Spirit Airlines might be experiencing financial turbulence, but don’t write off this carrier just yet.
At a hearing before the U.S. Bankruptcy Court for the Southern District of New York, representatives for Spirit Airlines revealed the financially troubled carrier has negotiated a multi-tranche debtor-in-possession financing facility of up to $475 million from existing bondholders.
The package, which remains subject to court approval at an Oct. 10 hearing, would provide $200 million in immediate liquidity once approved. Spirit has also secured interim access to $120 million of cash collateral.
In a significant move toward fleet optimization, Spirit reached an agreement with its largest aircraft lessor, AerCap Ireland Limited. Under the deal, AerCap will pay Spirit $150 million while the carrier will reject leases on 27 aircraft. The arrangement is expected to reduce operating costs by hundreds of millions of dollars and resolve all outstanding claims and disputes between the two companies. The agreement also provides for the future delivery of 30 aircraft and will be reviewed at the Oct. 10 hearing.
The court has already approved Spirit’s motion to reject 12 airport leases and 19 ground handling agreements as part of its ongoing network rationalization strategy. The airline said it continues active discussions with additional lessors to secure further liquidity and reduce costs, while also working with labor unions to identify savings in collective bargaining agreements.
“These are significant steps forward in a short period of time to build a stronger Spirit and secure a future with high-value travel options for American consumers,” Spirit CEO Dave Davis said in a statement. “While there’s more work to be done, we’re grateful to our stakeholders who have stepped up to support us during the restructuring. We remain focused on delivering a safe, reliable operation, and I’m incredibly proud of our Team Members for continuing to rise to the occasion and take great care of our Guests.”
The restructuring plan, which began when Spirit filed for Chapter 11 protection earlier this year, is aimed at cutting costs, rightsizing the fleet, and ensuring the carrier remains a competitive low-cost option in the U.S. market.
The moves come as Spirit continues navigating a turbulent period that has raised concerns for both investors and travelers. As previously reported, the airline has struggled under mounting debt and an unprofitable route network, leading to its Chapter 11 filing earlier this year.
While today’s announcements show progress, advisors should continue to exercise caution when booking clients on Spirit until its restructuring path is clearer—particularly in light of Icelandic low-cost carrier PLAY Airlines’ abrupt shutdown earlier this week, which stranded passengers on both sides of the Atlantic.
For more information, visit www.spiritrestructuring.com.
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