The filing provides Spirit with the legal framework, time,
and flexibility to implement broad changes across its operations and financial
structure. Over the past few months, the company has been in active discussions
with its largest lessors, secured noteholders, and key stakeholders to refine
its path forward. The Chapter 11 process is expected to facilitate ongoing
negotiations with all its financial creditors and other parties. Spirit also
indicated productive engagement with its secured noteholders regarding
potential financing for later stages of the proceedings.
Despite the bankruptcy filing, Spirit Airlines assured
customers, employees, and vendors that business operations would continue as
normal.
Guests can proceed with booking new flights, traveling on
existing tickets, and utilizing any accumulated credits or loyalty points
without disruption. Furthermore, the company committed to honoring all wages
and benefits for its employees and contractors. Vendors and suppliers providing
goods and services on or after the filing date are also expected to be paid in
the ordinary course of business.
Dave Davis, president and chief executive officer of Spirit,
addressed the decision, stating, "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." He added, "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 making the changes needed to ensure our long-term success."
Davis emphasized a "comprehensive approach" to the
restructuring, focusing on being more strategic about the airline's fleet,
markets, and opportunities to better serve its guests, team members, and other
stakeholders.
Through the restructuring process, Spirit expects to double
down on several key strategic initiatives:
- Redesigning
its Network: The airline plans to concentrate its flying on key
markets, aiming to provide more destinations, frequencies, and enhanced
connectivity in its focus cities, while concurrently reducing its presence
in certain less profitable markets.
- Optimizing
its Fleet Size: Spirit will “right-size” its fleet to align
capacity with profitable demand, matching its redesigned network. This
move is projected to significantly lower the airline's debt and lease
obligations, generating hundreds of millions of dollars in annual
operating savings.
- Addressing
its Cost Structure: Building on its existing industry-leading
cost model, Spirit will pursue further efficiencies across all facets of
its business.
- Meeting
Evolving Consumer Preferences: The company intends to effectively
compete by leveraging its lower costs to offer enhanced value across its
three travel options: Spirit First, Premium Economy, and Value. This
strategy aims to expand premium choices while staying true to its core mission
of making travel accessible to a broader audience.
Stock Shares 'Hold No Value'
As a direct consequence of the Chapter 11 filing, Spirit
Aviation Holdings, Inc. stock shares are expected to be delisted from the NYSE
American Stock Exchange in the near term. While the common stock is anticipated
to continue trading in the over-the-counter marketplace during the Chapter 11
process, the company warned that these shares are expected to be cancelled and
hold no value as part of the eventual restructuring plan.
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