Spirit Airlines will suspend all flights starting Saturday morning at 3:00 a.m. East Coast time (10:00 a.m. in Romania). The announcement is to be made in the immediate future, according to two sources familiar with the company's plans, cited by CNN.
It becomes the first US airline to go out of business in nearly 25 years. The shutdown comes amid skyrocketing jet fuel prices that have stymied the company's plans to emerge from its second bankruptcy filing.
Efforts to reach an agreement with the Trump administration on a last-minute rescue package acceptable to a key group of creditors also proved unsuccessful on Friday.
Millions of passengers who hold Spirit tickets in the coming months will have to make other travel arrangements. This decision will leave 17,000 company employees out of a job. The flight shutdown will also lead to a likely increase in fares throughout the US airline industry.
As of Friday, shortly before midnight East Coast time, the airline had issued no statement confirming the plans to close.
A lawyer for Spirit told a bankruptcy court last week that the airline was in “very advanced discussions” with the administration about a bailout.
A group of creditors disagreed with that plan, according to a source familiar with the negotiations. These creditors opposed the package. According to some reports, the document would have given the government control over the majority of the airline's shares.
On Friday morning, President Donald Trump appeared to distance himself from his earlier support for a bailout for the airline. He also distanced himself from a possible acquisition of the company by the government, writes CNN.
“Well, we're looking at the situation — but if we can't make a good deal, no institution has been able to,” Trump said Friday. “I would like to save the jobs, but we will make an announcement later today. I have presented them, I have presented them with a final proposal.”
The coup de grace: the increase in the price of fuel
All air carriers are facing higher jet fuel costs. These have almost doubled since the start of the Iran war. Jet fuel is the second largest expense for airlines after labor costs.
To compensate for this, airlines have raised fares and increased fees, such as those for checked bags. But competition to attract travelers has prevented them from passing all the costs on to customers.
Low-cost airlines such as Spirit have struggled to raise fares because of their reliance on bargain-hunting customers.
Spirit Airlines has about 9,000 flights scheduled from May 2 through the end of the month, according to aviation analytics firm Cirium. These flights have a total of 1.8 million seats. That means an average of around 300 flights and 60,000 passengers per day affected over the next month.
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