Spirit Airlines may have days left to operate. Now the Pentagon is being dragged into a $500 million rescue plan

Spirit Airlines may be running out of time. The airline has only about $250 million in cash left, and creditors have a lien on it, which limits access to those funds. Because of this, Spirit’s attorney warned at a bankruptcy hearing on Thursday that the airline may only have days left to keep operating.

In a surprising turn, the Trump administration is now exploring using the Defense Production Act as part of a $500 million rescue plan for the airline, as per CBS News. This move would involve giving loan authority to private firms for national defense reasons. President Trump has publicly said he wants to help Spirit, saying he’d “do it to save the jobs.”

The Defense Production Act is an emergency power that is normally used to push private companies to prioritize government contracts and increase supplies of important goods. Under this plan, the government would lend Spirit $500 million at a reasonable interest rate, becoming the top debtor in the bankruptcy process. Taxpayers would also receive a warrant, which is the right to own 90% of the company once it comes out of bankruptcy.

The Pentagon’s role in the Spirit Airlines bailout plan shows how far the government is willing to go

The Pentagon’s involvement is a key part of the strategy. Sources told CBS News that the Pentagon would use Spirit’s extra capacity for transporting troops, military cargo, or other missions. This would give Spirit a much-needed source of income while also letting the government make use of the airline’s planes and infrastructure. Spirit has faced public scrutiny before, including a viral incident involving a Spirit Airlines flight crew taping an engine that raised serious questions about the airline.

Spirit’s assets include 48 planes and 83 leased aircraft, which are an important part of the rescue plan. The government’s involvement would give it the leverage needed to use those assets for national defense purposes. Commerce Secretary Howard Lutnick and the White House have backed the plan, arguing that letting an American company shut down would be a bad move. Transportation Secretary Sean Duffy, however, has raised concerns about the precedent a bailout could set.

According to The Hill, prominent investor Kevin O’Leary has come out against the plan, calling it a “really bad idea.” He argued that the federal government should let Spirit “die” instead, saying “that’s how the private system works.” O’Leary believes that the best companies rise to the top, and the ones that fail should go out of business.

The proposed bailout has also drawn strong criticism from conservative lawmakers. Sen. Ted Cruz (R-Texas) called it “an absolutely TERRIBLE idea.” An advocacy group aligned with former Vice President Mike Pence also came out against it, questioning why taxpayers should bail out a “uniquely unprepared” company.

Despite the opposition, the Trump administration is moving forward. The Office of Management and Budget has looked into what a federal bailout would look like, and the government has already given Spirit’s creditors a term sheet. The deal would make the U.S. government the senior bondholder, with the option to take up to a 90% ownership stake in the airline. Around 7,500 Spirit employees are now waiting to see what the future holds.