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Spirit Airlines has received approval from the US Bankruptcy Court for the Southern District of New York for a debtor-in-possession (DIP) financing package of up to $475 million as part of its ongoing Chapter 11 restructuring process. The approval, granted to the company’s plan backed by existing bondholders, marks a key step toward stabilizing the low-cost carrier’s financial position and ensuring continued operations. I had previously written about these plans as well as some of the many routes that Spirit is cutting.
The multi-tranche DIP financing gives Spirit liquidity to support normal business operations while it reorganizes under Chapter 11. $200 million is immediately available to provide near-term cash flow relief as the airline works to maintain schedules, meet customer demand, and pay employees. The financing arrangement represents an important vote of confidence from bondholders and positions the airline to navigate short-term challenges while pursuing longer-term strategic and operational improvements.
In addition to the DIP approval, Spirit also received court authorization for its agreement with AerCap Ireland Limited (the airline’s largest aircraft lessor). The deal includes a $150 million payment from AerCap to Spirit, the termination of 27 aircraft leases, and the resolution of all outstanding disputes between the two companies. The agreement is expected to yield significant cost savings for Spirit, cutting hundreds of millions of dollars in operating expenses and providing a framework for future fleet efficiency. It also includes provisions for the delivery of 30 new aircraft, signaling Spirit’s intent to modernize and streamline its fleet once it emerges from restructuring.
Spirit Airlines continues to work with additional lessors as part of a broader fleet optimization strategy aimed at reducing lease expenses, retiring older or less efficient jets, and focusing on aircraft that best fit its network and cost structure.
Dave Davis, President and Chief Executive Officer of Spirit Airlines, said:
We are pleased to have reached another significant milestone in our restructuring, which represents continued progress toward securing a successful future for Spirit. With these approvals in place, we are better equipped to build a stronger airline that delivers unmatched value to American consumers. We thank our stakeholders for their support and the Spirit team for their dedication and resilience during this process.”
Anthony’s Take: I’m still rooting for Spirit. With the new financing and the AerCap agreement approved, it has achieved two major milestones in the restructuring process. These developments are designed to stabilize operations, lower costs, and pave the way for a stronger, more competitive airline once it exits Chapter 11.
(Image Credits: Spirit Airlines.)
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