Spirit Airlines announced earlier this week it has filed for bankruptcy protection and will attempt to reboot as it struggles to recover from the pandemic-caused swoon in travel and a failed attempt to sell the airline to JetBlue.
Spirit, the biggest U.S. budget airline, has lost more than $2.5 billion since the start of 2020 and faces looming debt payments totaling more than $1 billion over the next year, according to a report from The Associated Press.
Spirit said it expects to operate as normal as it works its way through a prearranged Chapter 11 bankruptcy process and that customers can continue to book and fly without interruption. All tickets, credits and loyalty points remain valid, the airline said, as are affiliated credit cards and other membership perks.
In a press release posted to its website, Spirit Airlines, Inc. said it has received approval from the United States Bankruptcy Court for the Southern District of New York for all of its requested “first day” relief in support of its prearranged chapter 11 process.
Among other benefits, this relief ensures that Spirit’s Team Members, vendors and other counterparties will continue to be paid in full in the ordinary course of business and that Guests can continue to book and fly without interruption and use all tickets, credits and loyalty points as normal.
“We are pleased with the Court’s decision to grant all of this important relief, which affirms our ability to continue operating seamlessly during our streamlined restructuring process,” said Ted Christie, Spirit’s President and Chief Executive Officer. “I want to thank our Guests, Team Members and business partners for their continued support as we position Spirit for long-term success. We look forward to emerging as a stronger company and continuing to execute on our strategic initiatives to transform our Guest experience.”
As previously announced, Spirit entered into a restructuring support agreement (the “RSA”) supported by a supermajority of its loyalty and convertible bondholders on the terms of a comprehensive balance sheet restructuring that would equitize $795 million of funded debt and provide $350 million of fully committed equity capital upon emergence. The restructuring will be effectuated through a plan of reorganization (the “Plan”) that is subject to confirmation by the Court. The Company expects to emerge from its streamlined chapter 11 process in the first quarter of 2025.
Shares of Spirit Airlines Inc., based in Miramar, Florida, dropped 25% on Friday, after The Wall Street Journal reported that the airline was discussing terms of a possible bankruptcy filing with its bondholders, according to the AP report.
