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Good morning. Who wants to own an airline? Congratulations, U.S. taxpayer, it looks like you\u2019re about to get a majority stake in Spirit Airlines, a struggling carrier on the precipice of collapse. With the Trump administration nearing a rescue package that could give Spirit up to $500 million in return for warrants that grant the government an equity stake, I reached out to a top airline executive who told me they \u201chave a fiduciary duty to say nothing\u201d before saying \u201cwe\u2019re dealing with fuel prices, too.\u201d\u00a0\u00a0<\/p>\n
Washington has rescued airlines before, much like it rescued big automakers, banks, insurers and others deemed too big or important to fail. And President Donald Trump has demonstrated a fondness for using the White House as a perch for doing business deals, whether it\u2019s owning 10% of Intel or securing access to Venezuela\u2019s oil. But it\u2019s unusual for the government to take a stake in a failing business with just over 3% market share. What\u2019s going on here?<\/p>\n
\u201cMoney, power and leverage.\u201d That\u2019s how Tad DeHaven, a policy analyst at the Cato Institute, sums up the government\u2019s motivation in what he calls the \u201cwackiest year of my career.\u201d Trump tried to create his own sovereign wealth fund early on, only to realize he needed Congress and a budget surplus to pull that off. Instead, he\u2019s doing trade deals like one with Japan that requires Tokyo to invest $550 billion in projects \u201cselected and managed\u201d by the U.S. government and aggressively interpreting laws to dictate how defense companies are run. \u201cIt\u2019s very simple. This is about power, leverage and control. Everything is a deal. Everything is transactional,\u201d DeHaven told me. \u201cWhat is desperately needed is for Congress to step in and say no to the government acquiring shares. This is a Pandora\u2019s Box.\u201d<\/p>\n
Aviation is an essential industry. There\u2019s a reason why the government rescued airlines during COVID and after 9\/11. Airlines are critical to transportation and regional development, and airline competition is critical for consumers. Brian Kelly, founder of The Points Guy, notes that Delta immediately raised fares 50% on some routes when Spirit exited the market. \u201cSpirit\u2019s existence saves consumers money,\u201d he told me last night. \u201cThe question is whether Spirit can become profitable when it has already filed for bankruptcy twice.\u201d It\u2019s a question that President Trump is intimately familiar with, having bought Eastern Air Line\u2019s shuttle for $365 million in 1988, renaming it the Trump Shuttle, only to sell it to US Airways less than three years later. Some blame the Biden Administration for blocking JetBlue\u2019s bid to merge with Spirit in 2024, prompting its first bankruptcy.<\/p>\n
Capitalism has many forms. There\u2019s state capitalism, entrepreneurial capitalism, crony capitalism, free-market capitalism and more. One of the hallmarks of American capitalism is Chapter 11 bankruptcy, which allows failing companies to restructure, reorganize and return to the playing field to fight a new day. Spirit CEO Dave Davis knows this because he\u2019s already done it. Some don\u2019t survive. Remember ValuJet, People Express, Skybus, Pro Air and National Airlines? Gone. Ditto for budget subsidiaries of the big guys like Delta Express\/Song, MetroJet, Ted and Continental Lite (not to mention Continental itself). It\u2019s a tough business. The government\u2019s job is to protect individual rights and create conditions for competitive players to compete. Spirit is failing for a reason. As Shawn Tully argues, a bailout could just make things worse.<\/p>\n
Contact CEO Daily via Diane Brady at diane.brady@fortune.com<\/p>\n
Top leadership news<\/p>\n
Best Buy\u2019s CEO swap<\/p>\n
After seven years at the helm, Best Buy CEO Corie Barry is stepping down this fall to be replaced by veteran executive Jason Bonfig. Barry won praise for navigating pandemic chaos, but Best Buy’s revenue is now lower than when she took over in 2019, and shares have risen just 6% against the S&P 500’s 157% gain. Analysts fault her for lacking a strategy to revive sales once the COVID electronics boom faded, leaving Bonfig to tackle the reinvention.<\/p>\n
Who owns AI?\u00a0<\/p>\n
Boards think the C-suite owns AI strategy. The C-suite isn’t so sure. A new survey found that while 90% of board members put AI responsibility squarely with senior leadership, C-suite executives themselves haven\u2019t reached a consensus on who’s actually accountable. The real problem isn’t AI; it’s that many leadership teams don’t know how to function as one, and AI is exposing the cracks.<\/p>\n
An unforeseen consequence of war<\/p>\n
A new report from Moody\u2019s Ratings is warning that helium supply disruptions stemming from the Iran war and conflict in the Middle East are threatening semiconductor supply chains. The gas is used in stages of chip manufacturing and a complex in Qatar, which accounts for around 30% of global high-purity helium supply, has been closed since being attacked March 2.<\/p>\n
The markets<\/p>\n
S&P 500 futures are down 0.48% this morning. The last session closed up 1.05%. The STOXX Europe 600 was down 0.54% in early trading. The U.K.\u2019s FTSE 100 was down 1.01% in early trading. Japan\u2019s Nikkei 225 was down 0.75%. China\u2019s CSI 300 was down. 0.28%. Hong Kong\u2019s Hang Seng was down 0.95%. South Korea\u2019s KOSPI was up 0.90%. India\u2019s NIFTY 50 is down 0.90%. Bitcoin was down at $77K.<\/p>\n
Around the watercooler<\/p>\n
Nvidia CEO Jensen Huang says you won\u2019t lose your job to AI\u2014you\u2019ll lose it to your coworker who uses it by Jake Angelo<\/p>\n
Craving work-life balance is a huge red flag, says Fortune 500 CEO\u2014and like Barack Obama, he happily works through the weekends by Orianna Rosa Royle<\/p>\n
Feud between AI power startup Fermi and its fired CEO and top shareholder heats up over proposed sale by Jordan Blum<\/p>\n
Inside MS NOW: The women leading the new MSNBC by Sydney Lake<\/p>\n
CEO Daily is curated and edited by Andrew Wyrich, Jason Ma,\u00a0Claire Zillman, and Lee Clifford.<\/p>\n
#Trump #hand #taxpayers #majority #stake #failing #Spirit #deal<\/p>\n","protected":false},"excerpt":{"rendered":"
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