TheChek News Flow

It’s only been since June that Meta invested $14.3 billion in the data-labeling vendor Scale AI, bringing on CEO Alexandr Wang and several of the startup’s top executives to run Meta Superintelligence Labs (MSL). But the relationship between the two companies is already showing signs of fraying.

At least one of the executives Wang brought over to help run MSL — Scale AI’s former Senior Vice President of GenAI Product and Operations, Ruben Mayer — has departed Meta after just two months with the company, two people familiar with the matter told TechCrunch.

Mayer spent roughly five years with Scale AI across two stints. In his short time at Meta, according to those sources, Mayer oversaw AI data operations teams but wasn’t part of the company’s TBD Labs — the core unit within Meta tasked with building AI superintelligence, where top AI researchers from OpenAI have landed.

However, Mayer disputes some details about his role, telling TechCrunch that his initial position was “to help set up the lab, with whatever was needed” rather than data, and that he was “part of TBD Labs from day one” rather than being excluded from the core AI unit. Mayer also clarified that he “did not report directly to [Wang]” and was “very happy” with his Meta experience.

Beyond the personnel changes, Meta’s relationship with Scale AI appears to be shifting. TBD Labs is working with third-party data labeling vendors other than Scale AI to train its upcoming AI models, according to five people familiar with the matter. Those third-party vendors include Mercor and Surge, two of Scale AI’s largest competitors, the people said.

While AI labs commonly work with several data labeling vendors – Meta has been working with Mercor and Surge since before TBD Labs was spun up – it’s rare for an AI lab to invest so heavily in one data vendor. That makes this situation especially notable: even with Meta’s multi-billion-dollar investment, several sources said that researchers in TBD Labs see Scale AI’s data as low quality and have expressed a preference to work with Surge and Mercor.

Scale AI initially built its business on a crowdsourcing model that used a large, low-cost workforce to handle simple data labeling, which is the process of tagging and annotating raw information to train AI models. But as AI models have grown more sophisticated, they now require highly-skilled domain experts—such as doctors, lawyers, and scientists—to generate and refine the high-quality data needed to improve their performance.

Although Scale AI has moved to attract these subject matter experts with its Outlier platform, competitors like Surge and Mercor have been growing quickly because their business models were built on a foundation of high-paid talent from the outset.

A Meta spokesperson disputed the fact that there are quality issues with Scale AI’s product. Surge and Mercor declined to comment. Asked about Meta’s deepening reliance on competing data providers, a Scale AI spokesperson directed TechCrunch to its initial announcement of Meta’s investment in the startup, which cites an expansion of the companies’ commercial relationship.

Meta’s deals with third-party data vendors likely mean the company is not putting all its eggs in Scale AI, even after investing billions in the startup. The same can’t be said for Scale AI, however. Not long after Meta announced its massive investment with Scale AI, OpenAI and Google said they would stop working with the data provider.

Shortly after losing those customers, Scale AI laid off 200 employees in its data labeling business in July, with the company’s new CEO, Jason Droege, blaming the changes in part on “shifts in market demand.” Droege said Scale AI would staff up in other parts of the business, including government sales — the company just landed a $99 million contract with the U.S. Army.

Some speculated initially that Meta’s investment in Scale AI was really to lure Wang, a founder who has operated in the AI space since Scale AI was founded in 2016 and who appears to be helping Meta to attract top AI talent.

Aside from Wang, there’s an open question around how valuable Scale is to Meta.

One current MSL employee says that several of the Scale executives brought over to Meta are not working on the core TBD Labs team.

Meanwhile, Meta’s AI unit has become increasingly chaotic since bringing on Wang and a wave of top researchers, according to two former employees and one current MSL employee. New talent from OpenAI and Scale AI have expressed frustration with navigating the bureaucracy of a big company, while Meta’s previous GenAI team has seen its scope limited, they said.

The tensions indicate that Meta’s largest AI investment to date may be off to a rocky start, despite that it was supposed to address the company’s AI development challenges. After the lackluster launch of Llama 4 in April, Meta CEO Mark Zuckerberg grew frustrated with the company’s AI team, one current and one former employee told TechCrunch.

In an effort to turn things around and catch up with OpenAI and Google, Zuckerberg rushed to strike deals and launched an aggressive campaign to recruit top AI talent.

Beyond Wang, Zuckerberg has managed to pull in top AI researchers from OpenAI, Google DeepMind, and Anthropic. Meta has also acquired AI voice startups including Play AI and WaveForms AI, and announced a partnership with the AI image generation startup, Midjourney.

To power its AI ambitions, Meta recently announced several massive data center buildouts across the U.S. One of the largest is a $50 billion data center in Louisiana called Hyperion, named after a titan in Greek mythology that fathered the God of Sun.

Wang, who’s not an AI researcher by background, was viewed as a somewhat unconventional choice to lead an AI lab. Zuckerberg reportedly held talks to bring in more traditional candidates to lead the effort, such as OpenAI’s chief research officer, Mark Chen, and tried to acquire the startups of Ilya Sutskever and Mira Murati. All of them declined.

Some of the new AI researchers recently brought in from OpenAI have already left Meta, Wired previously reported. Meanwhile, many longtime members of Meta’s GenAI unit have departed in light of the changes.

MSL AI researcher Rishabh Agarwal is among the latest, posting on X this week that he’d be leaving the company.

“The pitch from Mark and @alexandr_wang to build in the Superintelligence team was incredibly compelling,” said Agarwal. “But I ultimately choose to follow Mark’s own advice: ‘In a world that’s changing so fast, the biggest risk you can take is not taking any risk’.”

Asked afterward about his time at Meta and what drove his decision to leave, Agarwal declined to comment.

Director of product management for generative AI, Chaya Nayak, and research engineer, Rohan Varma, have also announced their departure from Meta in recent weeks. The question now is whether Meta can stabilize its AI operations and retain the talent it needs for its future success.

MSL has already started working on its next generation AI model. According to reports from Business Insider, it’s aiming to launch it by the end of this year.

OpenEvidence says its chatbot is more accurate than general chatbots such as ChatGPT because it was developed using information from medical journals whose content it licensed, such as the New England Journal of Medicine.

The company’s product uses open-source models to search through medical journals and return useful information and citations. It also uses AI from Google, OpenAI and other providers to write its chatbot’s responses.

With the new capital, OpenEvidence could acquire more content from medical journals to train its models or could buy other healthcare startups, like electronic health record firms, to reach hospitals and other potential customers and expand what the startup can offer doctors, one of the people involved in the deal said.

OpenEvidence’s product is used in more than 10,000 hospitals and medical centers and more than 40% of physicians in the U.S., the company said in a blog post. (There are about 1 million physicians in the U.S., according to the Federation of State Medical Boards.)

As of July, the company said it handles more than 8.5 million questions from clinicians each month. The company has raised more than $300 million from investors including GV, Kleiner Perkins and Sequoia Capital.

OpenEvidence said earlier this month that the models it developed scored perfectly on the U.S. medical licensing exam. Notably, one of OpenEvidence’s co-founders told Fierce Healthcare that OpenAI‘s ChatGPT-5 got 97% of answers right, based on OpenEvidence’s own evaluation.

Other health AI startups have received investor interest of late. Abridge, whose software transcribes physicians’ conversations with patients, recently raised funding at a $5 billion valuation, nearly double the company’s valuation from a deal three months earlier.

Ambience, a competitor to Abridge, raised capital at a valuation of more than $1 billion, more than triple its 2023 valuation.

The Week’s 10 Biggest Funding Rounds: Commonwealth Fusion’s Giant Financing Leads Otherwise Slow Week For Big Deals

Hoping to be the first company to commercialize fusion power, Commonwealth Fusion Systems led the pack by a long shot for funding this week, pulling in $863 million for its latest round. Beyond that deal, however, it was a rather slow week for large startup funding rounds, although we did see some good-sized financings for the fintech, biotech and vertical AI sectors.

1. Commonwealth Fusion Systems, $863M, fusion energy: Devens, Massachusetts-based Commonwealth Fusion Systems, a developer of commercial fusion energy systems, announced that it raised $863 million in what it described as Series B2 financing from a long list of investors including Nvidia’s NVentures. Commonwealth said it is moving closer to being the first in the world to commercialize fusion power.

2. Wugen, $115M, oncology: St. Louis-based Wugen, a developer of CAR-T cell therapies to treat T-cell cancers, picked up $115 million in equity financing led by Fidelity. Seven-year-old Wugen plans to use the financing in part to fund clinical trials.

3. Rain, $58M, fintech: Rain, a developer of infrastructure for stablecoin payments, announced that it secured $58 million in a Series B funding round led by Sapphire Ventures. The raise comes five months after New York-based Rain’s Series A and brings total funding to $88.5 million.

4. Blue Water Autonomy, $50M, autonomous ships: Boston-based Blue Water Autonomy, a startup designing and building unmanned ships for the U.S. Navy, closed on $50 million in Series A funding led by Google’s GV. Blue Water said it plans to use the funding to build and deploy its first long-range, full-sized autonomous ship next year.

5. Assort Health, $50M, health care AI: Assort Health, a San Francisco-based provider of AI patient communication tools for specialty healthcare providers, reportedly raised about $50 million in a Series B round at a valuation of $750 million.

6. OpenLight, $34M, photonics: OpenLight, based in Goleta, California, is a developer of a silicon photonics platform for semiconductor design which landed $34 million in a Series A co-led by Xora Innovation and Capricorn Investment Group.

7. (tied) Atomic, $30M, fintech: New York-based Atomic, provider of an embedded investing platform for fintechs and financial institutions, snagged $30 million in a growth round led by Aquiline Capital Partners and Brewer Lane Ventures.

7. (tied) Aurasell, $30M, vertical AI: San Mateo, California-based Aurasell, developer of an AI-native CRM platform, locked up $20 million in seed funding backed by N47, Menlo Ventures and Unusual Ventures.

7. (tied) Leal Therapeutics, $30M, biotech: Leal Therapeutics, a Massachusetts-based developer of therapeutics for patients living with neuropsychiatric or neurodegenerative disorders, announced a $30 million Series A financing led by SV Health Investors‘ Dementia Discovery Fund.

10. Copper, $28M, appliances: Copper, a developer of appliances with integrated battery storage, scored $28 million in a Series A financing consisting of equity and debt that was led by Prelude Ventures. The Berkeley, California-based startup’s first product offering is a stainless steel range and oven called “Charlie.”

Abivax surged almost 600% in one day, delivering big gains to some biotech-focused funds that had previously been in the red

• Abivax, a French drugmaker, saw its U.S.-listed shares jump over 580% in one day after releasing trial results.
• The surge in Abivax’s stock boosted the performance of healthcare-focused hedge funds ADAR1 and Deep Track Capital.

It had been an anemic year for hedge funds that trade biotech stocks, thanks in part to moves by the Trump administration. A little-known French drugmaker provided a shot in the arm.

The market value of Abivax ABVX 0.00%increase; green up pointing triangle hovered around $500 million early this summer. But when the Paris biotech company released results in July of a late-stage trial of its oral drug for inflammatory bowel disease, Abivax’s U.S.-listed shares skyrocketed by over 580% in one day. Abivax is now worth more than $6 billion.

That gave a major performance boost to a handful of healthcare-focused hedge funds. ADAR1 Capital Management and Deep Track Capital, two of the largest owners of Abivax’s U.S.-listed shares, gained about 18% and about 8%, respectively, in July, people familiar with their performance said.

After spending the first half of 2025 in the red, ADAR1 is now up nearly 16% on the year through July, while Deep Track is slightly positive. In contrast, the total return of the S&P 500 index was 8.6% this year through July after a 2.2% gain that month.

Founded in 2013 by the French immunologist Philippe Pouletty, Abivax went public in Europe two years later and added a U.S. listing in 2023. It had unsuccessfully explored using its main drug, obefazimod, to treat HIV before it homed in on ulcerative colitis.

The company remained off Wall Street’s radar for a while. Markets assigned obefazimod an estimated 16% probability of success ahead of the readout of its trial results, ADAR1 told investors in a June letter.

But the Austin, Texas, hedge-fund firm had developed its own hypothesis on how the drug worked and tested it itself in experiments on mice. After that, it raised the odds of a successful readout to 50% to 60%. It predicted that the stock could surge up to 500% if it was right, or slump 90% if it was wrong. ADAR1 shared its proprietary research with clients on June 28—a few weeks before the trial results came out.

“We believe that victory laps after the fact are cheap,” ADAR1 founder Daniel Schneeberger, a medical doctor and former McKinsey consultant, wrote in the letter.

The data from the Phase 3 trial showed that obefazimod was a safe and effective treatment for patients with moderately to severely active ulcerative colitis.

ADAR1, named for an enzyme, manages around $850 million.

Many biotech hedge funds were in a funk in 2025 until recently. Changes under Health and Human Services Secretary Robert F. Kennedy Jr. at the Food and Drug Administration and a White House order attempting to lower prescription-drug prices weighed on the stocks of experimental pharmaceutical companies.

A healthcare hedge-fund index compiled by the research firm PivotalPath lost 5% in the first half of 2025, a period during which PivotalPath’s broad hedge-fund index gained 4%.

Few sectors are as boom-and-bust as biotech, and investors in the sector notched a handful of recent wins.

Hedge funds rode the 167% rally in shares of Celcuity on July 28, the day the company announced a successful late-stage trial of its breast-cancer therapy. Baker Brothers Advisors and Soleus Capital, two of Celcuity’s largest shareholders as of the end of June, each gained about 11% in July, people familiar with their performance said.

On July 9, Merck agreed to buy Verona Pharma, a drugmaker focused on respiratory disease, for roughly $10 billion, representing a 23% premium to Verona’s closing price a day earlier.

Caligan Partners, an activist hedge-fund firm that counts Verona and Abivax among its top holdings, was up about 14% in July, bringing its year-to-date gains to 38%, people familiar with the matter said.

Hedge funds collectively gained at least $1.4 billion on their Abivax positions in July, according to Old Well Labs, which analyzes hedge-fund filings to estimate returns. Five of the 10 best-performing funds Old Well Labs followed in July owned sizable stakes in Abivax at the end of June.

Investors are piling back into funds that buy junk-rated corporate bonds and loans, despite elevated default rates

So much for the dog days of summer. Companies with low credit ratings are feverishly issuing new bonds and loans to capitalize on the appetite for risk that is driving stocks to record highs.

Buying by individual and institutional investors is pushing up prices for junk debt and driving down yields to levels not seen since before President Trump’s “Liberation Day” tariffs in April. That is prompting companies to refinance existing debt and slash their interest expenses.

One possible danger: Defaults among junk-rated companies have been elevated. If tariffs fuel inflation or slow down the economy, analysts say more defaults are likely. That means investors could lose out on their bets and likely see prices of other high-yield bonds fall.

Investors have been piling back into high-yield mutual funds and exchange-traded funds since May.

They are betting U.S. economic activity will strengthen if the Federal Reserve begins cutting interest rates as expected in September. But there are also signs tariffs are pressuring corporations.

Downgrades accounted for two-thirds of S&P Global Ratings’ credit-rating actions in the second quarter, up from about half in the first quarter.

The average yield of around 6.75% is still juicy enough to attract buyers. The premium for junk bonds—or the spread on yields compared with Treasurys—remains slightly above its recent low in January, suggesting the rally could continue.

Issuance of junk-rated bonds and loans hit a monthly record of $240 billion in July, according to data from JPMorgan Chase. This month is also expected to be the busiest August ever, with total issuance set to exceed $100 billion.

That brings the amount companies have raised from junk bonds and loans so far this year to $930 billion, just shy of the $1 trillion issued during the same period in 2024, despite the credit freeze this spring.

Most of the deals refinanced existing debt, but others went to less conservative uses. Aircraft parts maker TransDigm Group issued a $9 billion bond in August to fund a dividend to shareholders.

“If the markets stay in the condition they are, they will remain busy through the rest of the year,” said Trip Morris, co-head of leveraged finance at Wells Fargo.

Funds that make private loans to riskier corporations have been booming in part because they pay even higher yields than their public counterparts.

The money managed by business development companies, which make private loans to small and midsize companies, jumped by about 33% over the 12 months ending in June, according to data from LSEG’s loan data unit.

The performance of the funds’ portfolio companies has been generally stable, according to Morgan Stanley research. But smaller borrowers have been pressured by tariffs and weakening consumer spending, pushing the ratio of delinquent loans held by BDCs to 2.9% at the end of June. That’s up from 2.7% in March and about 2.25% in December.

Signs of trouble are also emerging in public high-yield bonds and loans, where the default rate has remained above the 30-year average since July 2023. That is a longer stretch than any of the previous three default cycles, including the subprime credit crisis, according to data from S&P Global Ratings.

The period of elevated defaults has the potential to drag if the risk of runaway inflation prevents the Fed from sharply cutting interest rates. If interest rates remain elevated, larger junk-rated companies could start to buckle under their debt loads.

The current default rate of 4.7% is still well below the 12% peak hit in 2009.

CSI 300 has rallied more than US and European indices this year, even as foreign investors stay away

Chinese investors are driving a sharp rally in the country’s stock markets, even as international investors have been deterred by years of underperformance and persistent deflationary pressures.

The mainland’s CSI 300 benchmark index traded flat in the first six months of this year but has posted double-digit gains since the end of June. It is now up 14.3 per cent so far this year, more than the main US, European and Japanese benchmarks, in local currency terms.

Easing trade tensions with the US has calmed investors’ nerves. But analysts say it is primarily low interest rates, near-record low bond yields and a lack of attractive alternatives that have driven Chinese retail and institutional investors into A-shares, traded on the country’s onshore stock markets.

“For households and institutions in China, they don’t have too much choice,” said Shujin Chen, China economist and head of China financial and property research at Jefferies. “A-shares have joined the global party.”

Stock markets in the US, Japan and Europe are trading at all-time highs as investors pile into equities, defying the warnings of many economists about the negative impact that US trade policy will have on global growth.

While still below its all-time high during China’s post-Covid boom in 2021, the rally in the CSI 300 this year is close to the 14.7 per cent gain recorded for the whole of 2024, which followed three years of losses.

Some analysts have pointed to Beijing’s campaign against deflation as a big driver of the rally. Others are more cautious, however, saying the campaign will only deliver higher earnings in some sectors.

Bush Chu, a China equity portfolio manager at Aberdeen, instead points to the amount of money flowing around China’s financial system, partly as a result of loose monetary policy aimed at tackling lacklustre growth.

“The overarching reason is easing monetary policy since last year,” said Chu. “Initially, we saw that liquidity go into the bond market. [But with] the 10-year yield dropping to an unattractive level, and with deposit rates coming down, there are fewer options.”

The moribund state of China’s real estate market, once a preferred investment choice for households, has simultaneously boosted the amount of cash looking for assets to invest in and narrowed the range of options available.

“[Households are] not borrowing to buy properties any more, so there’s plenty of excess cash in the system,” said Hao Hong, chief investment officer at Lotus Asset Management.

Despite the strong rally in A-shares, international investors have stayed largely on the sidelines. For them, the US currency’s weakness against the euro and the yen this year has delivered stronger gains in dollar terms for European and Japanese equities than for Chinese ones.

“We haven’t seen a significant impact from foreign flows,” said Vincent Che, head of equities at Ping An of China Asset Management (Hong Kong).

Domestic investors, however, have piled in. In a sign of their enthusiasm, the amount of margin trading, in which investors borrow money to buy stocks, has risen 19 per cent in the past two months to Rmb2.2tn ($308bn). That is the highest level since 2015, when Chinese state media urged retail investors to buy stocks as part of the government’s drive for economic growth — only for the rally to end in a stock market crash the following year.

But analysts said that since then, changes in stock market structure and more targeted government policies meant that the worst excesses of that bubble would not happen this time.

“It’s very different,” said Kinger Lau, chief China equity strategist at Goldman Sachs. “We are in a more moderate rally now.”

The amount of margin trading in relation to total market value, for example, is much lower than it was a decade ago.

“There’s nothing about Chinese valuations which to me look like they’re in a bubble,” said Alexander Treves, investment specialist at JPMorgan Asset Management. 

Analysts said massive co-ordinated share buying by Chinese state-owned funds and companies earlier this year had helped set the foundation for the current rally, by signalling a floor on asset prices. A policy last year mandating the country’s insurance industry to buy more equities has also supported the market.

China’s rally comes even as enduring deflation threatens to erode corporate earnings. Factory gate prices fell 3.6 per cent year on year in July and have fallen every month since October 2022.

This has prompted caution among some foreign investors, who see better opportunities for earnings growth in markets such as Japan, where bets that recent corporate governance reforms will bear fruit have pushed the Topix to record highs.

“I would much rather be focused on an earnings-driven market,” said John Woods, chief investment officer for Asia at Lombard Odier.

The consortium led by the UK engineer is in talks to finalise a contract with the government later this year

Rolls-Royce has held exploratory talks with advisers over financing options for its small nuclear business, including an initial public offering, amid growing investor excitement about the nascent technology.

The FTSE 100 engineer was selected to build Britain’s first fleet of small modular reactors in June as part of a plan by the Labour government to make the UK a world leader in the technology. The Rolls-Royce-led SMR consortium is in talks to finalise a contract with the government later this year.

The talks with investment houses and banks focused on future funding requirements of the business, according to two people familiar with the situation. “There is a live debate within the shareholder base,” said one of the people, noting that a listing at a high valuation would generate significant funding. 

Other members of the consortium include CEZ Group, the Czech utility, which holds a 20 per cent stake as part of a wider partnership with Rolls-Royce, the Qatar Investment Authority and BNF Resources. There were “different views” among shareholders, the person added. 

Discussions were at an early stage, with the Rolls-Royce board not in a rush to make any decision, said the other person. The UK government would be eager to ensure that any listing occurred in London, which has suffered a marked slowdown in flotations in recent years, they added.

Rolls-Royce SMR said the company was “not planning for, or in the process of launching an initial public offering”. 

Governments and investors are increasingly backing the potential of SMRs — nuclear reactors that are smaller than the gigawatt plants that have dominated the industry for decades — as a reliable source of low-carbon electricity.

UK government funding for Rolls-Royce, which is still subject to final agreements, involves support to help develop three small modular reactors amounting to almost 1.5 gigawatts of electricity capacity, enough for about 1.5mn homes.

The government has said it will pledge £2.5bn to small modular reactors during this three-year spending review period, helping to develop Rolls-Royce’s technology as well as develop sites for the reactors.

The renaissance in nuclear power has come amid the boom in power-intensive artificial intelligence and as governments worldwide seek to shore up domestic sources of energy.

Technology groups such as Amazon and Google have in recent months struck deals with SMR developers to help power the data centres needed for AI. Oklo, a nuclear start-up backed by OpenAI chief Sam Altman, is valued at more than $11bn.

Companies in the space eyeing possible IPOs include Florida-based Holtec International and Quantum Leap Energy, part of ASP Isotopes.

Quantum Leap said its decision to “pursue a US listing this year reflects both our confidence in the company’s growth trajectory and the appetite we are seeing from international investors”.

Nick Lawson, chief executive of investment group Ocean Wall, which is advising ASP Isotopes on the QLE spin-off, said he was seeing “extraordinary momentum at the intersection of nuclear technology and artificial intelligence”, which included several upcoming listings.

At least three nuclear energy developers are also seeking to raise money through mergers with special purpose acquisition companies.

Tufan Erginbilgiç, Rolls-Royce’s chief executive who has presided over a sweeping turnaround at the group since taking the helm in 2023, has become a vocal proponent of SMRs.

Recommended

News in-depthNuclear energy

Is the UK’s giant new nuclear power station ‘unbuildable’?

The engineering group, which remains the majority shareholder in the consortium, is not expected to make a decision on whether to proceed with an IPO until after it has signed the contract with the UK government, as any valuation would depend on the commercial details.

The London-listed company said this summer that it expected the SMR business, which employs about 800 people, to be free cash flow positive and profitable by 2030. 

Rolls-Royce last year sold a 20 per cent stake in the business to CEZ Group. Although terms of the deal were not disclosed, the utility was estimated to have paid hundreds of millions of dollars for the stake.

Troubled budget carrier re-enters chapter 11 process after prior reorganization failed to fix problems

Spirit Airlines has filed for bankruptcy for the second time in a year after an earlier reorganization failed to put it on stable financial ground.

The discount airline said Friday it needs to slash costs and make sweeping changes to its business as it grapples with flagging travel demand and challenges to the no-frills business model it once pioneered.

The airline will continue flying and selling tickets through the bankruptcy process. It made the chapter 11 filing in bankruptcy court in the Southern District of New York.

Spirit filed for chapter 11 last November after multiple failed attempts to merge with other airlines. It exited court protection in March after having exchanged nearly $800 million of corporate debt for equity.

Spirit didn’t renegotiate its aircraft leases during the previous process, leaving the airline stuck with high lease costs in addition to its remaining burden of more than $2 billion in debt. Spirit’s new management team, appointed as part of the previous restructuring, has determined the company needs another chapter 11 process. In addition, the buoyant travel market that was expected postbankruptcy didn’t materialize, said Robert Milton, chairman of Spirit’s board since earlier this year.

“The right thing to do is to get on with a proper restructuring, a complete revamp of the business plan, the network plan,” Milton said in an interview. “We just need to get on with fixing this airline properly and thoroughly.”

The airline is looking to shed some planes and retrench to core cities such as Fort Lauderdale, Orlando and Detroit. Other areas of focus will likely include discussing bargaining agreements with unions and addressing problems stemming from a Pratt & Whitney engine defect that has grounded dozens of planes.

Discount airlines and those that cater to leisure fliers have been struggling to compete with bigger airlines like United, Delta and American that have their own inexpensive basic economy tickets but can also lure passengers with premium perks and far-flung destinations.

Spirit has been retooling its offering to appeal to higher-end consumers willing to pay extra for a more comfortable flying experience—efforts the carrier said it plans to expand as it reduces costs across its businesses.

Spirit’s bankruptcy could provide another opening for a merger with Frontier—one of the industry’s longest-running will-they-or-won’t-they sagas. Milton and Spirit Chief Executive Dave Davis met earlier this week with Bill Franke, Frontier’s chairman, to discuss Spirit’s plans and the state of the industry broadly.

Frontier has pursued a deal with Spirit several times, including making a last-ditch offer to buy it in January while Spirit was going through chapter 11.

Frontier, which earlier this week announced a slew of new routes aimed at picking up Spirit customers, declined to comment Friday.

Its shares rose 19% after the close of trading. Shares of other airlines also climbed as Spirit, which once undercut rivals’ prices and pressured competitors to lower fares, signaled plans to scale back.

Milton said a deal with Frontier still makes logical sense, but Spirit has had inquiries from other airlines. He said Spirit has the right executive team in place, and that by going through the bankruptcy process now it can gain an advantage, whether it remains on its own or combines with another carrier.

“If you’re smart, get on with it, do it with a sharp knife and not a blunt instrument, you come out in a far better position,” he said.

Measure would give members of Congress 180 days to sell off individual stocks

WASHINGTON—A group of House lawmakers from across the political spectrum has agreed on a proposal that would ban members of Congress from trading individual stocks, which proponents said marks the first realistic shot at reining in the practice in more than a decade.

The bipartisan bill, set to be unveiled next week, gives lawmakers and their family members a period of 180 days from enactment to sell off individual stocks they own, including ones held in blind trusts, according to a copy of the text viewed by The Wall Street Journal. Future lawmakers would have 90 days after being sworn in to sell off their stocks, according to the proposal.

Lawmakers who don’t comply would face fines equal to 10% of the value of the investment and would be forced to give up any profit they received, according to the 10-page proposal. The measure has several exceptions, including stock given to spouses and dependent children as part of their employment compensation, according to the bill’s text.

The proposal was negotiated by Rep. Seth Magaziner (D., R.I.). Talks included conservative Reps. Chip Roy (R., Texas) and Tim Burchett (R., Tenn.), and progressives such as Reps. Alexandria Ocasio-Cortez (D., N.Y.) and Pramila Jayapal (D., Wash.).

Momentum has grown in recent months to limit stock trades by members of Congress and their family members. Tariff-related stock-market fluctuations have put a spotlight on trades by lawmakers. Proponents have said new restrictions could help restore trust in Congress.

Speaker Mike Johnson (R., La.) said earlier this year that he supports a ban on trading, but he hasn’t thrown his weight behind any particular proposal. Treasury Secretary Scott Bessent said recently he is willing to start pushing for an individual stock trading ban. “People shouldn’t come to Washington to get rich,” he said. “It brings down trust in the system.”

President Trump has said he is “conceptually” open to further restrictions.

Lawmakers in 2012 passed the Stock Act mandating more disclosures and explicitly outlawing trading on nonpublic information. But they have struggled to ban trading outright despite broad support for such a move in Congress and among voters.

Opponents to new stock-trading restrictions pointed out that insider trading is already illegal. Securities and Exchange Commission officials, along with the Justice Department, can investigate suspicious trades. Others said forcing lawmakers to comply with more onerous requirements and the taxes and other costs associated with selling off individual stocks places an unnecessary burden on them.

Only a third of House lawmakers and slightly less than half of senators traded individual stocks or held them as assets while in office last year, according to an analysis of financial-disclosure filings. It is more common for lawmakers to hold investments in traditional mutual funds, which invest money across a spectrum of stocks. Those funds wouldn’t be affected by the proposed trading ban.

Members of Congress have said they routinely get access to information, including from senior government officials during classified briefings, which could provide insight into where the stock market is headed. Lawmakers negotiate legislation that could affect publicly traded companies, and work with committee staff to call in top executives for oversight hearings.

“We absolutely have access to insider information here. There is no question about it,” Rep. Brian Fitzpatrick (R., Pa.), a moderate involved in the negotiations, said in an interview earlier this year. “So to not acknowledge that, I think, is very dishonest.”