The US Bankruptcy Court has approved Spirit Air's plans to reorganize through the Chapter 11 process, appearing on a stronger balance sheet next month.
The Florida-based spirit said on February 20 that the US Bankruptcy Court for the Southern District of New York confirmed its plans. This includes nearly $800 million in debt, $350 million in equity injections and $840 million issuance of new debt to bondholders.
“In addition, Spirit will be participating in a new revolving credit facility of up to $300 million,” the company says. “The spiritual vendors, aircraft lenders, and holders of protected aircraft debt will not be harmed.”
Ultra-low-Cost Carrier has been operating throughout the United States since it filed for court-supervised Chapter 11 bankruptcy protection in November. But it fired hundreds of employees and hit hundreds of pilots as they tried to reduce the network. We also sold over 20 Airbus A320 Family Jets.
Meanwhile, Spirit continues to advance from its competitor Frontier Airlines, which are offensive to gain the spirit.
Frontier CEO Barry Biffle argued on February 19 that his company's latest bid would provide more value to spirit shareholders than the airline's standalone plans.
Spirit has been arguing for months that it will bring out stronger organizations that can compete in the US's ultra-competitive, low-cost segment from bankruptcy. However, analysts at some airlines have questioned whether the new cost structure of carriers will allow them to continue operating in the long term.
Integration chatter is growing in the US aviation industry. JetBlue Airways has admitted to talking to several US carriers about potential combinations, including the re-activation of the Northeast Alliance with network carrier American Airlines.
Dave Davis, chief financial officer at Minneapolis-based Disc Counter Sun Country Airlines, said at the Barclays Industrial Select Conference on February 20th that the carrier is looking favorably at some combinations.
“I think there's a combination with Sun Country that makes sense. We keep looking at things,” he says. “That's certainly not our master plan, but I believe the industry needs to integrate on the low cost side.”
