Spirit Aviation Holdings Inc. has proposed offering the US government an equity stake in the discount carrier to help prevent its potential liquidation, according to people familiar with the matter. The struggling airline is exploring this unusual arrangement as part of its efforts to secure financial stability and avoid bankruptcy proceedings.

The move comes as Spirit faces mounting financial pressures in a challenging airline industry environment. The discount carrier has been grappling with operational difficulties and competitive pressures that have strained its balance sheet. By offering the government an equity stake, Spirit aims to access capital that could provide a lifeline to keep the airline operational.

This potential government stake represents a significant development in the airline's restructuring efforts. The proposal signals Spirit's determination to find alternative solutions to traditional bankruptcy proceedings, which could result in the carrier's dissolution. The outcome of these negotiations could have broader implications for the airline industry's approach to financial distress.