Spirit Airlines has filed for Chapter 11 bankruptcy to restructure its operation, and expects to be delisted from the New York Stock Exchange in the near term.
The low-cost carrier in a statement says it has entered into a restructuring support agreement (RSA) that is “supported by a supermajority of Spirit’s loyalty and convertible bondholders on the terms of a comprehensive balance sheet restructuring”.
“The restructuring,” it adds, “is expected to reduce Spirit’s debt, provide increased financial flexibility, position Spirit for long-term success and accelerate investments providing Guests with enhanced travel experiences and greater value.”
Notably, Spirit has received backstopped commitments for a $350 million equity investment and $300 million in debtor-in-possession financing from existing bondholders
The airline expects to continue operating its business and assures that guests can continue to book and fly “without interruption”.
“I am pleased we have reached an agreement with a supermajority of both our loyalty and convertible bondholders on a comprehensive recapitalization of the Company, which is a strong vote of confidence in Spirit and our long-term plan,” Spirit president and CEO Ted Christi said after the carrier filed its Chapter 11 paperwork in the US Bankruptcy Court for the Southern District of New York.
“This set of transactions will materially strengthen our balance sheet and position Spirit for the future while we continue executing on our strategic initiatives to transform our guest experience, providing new enhanced travel options, greater value and increased flexibility. I’m extremely proud of the Spirit team’s hard work and dedication, which is key to our sustained progress in advancing our business and delivering for our guests.”
The airline hopes to emerge from the restructuring vehicle in the first quarter of 2025.
Spirit had previously hoped to be acquired by and merge with JetBlue Airways, but the Justice Department thwarted the move. In January, the U.S. District Court for the District of Massachusetts formally blocked the transaction, saying it violated “the core principle of antitrust law: to protect the United States’ markets – and its market participants – from anticompetitive harm”.
