Latest Spirit Airlines News, Bankruptcy Updates and More

According to the latest Spirit Airlines news reports, Spirit Airlines has filed for Chapter 11 bankruptcy protection as of November 18, 2024, over $9 billion in debt. Spirit Airlines’ stock performance this year has been poor with shares down over 90% as of mid-November.

The filing took place on November 18, 2024 in the United States Bankruptcy Court for the Southern District of New York.

Spirit Airlines has engaged several advisors to assist in its restructuring process. Davis Polk & Wardwell LLP is serving as the company’s restructuring counsel, while Akin Gump Strauss Hauer & Feld LLP represents the ad hoc group of loyalty noteholders.

Additionally, Paul Hastings LLP is acting on behalf of convertible bondholders. The financial advisory landscape includes Alvarez & Marsal, which is providing restructuring advice and Perella Weinberg Partners LP as the investment banker for Spirit.

Evercore is advising the ad hoc group of loyalty noteholders and Ducera Partners LLC is assisting the convertible bondholders.

Wilmington Trust, the largest creditor holding $500 million in convertible unsecured notes due in 2026.

US Government, the second-largest creditor with an unsecured term loan totaling $136 million from the Treasury Department.

According to the latest Spirit Airlines news reports, Spirit has reached an agreement with its bondholders for a $350 million equity investment and a commitment of $300 million in debtor-in-possession financing to support operations during the bankruptcy process.

Additionally, they plan to convert $795 million of funded debt into equity.

The estimated recovery rate for creditors in Spirit Airlines’ bankruptcy will depend on the final restructuring plan approved by the court. Generally, recovery rates can vary based on the airline’s asset liquidation value and the total amount of debt.

Creditors might expect a recovery rate that could range from 10% to 50% of the amounts owed.

Spirit has reached an agreement with bondholders to restructure its debts and secure funding during the bankruptcy process, which is expected to last until early 2025.

The airline plans to emerge from bankruptcy in a stronger financial position with assurances that all existing tickets, credits and loyalty points remain valid for customers.

Spirit plans to continue normal operations without disruption. Customers can still make reservations and travel as scheduled. Experts say that the airline may reduce its flight schedule, which could lead to changes or cancellations in some routes.

According to the latest Spirit Airlines news reports, Spirit Airlines has not posted a profit since 2019 and has faced mechanical issues with its fleet. The company was originally established in 1964 and transitioned into an airline in the early 1980s.

The bondholders have committed to providing $350 million in equity investment and $300 million in debtor-in-possession financing.

The agreement includes a plan to delever the airline’s balance sheet by equitizing $795 million of funded debt.

Spirit Airlines has assured customers that all flights, ticket sales and operations will continue as normal during the bankruptcy proceedings. Existing tickets, credits and loyalty points will remain valid.

Spirit Airlines anticipates completing the restructuring process and emerging from bankruptcy by the first quarter of 2025. The company has filed a proposed Plan of Reorganization with the court, which incorporates the terms of the RSA.

Spirit has assured customers that it will continue to operate normally throughout the bankruptcy process. Flights will remain scheduled and customers can continue to book tickets without interruptions.

While Spirit plans to maintain normal operations, it has indicated that it may reduce its flight schedule by nearly 20% in the upcoming months compared to the same period last year. This reduction plans to help stabilize fares but may lead to fewer available flights.

Spirit has filed for a prearranged Chapter 11 bankruptcy, which means it has already negotiated a restructuring plan with its bondholders before filing.

The airline has reached an agreement with its bondholders that includes a $350 million equity investment and $300 million in debtor-in-possession financing. Additionally, Spirit plans to equitize $795 million of funded debt.

According to the latest Spirit Airlines news reports, Spirit has already begun measures such as postponing the delivery of new aircraft and selling some planes.

Spirit Airlines plans to sell some of its aircraft to reduce debt during the bankruptcy process. Specifically, the airline announced that it intends to sell 23 older planes, which is projected to save approximately $80 million.

Spirit Airlines reported total revenue of approximately $5.13 billion for the trailing twelve months ending in June 2024, a 7.07% decline year-over-year. For the second quarter of 2024 alone, the airline’s revenue was about $1.28 billion, a 10.6% decrease compared to the previous year.

Reasons Behind Spirit Airlines Bankrupcy, As of Spirit Airlines News Reports

Since early 2020, Spirit Airlines has incurred losses exceeding $2.5 billion with the airline not turning a profit since 2019. Spirit faces debt payments totaling over $1 billion within the next year.

A federal judge’s decision to block Spirit’s proposed merger with JetBlue Airways earlier this year hindered its recovery efforts.

Spirit has faced rising operational costs particularly in labor, which have squeezed its profit margins. Competing airlines have adopted similar low-cost strategies.

The airline has experienced mechanical problems with Pratt & Whitney engines that have grounded about 10% of its fleet. This has led to operational disruptions and additional costs related to repairs and maintenance.

Despite a slight increase in passenger numbers, revenue per mile from fares has decreased down nearly 20%.

Spirit Airlines has not disclosed any plans to lay off employees during the bankruptcy process. The airline has assured that employee pay and benefits will remain unaffected throughout the Chapter 11 proceedings.

According to the latest Spirit Airlines news reports, Employees will continue to receive their salaries and benefits as normal.

Spirit Airlines has stated that it will continue to pay its vendors, aircraft lessors and holders of secured aircraft indebtedness in the ordinary course of business.

Spirit Airlines Stock Performance (November 2024), As of Spirit Airlines News Reports

As of the latest trading data, Spirit Airlines’ stock (ticker: SAVE) is priced at approximately $1.08, a decline of over 90% this year. The stock has fluctuated, trading as high as $17.02 in the past year but currently sits near its all-time lows.

Following the bankruptcy announcement shares saw a slight uptick of about 3.7% in premarket trading, but overall sentiment remains bearish. Analysts have rated Spirit Airlines stock as a sell, with no buy ratings noted among 24 analysts surveyed.

Spirit Airlines has struggled with declining revenues, reporting a decrease of over 10% year-over-year in its recent quarter. This is the fourth consecutive quarter of revenue decline.

The airline carries approximately $3.3 billion in long-term debt, overshadowing its market capitalization of around $118 million.

Analysts project a median price target of $9.45 for Spirit Airlines stock with estimates ranging from as low as $2.00 to as high as $25.00.

According to the latest Spirit Airlines news reports, Spirit Airlines currently has a market capitalization of approximately $118.28 million.

Spirit reported a 2% increase in the number of passengers flying in the first half of 2024 compared to the same period in 2023, the airline is experiencing a 10% decrease in revenue per mile and nearly a 20% drop in fare revenue per mile.

Airlines	Market Cap (USD)
Spirit Airlines	$118.28 million
Azul	$1.13 billion
Navigator	$1.17 billion
Sun Country Airlines	$1.32 billion

Spirit Airlines has announced operational changes as it struggles with financial difficulties including the furlough of over 330 pilots and the postponement of new Airbus jet deliveries.

Effective January 31, 2025, Spirit will furlough approximately 330 pilots as part of a strategy to cut costs. This decision follows earlier announcements in which the airline had already furloughed around 240 pilots and downgraded 120 captains to first officers.

The airline is aiming to save about $80 million in annual costs through these workforce reductions and other measures.

According to the latest Spirit Airlines news reports, Spirit Airlines has also decided to defer deliveries of new Airbus jets. This move is intended to conserve cash as the airline navigates its financial restructuring efforts, which have included selling older aircraft to improve liquidity.

The deferral of aircraft deliveries is part of a plan that includes cutting unprofitable routes and reducing overall capacity by 20% year-on-year in the fourth quarter of 2024 with a projected decrease in capacity for 2025 as well.

The airline has faced quarterly losses and failed merger attempts, a proposed $3.8 billion merger with JetBlue Airways that was blocked due to antitrust concerns.

Spirit Airlines has not reported a profit since 2019 with cumulative losses exceeding $2.5 billion since early 2020.

In the first half of 2024 alone, Spirit reported losses nearing $360 million .Spirit Airlines is facing over $1 billion in looming debt payments due in 2025.