Spirit Airlines, the beleaguered low-cost carrier, may be headed toward partial federal ownership. First reported by the Air Current, Spirit has apparently floated the idea of offering the government an equity stake to help stave off a possible liquidation. The Wall Street Journal and Bloomberg likewise reported that the Trump administration and Spirit have been discussing a federal bailout, including a potential federal investment.
In other words, Washington may be preparing to do what it often does when prior interventions and political shocks leave a company reeling: intervene again.
President Trump’s own comments capture the muddle. Earlier today, Trump told CNBC that he was worried about 14,000 jobs disappearing and suggested, “Maybe the federal government should help that one out.” But he also said that he’d “love somebody to buy Spirit,” which is painfully ironic given that the Biden administration prevented precisely that from happening.
It’s hard to imagine a better illustration of policy uncertainty from one administration to the next.
Before Spirit’s latest descent into crisis, JetBlue had agreed to acquire the company. But Biden’s Justice Department sued to block the merger, arguing that Spirit’s disappearance as a low-cost carrier would hurt price-sensitive travelers, and a federal judge agreed. JetBlue’s CEO, Robin Hayes, said in 2023 that the Biden administration’s antitrust regulators “came to the table with their minds made up” to stop the merger.
It’s quite a progression for the government to move from blocking a private merger to contemplating government ownership, with one dubious federal intervention paving the way for the next.
The Trump administration, meanwhile, is not just an innocent bystander being asked to clean up someone else’s mess. Spirit’s finances were already weak, but the Journal reports that Trump’s war on Iran helped send jet-fuel prices soaring, with JPMorgan estimating that Spirit’s costs would rise by $360 million this year if those prices remain elevated. The Biden administration may have screwed up, but it’s the consequences of Trump’s inept foreign policy that have the company looking for a federal bailout.
Yes, the federal government bailed out airlines during COVID, but that was a broad industry response to an emergency. Washington did demand taxpayer protections during the pandemic airline bailouts, including warrants in some cases, but that’s still a far cry from a company-specific rescue built around the federal government taking an equity stake in a single carrier.
An equity stake would make the federal government an owner, not merely a regulator or temporary source of relief. And once the government becomes a shareholder, the temptation to meddle does not disappear when the immediate crisis passes. Government ownership would create an opening for officials to pressure the company on routes, staffing, mergers, labor issues, consumer policies, and any other priorities that happen to be fashionable in Washington.
Bloomberg also noted that any proposed bailout would likely get pushback from competitors facing the same fuel-price pressures. Of course it would. Once politicians start deciding which firms deserve rescue and which do not, market competition gives way to political competition.
The broader lesson is that policy mistakes have an unfortunate habit of begetting future policy mistakes. One administration blocks a merger in the name of protecting consumers. Another administration helps create a fuel shock through reckless foreign policy, then flirts with buying part of the airline.
A future administration could inherit those shares and use them for different purposes. If a Democrat wins the White House in 2028 and empowers a Lina Khan–style antitrust populist, federal ownership would hand such officials yet another lever over a private company. This is how government control ratchets forward—not through one grand plan, but through a series of improvised interventions that each become the rationale for the next.
Commenting last year on the Trump administration’s policy shift toward the federal government acquiring equity stakes in companies, Scott Lincicome and I separately warned that a Pandora’s box had been opened. Thus, it seemed only a matter of time until a struggling company approached the administration for a bailout in exchange for a government equity stake. Hopefully, this sadly predictable development with Spirit will spur more opposition to the administration’s stakeholder scheming, particularly in Congress.