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Spirit Airlines announced early Saturday that it will immediately shut down operations after failing to reach a deal for a government bailout, citing rising oil prices as a major factor.
The airline’s parent company Spirit Aviation Holdings started “an orderly wind-down of operations” and cancellation of all flights, urging travelers who purchased tickets through Spirit “not [to] go to the airport,” according to a statement. Customers were advised that they will receive refunds but would not receive help to book new flights through other airlines.
Spirit president and CEO Dave Davis said the company reached an agreement for a “restructuring plan” to move forward.
“However, the sudden and sustained rise in fuel prices in recent weeks ultimately has left us with no alternative but to pursue an orderly wind-down of the Company,” Davis wrote in the statement. “Sustaining the business required hundreds of millions of additional dollars of liquidity that Spirit simply does not have and could not procure.”
He added, “This is tremendously disappointing and not the outcome any of us wanted.”
Transportation Secretary Sean Duffy announced on Saturday that airlines were capping their ticket prices for Spirit customers seeking to rebook their cancelled flights. Spirit will automatically process refunds to travelers who paid with a credit or debit card.
Airlines will also extend travel benefits and ensure seats are available for Spirit employees making their return home.
Fuel prices have skyrocketed since the start of the U.S.-Israeli conflict in Iran, as the closure of the Strait of Hormuz to shipping traffic has stifled oil and gas exports out of the Middle East.
Davis thanked the Trump administration, including Commerce Secretary Howard Lutnick, “for their extraordinary efforts to try to preserve jobs and service across the country, along with the U.S. Department of Transportation for their assistance to minimize the disruption to our Guests in the days and weeks ahead.”
President Trump told reporters outside the White House on Friday that the administration “was looking” at a government bailout to keep Spirit running, “but only if we can make a good deal.” He said last month that the bailout would amount to $500 million.
“It’s something we’re not looking to get involved with but, if we can, it’s 14,000 jobs –– I would say we are driving a tough deal but it’s one of those things,” Trump said. “We will do it or we won’t. We’ll have something for you today or tomorrow.”
The president previously said he was weighing a taxpayer takeover of Spirit Airlines, with plans to resell the troubled carrier after oil prices decline.
The International Association of Machinists and Aerospace Workers (IAM), the union representing Spirit employees, said last month that any federal relief would have to ensure workers were protected from “furloughs, no layoffs, and no shifting the burden onto the very people who keep this airline running.”