May 1 (Reuters) - Bankrupt discount carrier Spirit Airlines is preparing to cease operations, after failing to align certain bondholders and the U.S. government on a bailout plan, the Wall Street Journal reported on Friday.
President Donald Trump said last month his administration was looking to buy the embattled carrier at the "right price."
Sources later said the administration had proposed $500 million in financing in exchange for warrants equivalent to 90% of Spirit's equity.
There had been disagreements
inside the Trump administration over whether and how to fund the bailout, the report said, citing people familiar with the matter.
Not all Spirit bondholders were on board with the deal, the report added.
A rescue hearing scheduled for Thursday, April 30, did not take place after talks over the terms of a potential $500 million U.S. government bailout continued.
A company spokesperson declined to comment on ongoing discussions, adding "Spirit is operating as usual".
The White House did not immediately respond to a Reuters request for comment.
The carrier's demise would mark the industry's first casualty linked to the war in Iran.
Shares of rivals Frontier Airlines rose 10%, while JetBlue Airways gained 7% following the report.
Spirit Airlines had earlier reached a deal with its lenders that would have helped it emerge from its second bankruptcy by late spring or early summer.
Those plans were, however, derailed after the war in Iran triggered a sharp spike in jet fuel prices, upending Spirit's cost projections and complicating its bankruptcy exit.
The carrier built its turnaround plan on jet fuel costs averaging about $2.24 per gallon in 2026 and $2.14 in 2027, according to March disclosures.
By the end of April, prices had climbed to around $4.51 a gallon, double the level assumed in its projections.
(Reporting by Shivansh Tiwary in Bengaluru; Editing by Anil D'Silva and Sriraj Kalluvila)
