One month after submitting for chapter, Spirit says it’s making “important progress” towards a profitable restructuring and has secured entry to badly wanted capital.
At a listening to Tuesday earlier than the U.S. Chapter Courtroom for the Southern District of New York, the ultra-low-cost airline mentioned it negotiated a multi-tranche debtor-in-possession financing facility of as much as $475 million from its present bondholders to help regular enterprise operations. The financing is topic to court docket approval, with a listening to scheduled for Oct. 10.
If the court docket guidelines in Spirit’s favor, $200 million would instantly turn out to be obtainable.
The money would complement $120 million in liquidity freed up by the chapter court docket this week.
Spirit has been dangerously in need of liquid capital for months. The provider reported internet losses within the two quarters since its emergence from its first chapter and has struggled with weak demand for home leisure journey.
In one other promising signal, Spirit mentioned it negotiated a cope with its largest plane lessor, AerCap, to hurry up fleet optimization with the eventual supply of 30 plane. AerCap helped set off Spirit’s second chapter by claiming defaults on 37 plane in Spirit’s fleet, however as a part of the brand new deal, AerCap can pay Spirit $150 million, and Spirit will reject leases on 27 plane, releasing itself from the monetary dedication.
The settlement settles all disputes between the 2 firms, Spirit mentioned.
The court docket additionally accepted Spirit’s movement to reject 12 airport leases and 19 floor dealing with agreements, which the airline referred to as an “essential step ahead in price and community rationalization.”
“These are important steps ahead in a brief time period to construct a stronger Spirit and safe a future with high-value journey choices for American customers,” President and CEO Dave Davis mentioned in a press release. “Whereas there’s extra work to be achieved, we’re grateful to our stakeholders who’ve stepped as much as help us through the restructuring.”
Spirit warned shareholders in August that it won’t survive the yr as a going concern. Trade analysts have faulted the airline for not making extra substantial modifications throughout its first chapter, and the heads of main U.S. carriers have voiced rising doubts concerning the viability of the ultra-low-cost enterprise mannequin.
