US considers using Defense Production Act in Spirit Airlines restructuring, source says

WASHINGTON: U.S. President Donald Trump's administration is considering using the Defense Production Act as the legal basis to bail out Spirit Airlines, a source told Reuters.

CBS News first reported the potential plan on Friday, citing U.S. officials familiar with the discussions.

The source said the government could invoke Title 3 of ‌the Defense Production ⁠Act ⁠that allows the U.S. government to invest in industrial capacity to ensure supply chains for national defense.


Also read: US imposes sanctions on a China-based oil refinery and 40 shippers over Iranian oil

The ​Trump administration "continues exploring possible options to ensure the airline remains in operation for its passengers and employees," ​White House spokesman Kush Desai said.

He added reporting about the mechanism or structure of the financing should be regarded as speculation.

The Defense Production Act is an emergency ​authority that allows the U.S. government to require private ⁠companies to prioritize ‌federal contracts and boost output of critical goods. It also ​permits loans ​to private firms for national defense purposes, a measure that may ⁠offer support to the airline.

Trump said on Thursday his ​administration was looking at buying the embattled airline at the "right ​price."

"When the price of oil goes down, we would sell it for a profit," he told reporters at the White House.

Also read: Trump weighs Spirit Airlines takeover, eyes resale after oil price drop report says

The Florida-based budget carrier is running short on time. A lawyer for Spirit said on Thursday it needs new financing or access to its cash by the end of next week, and ‌a court hearing is set for next week as lawyers for the company and creditors aim to reach agreement on a bankruptcy ​exit plan.

The ​Trump administration has made ⁠a financing offer to help the airline exit bankruptcy that was being reviewed by its major creditors, an outside lawyer for Spirit said on Thursday.

A lawyer for Spirit ​creditors said on Thursday they had reviewed a term sheet of the government's offer that sources say includes $500 million in financing and a condition the government receive warrants equal to 90% of Spirit's equity.

The senior debtor-in-possession financing would help Spirit exit its second bankruptcy restructuring since 2025.