The carrier is as much as 20 per cent smaller than it was a year ago, based on flying capacity
[TEXAS] Spirit Airlines emerged from bankruptcy protection on Wednesday (Mar 12) with “significantly less debt and greater financial flexibility”, meeting its goal to complete a reorganisation by the end of this quarter.
As part of the restructuring, Spirit received a US$350 million equity infusion from existing investors, according to a statement. The funds will be used to support new initiatives that diverge from its bare-bones fare model and add premium offerings in an effort to win more consumers who increasingly want upscale options.
Spirit filed for Chapter 11 protection in November to restructure about US$1.6 billion in debt after losing ground post-pandemic as larger airlines lured travellers away by offering more basic-economy fares. It was also hit by an engine manufacturing defect that grounded a portion of its aircraft fleet and historically high labour costs under new contracts. The carrier won US bankruptcy court approval last month to emerge from court protection.
“Right now, the business is entirely focused on this exit and on revamping the products and services, and taking a hard look at where we fly and our cost structure to put us on the best possible financial trajectory,” Ted Christie, who will remain chief executive officer, said.
Customers have been very receptive to Spirit’s new, higher fare class offerings that began about six months ago, Christie said. “The types of people we are attracting are those that want a value proposition and are willing to pay.”
Spirit previously rejected an eleventh-hour takeover effort by rival discounter Frontier Group Holdings. Frontier had sought to revive a years-long courtship between the two carriers. If and when additional conversations occur with Frontier, Spirit will take them under consideration, Christie said.
Spirit’s parent company, now known as Spirit Aviation Holdings, plans to re-list shares on a stock exchange. The carrier is as much as 20 per cent smaller than it was a year ago, based on flying capacity.
The company reduced its debt by approximately US$795 million through a transaction that converted debt into equity for its largest bondholders, including Citadel Advisors, Pacific Investment Management and Western Asset Management. Existing shareholders did not receive any compensation. BLOOMBERG
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