Spirit Airlines, the U.S. low‑cost carrier, is on the brink of shutting down after creditor talks broke down over a $500 million bailout the Trump administration offered. Bondholders who would have accepted a government loan that would subordinate their claims refused, leaving the airline with no viable exit from bankruptcy. The collapse would cost hundreds of jobs and strip airlines of slots.

Trump’s White House had floated a $500 million equity stake to keep Spirit afloat, offering bondholders new debt and 10 percent of the reorganised airline. Yet key holders such as Citadel Americas, Cyrus Capital and Ares pushed for liquidation, citing mounting losses after the Iran conflict spiked fuel prices. Their refusal derailed the rescue.

United and American Airlines have pledged to aid stranded customers and secure Spirit’s valuable slot inventory at hubs like Fort Lauderdale, Newark and LaGuardia. United’s new routes aim to cushion customers, while American caps fares on overlapping flights. The collapse would ripple through the U.S. network, prompting rivals to scramble for assets and reshaping low‑cost competition.