US mulls Emergency Powers in Spirit Airlines Restructuring
Reports indicate that U.S. President Donald Trump's administration is contemplating the use of the Defense Production Act as the legal foundation to rescue Spirit Airlines.
The government might utilize Title 3 of the Defense Production Act, which permits the U.S. government to fund industrial capacity to secure supply chains for national defense.
The Trump administration "is still looking into various options to guarantee the airline stays operational for its passengers and staff," stated White House spokesman Kush Desai.
He stated that reports concerning the mechanism or structure of the financing ought to be viewed as speculation.
The Defense Production Act is an emergency power enabling the U.S. government to mandate private companies to prioritize federal contracts and increase production of essential goods. It also allows for loans to private companies for national defense reasons, a step that could provide assistance to the airline.
Trump stated on Thursday that his administration was considering acquiring the troubled airline at the "appropriate cost."
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"When oil prices decrease, we will sell it for a profit," he informed reporters at the White House.
The budget airline based in Florida is running out of time. A Spirit attorney stated on Thursday that the airline requires new funding or access to its funds by the end of next week, with a court hearing scheduled for next week as the company’s lawyers and creditors seek to finalize a bankruptcy exit strategy.
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On Thursday, an external lawyer for Spirit stated that the Trump administration has proposed financial assistance to aid the airline in emerging from bankruptcy, which is currently under examination by its key creditors.
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On Thursday, an attorney for Spirit creditors stated they had examined a term sheet regarding the government's proposal, which sources indicate encompasses $500 million in funding and a stipulation that the government obtain warrants amounting to 90% of Spirit's equity.