Spirit Airlines, the ultra-low-cost carrier known for its no-frills fares, is on the brink of securing a $500 million bailout from the Trump administration. This deal, according to sources close to the negotiations, would prevent the airline from becoming the first major U.S. carrier in 25 years to shut down due to financial woes.

Talks could wrap up as soon as Thursday, allowing Spirit to finish its second bankruptcy reorganization since 2024.

The bailout comes as jet fuel prices have doubled since the war in Iran began, crippling Spirit's recovery plans. The package includes the federal government taking a stake in the airline, giving it breathing room to restructure. Without it, 25,000 employees could lose jobs, and millions of passengers might scramble for alternatives, disrupting travel nationwide.

Spirit pioneered ultra-low base fares in the U.S., charging extra for perks like carry-ons. This model forced bigger airlines to launch cheap "basic economy" options, keeping overall prices down. The airline represents about 2% of domestic U.S. capacity this summer; its collapse would shrink seat supply on key routes, likely driving up fares industry-wide.

Fares have already jumped 20% year-over-year due to strong summer demand and fuel spikes. A Spirit shutdown would worsen this, as airlines grapple with fuel, their second-biggest expense after labor.

Spirit filed for Chapter 11 bankruptcy twice since 2024, warning of "substantial doubt" about its future. A February deal with creditors aimed to slim it down with less debt, but the Iran conflict derailed that just days later.

President Trump signaled openness to the idea in a CNBC interview, noting it would save 14,000 jobs and suggesting government help in exchange for equity. Transportation Secretary Sean Duffy confirmed he'd review options at Trump's direction.

The White House blames the prior Biden administration's block of Spirit's JetBlue merger for its troubles, while monitoring the broader aviation sector.

However, rivals are furious. United CEO Scott Kirby called Spirit's model "fundamentally flawed" even before fuel hikes, insisting well-run carriers remain profitable. FAA Administrator Bryan Bedford flatly opposed using public funds for one airline. Past bailouts, like those post-9/11 or during COVID, aided the whole industry not a single player.

Spirit and the White House declined direct comment, with Spirit insisting it's "operating as normal."

This bailout could stabilize travel for passengers and workers but risks setting a precedent amid widespread industry pain.