Ultra-low-cost carrier Spirit Airlines has announced that it expects to emerge from Chapter 11 reorganization bankruptcy “within weeks” after a US court approved its recovery plan.
On February 20, 2025, the Bankruptcy Court for the Southern District of New York said that Spirit’s reorganization plan had been “confirmed” in its entirety and that the “burden of proving the satisfaction of the requirements” had been met.
Spirit’s President and CEO, Ted Christie, said: “Today’s approval is a major milestone as we progress toward the successful conclusion of our in-court process. We will emerge as a stronger airline with the financial flexibility to continue providing Guests with enhanced travel experiences and greater value. Throughout this process, we’ve had virtually unanimous support from our bondholders, who recognize Spirit’s value and potential.”
Christie added: “As we move forward, our leadership team remains focused on reducing costs while also advancing our strategic initiatives to transform our Guest experience and position Spirit for success. I’m especially grateful for the dedication and unwavering commitment of our entire Spirit Family, who continue their outstanding work to serve our Guests and drive our business forward.”
Under the approved plan, Spirit will equitize $795 million of funded debt, receive $350 million of new equity investment and issue $840 million aggregate principal amount of new senior secured debt to existing bondholders upon emergence.
In addition, Spirit will enter into a new revolving credit facility of up to $300 million. Spirit vendors, aircraft lessors and holders of secured aircraft indebtedness will not be affected.
On November 18, 2024, Spirit confirmed that the carrier has entered a prearranged Chapter 11 process so it could set out plans to reduce its debt, provide increased financial flexibility and position the airline for long-term success.
As part of the Chapter 11 process, Spirit announced that its bondholders would commit to a $350 million equity investment, plus $300 million in debtor in possession (DIP) financing.
On February 11, 2025, Spirit said it had rejected Frontier Group’s latest merger offer, stating that it is less beneficial to shareholders than the airline’s current restructuring plan.
Spirit expressed concerns about the timing and completion of the proposal, which would result in “extended and more costly chapter 11 proceedings”.
According to the US Courts, Chapter 11 of the Bankruptcy Code “generally provides for reorganization, usually involving a corporation or partnership. A Chapter 11 debtor usually proposes a plan of reorganization to keep its business alive and pay creditors over time. People in business or individuals also can seek relief in Chapter 11.”
