Spirit Airlines has entered into a restructuring support agreement (RSA) supported by a supermajority of Spirit’s loyalty and convertible bondholders on the terms of a comprehensive balance sheet restructuring. The restructuring is expected to reduce Spirit’s debt and provide increased financial flexibility.
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In connection with the RSA, Spirit has received backstopped commitments for a $350 million equity investment from existing bondholders and will complete a deleveraging transaction to equitize $795 million of funded debt. To implement the RSA, the Company has commenced a prearranged chapter 11 process in the United States Bankruptcy Court for the Southern District of New York (the “Court”). Existing bondholders are also providing $300 million in debtor-in-possession (“DIP”) financing, which, together with Spirit’s available cash reserves and cash provided by operations, is expected to further support the Company through the chapter 11 process.
Spirit expects to continue operating its business in the normal course throughout this prearranged, streamlined chapter 11 process. Passengers can continue to book and fly without interruption and can use all tickets, credits and loyalty points as normal. The chapter 11 process itself will not impact Team Member wages or benefits, which are continuing to be paid and honored for those employed by Spirit. Vendors, aircraft lessors and holders of secured aircraft indebtedness will continue to be paid in the ordinary course and will not be impaired.
As part of the chapter 11 process, Spirit is filing a proposed Plan of Reorganization that incorporates the agreed terms of the RSA and is subject to confirmation by the Court. The Company has received support from a supermajority of its loyalty and convertible bondholders and expects to emerge from a streamlined chapter 11 process in the first quarter of 2025.