Key Takeaways
- Donald Trump’s casual suggestion to “just buy” Spirit Airlines contrasts sharply with his earlier criticism of the Obama administration’s auto‑industry bailout.
- The Obama auto rescue was a deliberate, data‑driven effort that saved a strategically vital sector, imposed strict conditions, and exited government ownership quickly.
- Spirit Airlines has a chronically weak ultra‑low‑cost business model, has filed for bankruptcy twice in under a year, and faces rising fuel costs amid geopolitical turmoil.
- Government intervention in Spirit would lack the analysis, conditions, and clear exit strategy that characterized the auto bailout, raising concerns about ad‑hoc corporate meddling.
- Allowing Spirit to fail would let market forces reallocate its 17,000 workers and assets, preserving the principle that unviable businesses should exit, which ultimately benefits consumers and innovation.
- The Biden administration’s antitrust suit against a Spirit‑JetBlue merger worsened the airline’s predicament, but it does not justify a sweeping, unprincipled bailout.
- The author argues that propping up Spirit would repeat the mistakes of shielding inefficient firms, distort competition, and tax‑payer‑funded subsidies that hinder long‑term economic dynamism.
Steven Rattner recalls his role leading the Obama administration’s effort to rescue the American auto industry after the 2008 financial crisis. At that time, then‑candidate Donald Trump denounced the bailout, insisting that struggling automakers should be allowed to fail and rebuild themselves through free‑market forces. Rattner notes the irony of Trump’s later, off‑hand comment in the Oval Office that the government “could just buy” Spirit Airlines, a struggling ultra‑budget carrier on the verge of collapse.
He argues that the two situations are not comparable. The Obama auto rescue followed weeks of rigorous analysis by a team of financiers who concluded that the industry was critical to the Midwest economy and that a temporary infusion of capital, coupled with deep operational restructuring, could return manufacturers to profitability. The assistance was conditional, the government took no board seats, and it exited ownership as soon as possible—by late 2013 General Motors was free of federal control.
In contrast, Trump’s contemplated Spirit bailout appears to lack any systematic review, clear conditions, or a plan for how the government would exercise its potential 90 % stake or eventually withdraw. Rattner points out that the administration has already shown a pattern of ad‑hoc corporate interventions—taking equity stakes in Intel, rare‑earth miners, and imposing revenue‑sharing requirements on Nvidia and AMD for China‑related chips—actions that would provoke outrage if undertaken by Democrats.
Spirit’s fundamental problems stem from its ultra‑low‑cost model, which repeatedly fails when larger carriers match its fares and when consumer interest in “no frills” wanes. The airline has filed for bankruptcy twice within ten months, shed debt, and still exhausted its resources. Ongoing geopolitical conflict (the war against Iran) has driven fuel prices upward, further squeezing its thin margins. Even if the government injected up to $500 million, there is no evident path to sustainable profitability.
Rattner acknowledges that the Biden administration’s antitrust lawsuit blocking a Spirit‑JetBlue merger contributed to the airline’s woes; the blocked deal would have generated billions for shareholders and lenders and created a stronger competitor to the legacy carriers. Yet he argues that this misstep does not justify a sweeping, unprincipled bailout that would contradict the administration’s own stance on market discipline.
He warns that propping up Spirit would set a dangerous precedent: shielding inefficient firms distorts competition, misallocates taxpayer money, and ultimately harms consumers and innovation. The auto sector’s experience shows that while bailouts can preserve jobs in the short term, they can also entrench inefficiency—today’s protected U.S. automakers produce few vehicles under $20,000, while China’s more competitive, albeit subsidized, market offers far cheaper options.
Rattner concludes that the economy is now better able to absorb the loss of Spirit’s roughly 17,000 jobs than it was during the 2009 auto crisis, when over a million positions were at stake. He advocates letting Spirit liquidate, adding its name to the long list of failed airlines, and allowing market forces to reallocate its assets. In his view, capitalism works best when unsuccessful businesses are allowed to fail, preserving the dynamism that drives long‑term growth and consumer benefit.