Shareholders of Florida-based Spirit Airlines are expected to have their shares wiped if the ultra-low-cost carrier
proceeds with a robust restructuring deal
. The airline, which is doing its best to avoid bankruptcy, recently filed for Chapter 11 after a failed bid to merge with Frontier Airlines failed.
Cancelling shares with no chance of compensation
Spirit Airlines has been looking for an investment partner for months after its revenue plunged. Its failed bid to merge with firstly, JetBlue, and now Frontier, has never eventuated, and the airline’s future is now looking gloomy.
Phone: Markus Mainka | Shutterstock
The airline publically announced on Tuesday that shareholders are expected to see their investment wiped out of the carrier. The airline is looking to restructure by controlling the carrier’s bondholders. Spirit has filed for Chapter 11 bankruptcy protection as a final resort, according to the airline’s lawyer, Marshall Heubner.
According to Bloomberg, shareholder letters have been sent to Judge Sean Lane, who has widely criticized the airline’s CEO for supporting restructuring deals that would see the airline shareholders lose their investment. The United States Justice Department watchdog has said that the airline’s shareholders have requested a formal committee meeting before making widespread decisions. On Tuesday, shares were trading at around $0.60.
Related
Spirit Airlines Asks Bankruptcy Court To Shorten Notice On Sale-Leaseback Of Up To 4 Airbus A321neos
The four Airbus A321neo aircraft are scheduled for delivery between December 19 and April 2025.
A tough year for Spirit Airlines
The airline has stated that it regrets that Spirit shareholders could stand to lose their investment in the airline. However, the company is out of money, and the market has been aware of this for some time. Spirit Airlines
is insolvent; unless drastic changes are made, the airline will collapse.
Photo: YES Market Media | Shutterstock
This week, Spirit Airlines was approved to proceed with its restructuring plan, which would see bondholders exchange $795 million of the carrier’s debt for equity in the beleaguered carrier. The carrier’s executive team overwhelmingly supports this plan. The proposal will be put forward to Judge Sean Lane, with a decision expected by January 29.
Sale of Airbus A320 and A321 aircraft
This week, the United States Bankruptcy Court granted Spirit Airlines definite approval for the completion of the sale of 23 Airbus A320 and A321 aircraft. Earlier this month, this same court approved the sale of five aircraft with consideration to be made for the remaining 18. This approval will allow significant funds to be reinvested into the airline’s future and provide a clear path for the airline to finalize its transaction for sale.
Photo: Ken Wolter | Shutterstock
The agreement, which will see liquidity reinvested into the carrier, will optimize the airline’s fleet and allow it to consolidate and streamline its operations.
History of Spirit Airlines
Spirit Airlines is an ultra-low-cost carrier that operates a fleet of around 200 aircraft to 91 domestic and international destinations. The airline originally commenced operations as Charter One Airlines, a Detroit-based charter operator that provided unique travel packages to entertainment destinations like Las Vegas and Atlantic City.
Photo: MKPhoto12 | Shutterstock
Today, the airline operates across the United States, with a growing Caribbean and Latin America network. Operating bases for the all-narrowbody Airbus fleet include:
- Atlanta
- Chicago–O’Hare
- Dallas/Fort Worth
- Detroit
- Fort Lauderdale
- Houston–Intercontinental
- Las Vegas
- Miami
- Newark
- Orlando
Not only is the airline easily recognizable at the airport with its bright yellow livery, but also the ultra-low-cost fare model has boosted its fame. Spirit Airlines is renowned for its low-frills approach, charging passengers for meals, drinks, and any larger carry-on pieces of baggage, in addition to seat selection and checked bags.
Photo: lorenzatx | Shutterstock
Historically, the carrier had operated a range of the McDonnell Douglas
DC and MD aircraft; however has since transitioned to the Airbus family of aircraft. Currently, the airline operates a fleet of Airbus A319-100 (soon to be retired), A320-200, A320neo (the largest type operator in the United States), A321-200, and Airbus A321neo
.
Related
How Will Spirit Airlines Move Forward Amid Bankruptcy?
An industry expert shared his opinions with us.