Source: Fortune
Summary
The US government is considering a bailout for Spirit Airlines, a struggling carrier on the brink of collapse. The Trump administration is nearing a deal that could give Spirit up to $500 million in return for warrants that grant the government an equity stake. This move has raised concerns about the government’s increasing involvement in private businesses and the potential risks of a bailout. Spirit Airlines has filed for bankruptcy twice before and has struggled to become profitable.
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The numbers tell one story.
Spirit Airlines is struggling to stay afloat, and the government is stepping in to help. The airline has filed for bankruptcy twice before and has a market share of just over 3%. The government’s proposed bailout could give it an equity stake in the company. Meanwhile, President Trump has a history of using the White House to do business deals, including owning 10% of Intel and securing access to Venezuela’s oil.
The strategy enters a familiar phase: the government is taking a stake in a failing business to exert control and leverage. This move has raised concerns about the government’s increasing involvement in private businesses and the potential risks of a bailout.
As Tad DeHaven, a policy analyst at the Cato Institute, puts it, “It’s about power, leverage and control. Everything is a deal. Everything is transactional.”
The question is whether Spirit can become profitable when it has already filed for bankruptcy twice.
Aviation is an essential industry, and the government has a history of rescuing airlines in times of need. But some argue that a bailout could just make things worse.
Author: Evan Null
