Advertiser & Editorial Disclosure: The Bulkhead Seat earns an affiliate commission for anyone approved through the links below. This compensation may impact how and where links appear on this site. We work to provide the best publicly available offers to our readers. We frequently update them, but this site does not include all available offers. Opinions, reviews, analyses & recommendations are the author’s alone, and have not been reviewed, endorsed, or approved by any of these entities.
Just about every news source and blogger has chimed in this weekend around the supposed demise of Spirit Airlines that was supposed to occur yesterday. I wasn’t buying it and even purchased tickets for two flights on the low-cost carrier for this month and February. The Air Current first shared the premise that the end might be near, but I’m hopeful that Spirit will persist.
The airline has filed for bankruptcy twice within the past year while battling severe financial pressures. According to The Air Current, Spirit’s competitors had spent the weekend preparing contingency plans for an abrupt shutdown that could have occurred as early as yesterday. According to the report, several airlines were drafting supplemental flight schedules to accommodate passengers who could be stranded if Spirit ceased operations. Industry executives expressed doubt that the carrier would be able to secure the additional financing needed to remain afloat, which raised alarms ahead of one of the busiest travel periods of the year.
Despite these concerns, Spirit Airlines publicly denied that it was preparing to halt operations. On Friday, the airline issued a statement asserting that it remained fully operational and that it was “business as usual.” Saturday passed without interruption to Spirit’s schedule, yet the underlying financial concerns leave lingering uncertainty about what may come next. An emailed statement from Spirit to The Air Current reads:
There is no truth to any rumors that we are preparing to cease operations. It is business as usual at Spirit and flights continue to operate normally. We are working closely with our debtor-in-possession (DIP”) providers and other key stakeholders on a wide variety of issues to support the financial needs and future of the business, as we have been throughout our restructuring process. These ongoing discussions remain productive.”
Spirit had 2,710 flights scheduled between yesterday, December 14th and December 20th. These flights would be thrown into jeopardy if the airline were to shut down abruptly. For now, operations continue, but the heightened attention from competitors and analysts underscores how precarious the situation has become. Travelers booked in the coming weeks may find themselves watching developments closely as Spirit works to stabilize its future. The airline did get its pilots and flight attendants to ratify a contract this week while announcing that it would not be furloughing pilots next month. It has returned aircraft, sold gates to American Airlines, and is working hard to try to get its finances in order.
Anthony’s Take: I don’t believe that the end is as imminent as many are claiming. I think Spirit might shrink further, could get acquired, or might shut down in the future if all other avenues are exhausted. That said, I don’t see it happening before next year. That’s my personal opinion and I could be wrong, but my money is still on Spirit.
(Image Credits: Spirit Airlines.)
User Generated Content Disclosure: The Bulkhead Seat encourages constructive discussions, comments, and questions. Responses are not provided by or commissioned by any bank advertisers. These responses have not been reviewed, approved, or endorsed by the bank advertiser. It is not the responsibility of the bank advertiser to respond to comments.
Advertiser & Editorial Disclosure: The Bulkhead Seat earns an affiliate commission for anyone approved through the links above This compensation may impact how and where links appear on this site. We work to provide the best publicly available offers to our readers. We frequently update them, but this site does not include all available offers. Opinions, reviews, analyses & recommendations are the author’s alone, and have not been reviewed, endorsed, or approved by any of these entities.
2 comments
The entirety of this goes back to the Air Current which seems to have taken a comment by someone at another airline that was malicious in intent.
Some people have really misinterpreted the court filings, or rather took one person’s irresponsible headline and ran with it. Notice no national media carried this.
Yes, Dec 13th was a milestone date. By that day, concessions had to be secured and cuts required by the DIP creditors to continue receiving the emergency funding (the DIP loans). The votes by AFA and ALPA for concessions completed on the 11th enabled Spirit to fall below the lender-approved budget – a 13 week cash flow budget put on Spirit. Exceeding that amount would put the company in technical default and due on the loans. They did not — Spirit met the RSA milestone… so non-event.
On Friday (Dec 12th), the judge moved the timeline to file the bankruptcy plan from Dec 29th to April 28th due to Spirit staying within the guardrails, so to speak, and making the cuts needed on the agreed-upon time. The creditors then have until something like June 20th to vote on the plan.
The DIP was such at $200 million was funded initially as a sort of emergency loan. Another $275 million could be drawn in the different tranches including Nov 7th (which was when the creditors said “give us labor concessions or we stop the money” as a lever). December 13th and some future milestone dates are just points where there isn’t money due… just continued negotiations with the bondholders. On those dates, like yesterday, the DIP lenders with new money loans can convert a portion of the secured notes into DIP claims which moves them up the repayment hierarchy.
I feel like many bloggers are gunning for them to go under.