Spirit Airlines Files For Bankruptcy Protection, NYSE Delisting Looms: Retail’s Disgruntled
By Stocktwits Inc | First Published Nov 18, 2024, 6:31 PM ISTAfter a failed merger with Frontier Airlines, Spirit has entered into a restructuring support agreement supported by a majority of its convertible bondholders on the terms of a comprehensive balance sheet restructuring.
Budget carrier Spirit Airlines Inc ($SAVE) has filed for bankruptcy protection after years of losses and a failed merger with Frontier Airlines. The company’s shares were halted for trading early on Monday morning following the announcement.
The airline has commenced a prearranged chapter 11 process in the U.S. Bankruptcy Court for the Southern District of New York. The company has entered into a restructuring support agreement supported by a majority of its convertible bondholders on the terms of a comprehensive balance sheet restructuring.
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Spirit Airlines believes the restructuring is expected to reduce its debt, provide increased financial flexibility, position it for long-term success and accelerate investments. It has received backstopped commitments for a $350 million equity investment from existing bondholders and will complete a deleveraging transaction to equitize $795 million of funded debt.
"Existing bondholders are also providing $300 million in debtor-in-possession financing, which, together with Spirit's available cash reserves and cash provided by operations, is expected to further support the company through the chapter 11 process,” the airline said.
Spirit Airlines further clarified that throughout the process, the company will continue its business in the normal course with guests being able to book and fly without interruption and use all tickets, credits and loyalty points as normal.
The chapter 11 process will also not hit “Team Member wages or benefits,” which are continuing to be paid and honored for those employed by Spirit. Meanwhile, the company’s vendors, aircraft lessors and holders of secured aircraft indebtedness will be paid in the ordinary course, it added.
CEO Ted Christie said the set of transactions will materially strengthen the company’s balance sheet and position it for the future.
As part of the bankruptcy protection filing, the company expects its shares to be delisted from the New York Stock Exchange in the near term and anticipates 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 canceled and have no value as part of Spirit's restructuring,” it said.
Following the announcement, retail sentiment on Stocktwits dipped into the ‘bearish’ territory (35/100) from ‘neutral’ a day ago.
Stocktwits followers of the ticker expressed disappointment at the announcement.
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