Spirit Aviation Holdings Inc. is preparing to shut down its operations as its cash reserves continue to dwindle, according to people familiar with the situation.
Facing pressure from a recent spike in fuel costs, Spirit had been negotiating with the U.S. government for rescue financing, but those talks stalled in recent days, Bloomberg previously reported. As its financial position weakened and hopes for a bailout faded, the airline began taking steps toward winding down operations, the people said, speaking on condition of anonymity due to the private nature of the discussions.
A company spokesperson said the airline continues to operate as normal and declined to comment on the ongoing discussions. The White House and the Commerce Department did not immediately respond to requests for comment.
The low-cost carrier had aimed to emerge from bankruptcy by the summer, but rising fuel costs tied to the ongoing conflict in the Middle East have further strained its finances.
Spirit’s shares tumbled by as much as 74% on May 1 after The Wall Street Journal reported earlier that the airline was preparing to halt operations. Meanwhile, shares of rival carriers, including JetBlue Airways Corp. and Frontier Group Holdings Inc., moved higher.
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