The United States’ potential rescue of Spirit Airlines (NK, Fort Lauderdale International), in which the Donald Trump administration could disburse up to USD500 million in the ailing carrier, has hit an impasse, sources close to the talks have told Bloomberg, Reuters, and CBS News.

According to the CBS report, Spirit Airlines only has enough available cash to continue operations for a matter of days. Furthermore, a group of lenders, including hedge fund Citadel, is pushing back against the proposed terms, arguing it could significantly erode the value of their claims and limit recoveries. It reportedly made a counterproposal, but the government rejected it.

ch-aviation reached out to Spirit Airlines for comment on the reports, but it was not immediately available.

Spirit Airlines is currently under Chapter 11 bankruptcy protection and sought emergency protection from the US government as rising fuel prices resulting from the US-Israeli attacks on Iran derailed the business reorganisation. The ultra-low-cost carrier had hoped to emerge from Chapter 11 this summer but now faces the threat of liquidation.

According to reports, the Trump administration envisaged a USD500 million bailout of Spirit that could provide options to own up to 90% of the carrier after it exits bankruptcy. Trump said in April he was considering bailing or buying it out, and later selling it after fuel prices drop, “for a profit.”

In a separate report from CBS News, the administration was considering using the Defense Production Act as a federal lifeline for Spirit Airlines. This act allows the US government to invest in industrial capacity to ensure supply chains for national defence.

White House spokesman Kush Desai told Reuters that the US government “continues exploring possible ​options to ensure the airline remains in operation for its passengers ⁠and employees.”