The United States Bankruptcy Court for the Southern District of New York has confirmed the financial reoganisation plan put forward by Spirit Airlines (NK, Fort Lauderdale International), paving the way for the carrier to exit Chapter 11 proceedings. Judge Sean Lane approved the airline’s proposal during a February 20, 2025, hearing.

Under the plan, the company will cancel its existing equity shares and hand ownership to lenders and bondholders, including Citadel Advisors, Pacific Investment Management Co. and Western Asset Management Co.

The approval allows Spirit Airlines to equitise USD795 million of funded debt. It will also allow the company to receive USD350 million of new equity investment and issue USD840 million in fresh senior secured debt issued to existing bondholders after exiting Chapter 11. Spirit Airlines will also sign for a new revolving credit facility of up to USD300 million. Vendors, lessors, and holders of secured aircraft indebtedness will not be impaired. Spirit’s lenders supported the reorganisation plan.

“Today’s approval is a major milestone as we progress toward the successful conclusion of our in-court process,” said Spirit Airlines President and CEO Ted Christie. “Throughout this process, we’ve had virtually unanimous support from our bondholders, who recognise Spirit’s value and potential.”

The judge approved the reorganisation plan despite objections from the Securities and Exchange Commission and the Office of the US Trustee. The two Department of Justice agencies said the plan improperly voided shareholders’ and creditors’ legal claims against non-debtors, including Spirit’s lenders and its executives. The agencies argued it was unclear whether the creditors had properly consented to the releases. However, the judge said he would allow creditors to opt out of the release scheme and that this would be formalised in his written ruling, which will be released in March.

“All objections, responses, statements, reservation of rights, and comments in opposition to approval of the disclosure statement or confirmation of the plan have been withdrawn with prejudice in their entirety, waived, settled, or resolved prior to the combined hearing, or otherwise resolved,” the judge said.

Christie said Spirit’s senior management would focus on reducing costs while advancing the airline’s strategic initiatives. He also thanked the airline’s employees. Spirit Airlines has continued to operate normally throughout the Chapter 11 process, flying to 80 airports across 14 countries. The airline expects to exit Chapter 11 “in the coming weeks.”

Spirit Airlines filed for Chapter 11 in November 2024 after accruing debts of around USD1.6 billion and following a failed bid to merge with JetBlue Airways (B6, New York JFK). At that time, the airline estimated it would emerge from restructuring by the end of the first quarter of 2025.

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