Would a government bailout of Spirit Airlines really be worth it?

The Trump administration has reportedly been in talks to bail out Spirit Airlines, either with a big loan or by buying it. The budget airline, which had already been struggling, now faces even tougher times with higher fuel costs.

But does that justify bailing it out? By the time companies are discussing bailouts, “they're already toast, and you're just trying to resurrect them from the dead, if you will,” said Deborah Lucas. She’s the Sloan distinguished professor of finance at the MIT Sloan School of Management and director of the MIT Golub Center for Finance and Policy.

Bailouts can have a bad reputation, she said, but there are some cases where there is some justification.

“Where the whole economy is really disruptive, and there's this view that if you let a particular company fail, that failure is going to lead to other firms to fail, and it’s just gonna deepen either a recession or a financial crisis,” she explained.

That’s why, Lucas added, there was a lot of support for bailing out the banks in response to the 2008 financial crisis.

In the past, bailouts were discussed with Congress, according Tad DeHaven, a policy analyst at the Cato Institute.

“But that's different with the Trump administration's second term,” he said, “which signaled pretty much from the outset that it had little regard, interest and time for Congress' thoughts, feelings, or anything else.”

DeHaven said the challenge with any kind of bailout is the precedent it sets. “Eventually, it is likely that a future administration, a future Congress will use those past bailouts as justification for a new set of bailouts, even though those bailouts don't fit that category of being an emergency.”

And that, DeHaven thinks, is exactly what’s happening with Spirit now.

Marketplace reached out to both Spirit and the White House for comment; Spirit did not respond in time for publication.

In a statement, a White House spokesperson told Marketplace that the administration is monitoring “the health of the U.S. aviation industry … unless an announcement is officially made by the administration, however, any discussion about federal policymaking should be regarded as baseless speculation.”

Want to hear conversations about some of the biggest bailouts in recent memory?

Check out this 2018 conversation between Timothy Geithner, Ben Bernanke, and Henry Paulson, and Marketplace’s Kai Ryssdal, in which they discuss TARP, an unprecedented government bailout of troubled financial institutions.

In 2018, Marketplace’s David Brancaccio also sat down with Chris Dodd and Barney Frank, who worked together to create the Dodd-Frank Act, a bill that put stricter requirements on the banks.