Spirit Airlines Prepares to Shut Down

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0:34Spirit Airlines prepares to shut down after a rescue deal falls apart. Plus, President Trump threatens to raise tariffs on autos from the European Union. And a new law in Illinois banning some credit card fees has banks up in arms. This opens up the possibility of other state legislation that could more significantly impede their ability to collect fees. It's Friday, May 1st. I'm Alex Oseleff for The Wall Street Journal. This is the PM edition of What's News, the top headlines and business stories that move the world today.

1:11First up, Spirit Airlines is preparing to end operations. After spending much of the past year and a half in Chapter 11, Spirit had been hoping to finalize a$500 million lifeline from the government before running out of cash. The journal has learned that that bailout has fizzled. Now the airline is preparing to shut down. I'm joined now by WSJ reporter Alison Sider. Alison, what happened to the bailout plan? The rescue that Spirit and the government and its bondholders have been talking about for the last couple of weeks, some of its bondholders dug in their heels against the deal, convinced that it was not going to be the best outcome for them.

1:47There was disagreement within the Trump administration. Our understanding is that those talks are over. And as a result, Spirit is going to shut down. We should note that Trump told reporters at the White House today that though he'd like to have the chance to save Spirit's jobs, he would only agree to a deal with the company if it was, quote, a good deal. Now we're reporting that Spirit is expected to end its operation Saturday in the early morning hours around 3 a.m. Eastern. How do you expect the airline industry to respond? Some of Spirit's competitors have been almost hoping that this would happen.

2:17It removes a lot of capacity from the markets, means less competition. What was Spirit's reputation in the industry? Spirit is sort of a shadow of its former self. It used to be much more of an industry maverick that really went head to head with bigger airlines and helped keep fares in check. And in ways that consumers didn't like so much either, it's helped bring over the nickel and diming fee model to the United States where Spirit charged super low base fares and then charged a fee for almost everything else, even water or paperboarding passes. But in the years since, lots of airlines have adopted many of those practices.

2:53It's the end of the line for an airline that was really revolutionary in its time and helped bring cheap air travel to the masses. That was Journal reporter Alison Sider. Thanks, Alison. Thanks so much for having me.

3:09President Trump said today that the U.S. will raise tariffs on cars and trucks from the European Union to 25 percent from 15 percent. The president says the EU isn't complying with the trade agreement it signed last year. European lawmakers are in the process of passing legislation for its side of the deal. The European Commission said the bloc is putting the deal into practice and that it will, quote, keep our options open to protect EU interests if the U.S. doesn't abide by the agreement. The White House didn't say when higher tariffs would go into effect.

3:42As you probably know, banks get money from stores whenever customers use their credit card. An Illinois law set to go into effect this summer would ban a small part of those credit card fees. The fees wouldn't be applied to taxes and tips. Stores argue that right now it's unfair that they have to pay credit card fees on money that doesn't end up in their pockets. Now, this law may sound like small change in the scheme of things, but it could have big repercussions. Ben Glickman covers payments for the journal and joins us now. Ben, credit card fees have long been a point of tension between merchants and banks and credit card companies.

4:15Some recent developments have been in favor of merchants, like a settlement that lets them reject some credit cards. What do stores hope to gain from the Illinois law if it does go into effect? What the merchant trade groups will tell you is that the interchange fees that go to banks, they ended up being quite a significant expense. One business owner I spoke to in Chicago told me that this law alone could save him up to$40 ,000 per year. That's just from not having interchange fees collected on the taxes and tips. Merchants feel it would make a relatively meaningful difference for their business itself.

4:51And how has the banking industry reacted to this law? They feel that the law is, first of all, preempted by federal law. They've argued notably that this would be extremely challenging to implement. It would be technologically challenging for them to change the current back end of payments in order to allow a differentiation between tip and tax and people's actual bills. They've also argued that smaller credit card issuers, that they essentially will be unable to foot the cost of complying with this law. The bank trade groups and some individual banks have said that they would essentially be forced to curtail their credit card service in the state, either withdrawing or pulling back on certain services.

5:38But the more important thing from a banking perspective is that this opens up the possibility of other state legislation that could more significantly impede their ability to collect fees. Is this law definitely taking effect? So right now, it is set to take effect, but there's still a pending court case that a judge could prevent it from taking effect. It could also still be pushed back or repealed by the Illinois state legislature. The bank trade groups have been quite clear that they're focused on preventing this from going into effect. But at this point, we really don't know. That was WSJ reporter Ben Glickman.

6:18Thanks, Ben. Thanks so much. Coming up, the American cities where the dream of robo-taxis is finally becoming a reality. That's after the break.

6:33WSJ's Take on the Week gives you a leg up on the world of money and investing. We cut through the noise and dive into markets, the economy, and finance. I'm Telus Demos. And I'm Miriam Gottfried. We break down the big trades, speak with the key players. And find out what's important for investors in the week ahead. Subscribe to WSJ's Take on the Week wherever you listen to podcasts.

7:00In international news today, Britain's government said it plans to crack down on pro-Palestinian protests. One government official said the protests were incubators of anti-Semitism. There's been a wave of anti-Semitic attacks in the UK, including a knife attack this week in London that seriously wounded two Jewish men. Yesterday, the UK government raised its terror threat level to severe. That means there's a high likelihood of another attack in the next six months. Prime Minister Keir Starmer called on police to arrest people who chant slogans like Globalize the Intifada. One organizer of pro-Palestinian protests says they don't foster anti-Semitism and that many Jewish people attend.

7:40And in the latest on the Iran war, Tehran has given Washington a new proposal for ending the conflict. People familiar with the details said Iran has softened conditions for talks. The country has dropped its demand that the U.S. end its blockade before negotiations can start. President Trump, speaking to reporters today as he left the White House, expressed skepticism about the proposal. Iran wants to make a deal because they have no military left, essentially, and they want to make a deal, but I'm not satisfied with that. Iran has indicated to mediators that it could sit down for talks in Pakistan by early next week if Washington is open to the new proposal.

8:17But the two sides are still far apart on big issues like Iran's nuclear program.

8:25The S &P and Nasdaq rose today and closed at their latest in a string of record highs. Tech stocks climbed after strong earnings from Apple, but the Dow slipped 0.3%. In energy markets, oil prices slipped, but at the pump, U.S. drivers are paying more. A gallon of regular gas rose today to$4.39 on average. That's up 33 cents from a week ago and is the highest price in almost four years. In tech, the Defense Department has struck deals with eight technology companies to use their AI capabilities in classified settings. Those companies include OpenAI, Google, SpaceX, Microsoft, and Amazon. The deals show that Anthropic, which makes the Claude models, may be an outlier in Silicon Valley for not agreeing to the Pentagon's terms.

9:11And on American roads, there's been nearly a decade of cycles of hype and disappointment for the dream of self-driving taxis. Now they're a reality, at least in some American cities. Journal reporter Sean McLean told our tech news briefing podcast how the robo-taxi rollout is going. If you've been in Austin or Phoenix or Los Angeles or San Francisco, Robo-taxis are increasingly commonplace. There are hiccups, like getting lost in a parking lot, and there has been some highly public incidents and accidents on the road. But the technology is becoming more stable, and people are becoming more comfortable with it.

9:47And that's giving the industry confidence to roll out into more places like Detroit, Minneapolis, even trying to tackle midtown Manhattan. The industry and analysts feel the technology is stable enough to start tackling harder challenges. Sean says the robotaxi industry is currently a one-horse race, with Alphabet's Waymo in the lead. But industry watchers are waiting to see if other players like Tesla can catch up. They're starting to roll out in Austin and Houston and Dallas. That's what people mostly have their eyes on, whether or not Tesla can do the same thing with robotaxis that it did with electric vehicles.

10:21And Uber, who is aggregating a bunch of different robotaxi players into their network. and even startups like Zoox, who we've been hearing about for the better part of a decade. All of these companies are starting to deploy vehicles or getting close to being able to deploy their vehicles. To hear more from Sean, listen to Tuesday's episode of Tech News Briefing next week. And that's What's News for this week. Tomorrow you can look out for our weekly markets wrap-up, What's News in Markets. Then on Sunday, we'll be heading to Ohio to dig into the effect of tariffs on the economy and voters' decisions ahead of primary elections there.

10:55That's in What's New Sunday. And we'll be back with our regular show on Monday morning. Today's show is produced by Danny Lewis and Anthony Bansi with supervising producer Tali Arbel. Michael LaValle wrote our theme music. Aisha El-Muslim is our development producer. Chris Zinsley is our deputy editor. I'm Alex Osula. Have a great weekend and thanks for listening.

11:24How do you prepare for the week ahead? Why not start with thinking about your investment portfolio? On WSJ's Take on the Week, we break down the top headlines. If the AI narrative hits a wall, there's no question in my mind that the U.S. economy starts to go perilously close to recession. And we go behind the biggest stories in markets, the economy and finance. I'm Telus Demos. And I'm Miriam Gottfried. We break down the big trades and speak with the key players. I'm very focused on making sure that we can get inflation back to target. Let us help you start your week. With WSJ's take on the week, subscribe wherever you listen to podcasts.