Negotiations between the Trump administration and low-cost airline Spirit Aviation ended without a deal to rescue the struggling airline.
The company, severely affected by the recent increase in fuel costs, operates almost 200 planes from Florida to destinations in North America, the Caribbean and South America. According to people familiar with the negotiations, the company is preparing to cease operations in the coming hours.
The price of the main aviation fuel in the US (called Jet-A) has almost doubled in some regions of the country since the oil boom caused by the war in the Middle East. Extra fuel operating costs for major American airlines could grow by 40% in the first half of the year.
Spirit — which has about 13,000 employees — was in talks with the U.S. government for bailout financing, but the talks have reached an impasse and the airline is cash-strapped.
The airline is under so-called Chapter 11, comparable to judicial recovery in Brazil, and planned to avoid bankruptcy and exit the regime by the summer, after reaching an agreement with creditors in a plan aimed at reducing billions in debt. However, rising fuel costs from the war in the Middle East put the airline on the brink of liquidation.
According to people familiar with the matter, the company yesterday began notifying some creditors of its plans to suspend operations as prospects for a bailout dimmed.
Continues after advertising
Some people involved in the negotiations still held out hope last night for a possible revised offer that could pave the way for a deal. American Airlines, United Airlines and Frontier Airlines said in statements that they are prepared to help Spirit customers and employees who may be left stranded if the airline goes out of business.
Rob Britton, associate professor of crisis management at Georgetown University, in the USA, and former executive at American Airlines, emphasized in an interview with the New York Times that, even after the war in the Middle East ends, QAV and ticket prices will take months to stabilize:
— It won’t happen overnight because at the moment the chaos is total.
On Thursday, Air Canada, the largest among Canadian operators, announced that, due to the scenario, it will not report financial projections for its results — it is common among publicly traded companies in various sectors to inform investors of projections and growth targets.
