Negotiations over a potential $500 million rescue package for Spirit Airlines have stalled, in part due to concerns from the ultra-low-cost carrier’s creditors.
Bloomberg reported Tuesday that a group of lenders, including hedge fund Citadel, came out against proposed terms and conditions that could affect the value of their claims. The investors reportedly made a counterproposal.
The newspaper cited people with knowledge of the negotiations.
Earlier reports suggested that Spirit was making progress on the deal and had the backing of two of its three major creditor groups. It will need the support of all three to make a binding deal with the federal government.
The airline has not commented publicly on the talks.
Spirit entered discussions with the Trump administration earlier this month over a potential bailout. The carrier is struggling to cover the rising cost of jet fuel, an issue which could derail the company’s plan to exit bankruptcy protection later this spring or summer.
In exchange for financing, the administration would likely receive warrants that it could convert to ownership stakes in the airline. Similar agreements were used to stabilize major U.S. air carriers during the COVID-19 pandemic.
President Donald Trump confirmed last week that the federal government is talking with Spirit. He floated the idea of buying the airline outright, operating it for a time, then selling it for a profit when the price of oil comes down.
