The Florida-based airline announced their filing for Chapter 11 bankruptcy status on Monday, November 18, 2024.
Restructuring Deal Calls for $650 Million in Support from Bondholders and Partners
According to airline leadership, their restructuring support agreement is supported by “a supermajority of Spirit’s loyalty and convertible bondholders on the terms of a comprehensive balance sheet restructuring.” Their plan calls for $650 million in support from the current bondholders, including $350 million from an equity investment, and $300 million in debtor-in-possession financing. In turn, Spirit says they will “complete a deleveraging transaction to equitize $795 million of funded debt.”
Investors have speculated since October that Spirit would declare bankruptcy after their planned merger with JetBlue was shut down in federal court. Although the filing is a setback for the airline, they are optimistic that they can re-emerge from bankruptcy by the first quarter of 2025.
“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,” Ted Christie, president and CEO at Spirit, said in a press release. “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.”
Despite their plans advancing, Spirit leadership says they expect their stock to be delisted from the New York Stock Exchange in the coming weeks. Furthermore, they expect shares to be cancelled and to have no value as part of the restructuring.
In the meantime, the airline says nothing will change for passengers. There are no planned cancellations or outages for the carrier, and Spirit is still issuing and honoring credits and loyalty points as usual. Employees, vendors, and aircraft lessors will continue to get paid as normal.
The airline has setup a website to answer questions about the process at https://www.spiritgoforward.com/.
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Source: frugal travel guy