Spirit Airlines exits bankruptcy with private deal
Spirit Airlines has obtained court permission to exit Chapter 11 bankruptcy under a $795 million debt reorganization plan. The plan involves exchanging existing debt for shares of stock, effectively giving control to the airline’s largest lenders, including Pacific Investment Management Company, UBS Asset Management, and Citadel Advisors. Furthermore, Spirit plans to raise $350 million through the issuance of new equity shares, with the aim of finishing the restructuring and becoming a private company by the end of the first quarter of 2025.
This follows Spirit’s rejection of several buyout proposals from Frontier Airlines, the latest of which was deemed “woefully inadequate financially.” Spirit has instead chosen to pursue its own restructuring plan, focusing on enhancing financial flexibility and customer experience. CEO Ted Christie stated that the company will “emerge as a stronger airline with the financial flexibility to continue providing guests with improved travel experiences and more value.”
In spite of the reorganization, Spirit Airlines continues to have serious problems. The carrier reported substantial operating losses in recent quarters, and industry analysts are worried about its long-term viability as a standalone carrier. The success of Spirit’s reorganization effort will depend on its capacity to turn around financial losses and adjust to the competitive environment of the airline sector.
