Spirit Airlines reaches ‘major milestone’ in Chapter 11 exit talks
Spirit Airline has passed a ‘major milestone’ in its attempts to restructure and emerge from Chapter 11 proceedings.
The holdings company behind the embattled LCC has reached an agreement in principle with its Debtor‑in‑Possession (DIP) lenders and secured noteholders on key terms for a restructuring support agreement.
The agreement will give Spirit the financial backing needed to complete its restructuring, optimise its fleet and network, and reduce costs. The company expects to emerge from Chapter 11 in ‘late spring or early summer’ as a stronger, more efficient airline.
“This agreement in principle is the result of months of hard work and allows Spirit to move toward completing its transformation,” said Dave Davis, President and Chief Executive Officer. “Spirit will emerge as a strong, leaner competitor that is positioned to profitably deliver the value American consumers expect at a price they want to pay.”
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As part of the restructure, the airline will move away from its ‘pure play’ LCC roots, and instead will expand its First and Premium Economy offerings. The carrier will also make enhancements to its Free Spirit and co-brand loyalty programmes.
The network will also be reduced to routes with the highest load factor and to periods of the strongest demand. This includes higher aircraft use during peak days while reducing off-peak flying, as well as the flexibility to adjust to seasonal demand.
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Upon emergence from Chapter 11, Spirit expects debt and lease obligations will be reduced from $7.4 billion pre-filing to approximately $2.1 billion post-emergence.
“I am grateful to our Team Members for their dedication and unwavering commitment to our Guests throughout our restructuring,” Davis added. “I also want to thank our guests for continuing to choose Spirit to connect them to the people and places that matter most.”
During the restructuring process passengers can continue to book, travel and use tickets, credits and loyalty points as normal.
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