Ultra-low-cost carrier Spirit Airlines has reassured customers of its future despite filing for bankruptcy protection in the United States (US) following a challenging year.
On November 18, 2024, Spirit Airlines confirmed that the carrier has entered a prearranged Chapter 11 process in the US Bankruptcy Court for the Southern District of New York.
A restructuring support agreement was backed by Spirit’s bondholders with a comprehensive restructuring designed to secure the airline’s future.
“The restructuring 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,” a spokesperson for Spirit Airways said.
As part of the chapter 11 process, bondholders will commit to a $350 million equity investment and $300 million in debtor in possession (DIP) financing.
Spirit said that the additional funds are “expected to further support the Company through the chapter 11 process”.
Spirit reassured customers that they can “continue to book and fly without interruption and can use all tickets, credits and loyalty points as normal” and that employees’ wages will not be impacted.
As a result of the Chapter 11 filing, Spirit expects to be delisted from the New York Stock Exchange in the near term.
“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,” Ted Christie, Spirit’s President and CEO, said. “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.
Christie added: “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.”
Spirit has suffered from ongoing maintenance issues surrounding its Pratt & Whitney geared turbofan engines and a prized merger with JetBlue earlier this year fell through at the final hurdle.
Earlier in November 2024, merger talks with Frontier Group Holdings reportedly also broke down.