Bankrupt discount carrier Spirit Airlines is preparing to cease operations after failing to align certain bondholders and the US government on a bailout plan, the Wall Street Journal reported on Friday.

President Donald Trump said last month that his administration was considering buying the troubled carrier at the “right price.”

Sources later said the administration proposed $500 million in financing in exchange for warrants equivalent to 90% of Spirit’s equity.

There were disagreements within 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 involved in the deal, the report added.

A defense hearing scheduled for Thursday, April 30, did not take place after negotiations continued over the terms of a potential $500 million US government bailout.

A company spokesman declined to comment on ongoing discussions, adding that “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 war-related casualty in Iran.

Shares of rival Frontier Airlines rose 10% following the report, while JetBlue Airways gained 7%.

Spirit Airlines previously struck a deal with its creditors that would have helped it emerge from its second bankruptcy in late spring or early summer.

However, those plans were derailed ⁠after the war in Iran led to a sharp rise in jet fuel prices, which increased Spirit’s cost projections and complicated its exit from bankruptcy.

The carrier built its turnaround plan on jet fuel costs averaging $2.24 per gallon in 2026 and $2.14 in 2027, according to a March disclosure.

By the end of April, prices had reached about $4.51 a gallon, more than double the level expected in his estimates.