Spirit Airlines files for Chapter 11 bankruptcy protection for the second time in a year ! In a statement, the carrier said it's executing a comprehensive restructuring of the airline to position the business for long-term success. The press statement read as,
Spirit Aviation Holdings, Inc. (NYSE American: FLYY), parent company of Spirit Airlines, LLC ("Spirit" or the "Company"), today announced that it is executing a comprehensive restructuring of the airline to position the business for long-term success. To facilitate the process, the Company has filed voluntary petitions for Chapter 11 in the U.S. Bankruptcy Court for the Southern District of New York (the "Court").
In February this year, Spirit Airlines Inc. won the court approval to exit bankruptcy through a lender-backed privatization deal. Prior to that, in the same month, Spirit Airlines rejected Frontier's most recent merger proposal, opting to proceed with its own standalone recapitalization without a merger instead.
In November last year, Spirit filed for court protection to restructure about $1.6 billion in debt after losing ground in the aftermath of the pandemic as larger airlines lured travelers by offering more basic economy fares. The company has said the revamp will give it time to boost business through new premium options, including wider seats and free alcoholic drinks with certain tickets.
However, earlier this month (August 13), Spirit Airlines sent shockwaves through the industry by announcing it may not survive the next 12 months, which turned out to be true with the latest development.
The airline also issued a “going concern”, raising alarms for both travelers and competitors. Spirit Aviation Holdings, the budget carrier's parent company, says it has "substantial doubt" about its ability to continue as a going concern over the next year.
Worth noting here, Ultra-low-cost Spirit struggles against major airlines like United, American, and Delta, which offer basic economy fares plus extra perks such as snacks and more destinations.
Spirit had been attempting to rebrand as a more premium airline to keep pace with post-pandemic travel trends that have challenged the viability of the ultra-low-cost model.
Spirit now says that through Bankruptcy protection, it aims to implement the broad changes necessary to transition the Company for a sustainable future and position it to deliver the best value in the sky for years to come, the press release reads,
Spirit intends to use the Chapter 11 process to implement the broad changes necessary to transition the Company for a sustainable future and position it to deliver the best value in the sky for years to come. The Company has been actively engaged with certain of its largest lessors, secured noteholders and key stakeholders over the past few months as it works to refine its path forward.
The Chapter 11 process will provide Spirit the tools, time and flexibility to continue ongoing discussions with all of its lessors, financial creditors and other parties to implement a financial and operational transformation of the Company. The Company is also working productively with its secured noteholders, including with respect to potential financing that may become necessary later in the proceedings.
To the relief of passengers, Flights, ticket sales, reservations and operations will continue, the airline said on Friday. The press release read as:
The Company is filing customary motions with the Court to enable it to conduct business as normal during the restructuring process. Guests can continue to book, travel and use tickets, credits and loyalty points.
Wages and benefits will continue to be paid and honored for those employed by the Company, including contractors. Spirit intends to pay vendors and suppliers for goods and services provided on or after the filing date in the ordinary course.
Dave Davis, President and Chief Executive Officer, said:
"Since emerging from our previous restructuring, which was targeted exclusively on reducing Spirit's funded debt and raising equity capital, it has become clear that there is much more work to be done and many more tools are available to best position Spirit for the future," "After thoroughly evaluating our options and considering recent events and the market pressures facing our industry, our Board of Directors decided that a court-supervised process is the best path forward to make the changes needed to ensure our long-term success. We have evaluated every corner of our business and are proceeding with a comprehensive approach in which we will be far more strategic about our fleet, markets and opportunities in order to best serve our Guests, Team Members and other stakeholders."
"As we move forward, Guests can continue to rely on Spirit to provide high-value travel options and connect them with the people and places that matter most," Davis continued. "On behalf of our Board and leadership, I want to thank our Team Members for their continued dedication, resilience and commitment to delivering a safe, reliable operation and excellent service to our Guests."
Through the Bankruptcy protection restructuring process, the Company expects to double down on its efforts to:
Spirit expects to be delisted from the NYSE American Stock Exchange in the near term as a result of the Chapter 11 filing, and the Company expects that its common stock will continue to trade in the over-the-counter marketplace through the Chapter 11 process. The shares are expected to be cancelled and have no value as part of Spirit's restructuring.
In April this year, Spirit Airlines announced today that it’s parent company, Spirit Aviation Holdings, Inc. has received approval to list its common stock on the NYSE American stock exchange.
The carrier posted a $1.2 billion net loss last year, with its troubles compounded by the collapse of a $3.8 billion merger with JetBlue Airways and RTX’s Pratt & Whitney engine issues that forced it to ground many of its Airbus jets.
Spirit News from the past.......
