Spirit Airlines Airbus A320 taxi at Los Angeles International Airport after arriving from Boston in Los Angeles, California on September 1, 2024.
Kevin Carter | Getty Images News | Getty Images
WHITE Plains, N.Y. — Spirit Airlines is making “great progress” to revitalize the airline, career restructuring attorney Marshall Hubner said at a court hearing Tuesday.
The struggling budget airline has reached an agreement with a portion of Debtholders on debtor funding of up to $475 million. That’s $150 million from major aircraft lenders, as well as lifelines that bankrupt companies can use to continue operating. The contract is subject to court approval.
Spirit filed Chapter 11 Bankruptcy Protection last month in less than a year after high costs, low demand and many other prolonged issues.
Carriers have raced to significantly reduce costs, and recently announced plans to cut 40 routes and cut about a third of flight attendants. The airline is in talks with the pilot association and is calling for a cut of about $100 million from its group. Last month, Spirit said it had cut its entire revolver’s $275 million.
Huebner, a partner at Davis Polk & Wardwell, said at U.S. Bankruptcy Court on Tuesday that anyone who is pessimistic about the prospect of a struggling carrier should say it is “less” and observe what it is doing.
Spirit said Tuesday that it will have immediate access to liquidity of $120 million after a motion to use cash collateral was granted.
Spirit plans to refuse leases on 27 Airbus narrow body aircraft from Ireland-based leasing giant aercap25 planes are grounded or grounded for inspection. Pratt & Whitney Engine defects, Huebner said in court. Aercap will pay Spirit to $150 million as part of the deal. Beneath that, Spirit plans to deliver 30 more planes, the company said.
Aercap did not immediately comment on the plan.
Spirit also said it plans to reject 12 airport leases and 19 ground processing agreements to reduce carriers and reduce costs, a court-approved plan.
Another hearing is scheduled for October 10th. If the debtor’s owned funds are approved, $200 million will be available immediately.
“These are important steps in a short period of time to build a stronger spirit and secure a future with valuable travel options for American consumers,” Spirit CEO Dave Davis said in a news release Tuesday. “There’s more work to do, but I’m grateful to the stakeholders who stepped up to help us during the restructuring.”
Spirit’s senior collateral memo holders include Citadel Americas, Ares Management, Alliancebernstein, Arena Capital Advisors and Pacific Investment Management Company.
Spirit competitors United Airlines, Frontier Airlines, JetBlue Airways and Allegiant Airlines We announced a new route in hopes of attracting spirit customers. United CEO Scott Kirby went a step further and said he hopes Spirit will go out of business earlier this month.
Spirit has struggled for years with engine recalls, failed acquisitions by JetBlue, higher costs, and changing consumer preferences for more premium products. The Dania Beach, Florida-based airline has changed its business strategy to offer luxury products in recent months.
