FX.co ★ Spirit Airlines Files For Bankruptcy Protection; Stock Up In Pre-market

Spirit Airlines, Inc. (SAVE) has initiated the process of filing for Chapter 11 bankruptcy protection with the United States Bankruptcy Court located in the Southern District of New York. The airline anticipates concluding this process by the first quarter of 2025.

In early trading on the NYSE, Spirit's stock saw an approximate increase of 4%, reaching a price of $1.12.

The company has secured a Restructuring Support Agreement (RSA), backed by a substantial majority of its loyalty and convertible bondholders, which outlines the framework for a comprehensive restructuring of its balance sheet.

This restructuring initiative aims to decrease Spirit's debt obligations, thereby enhancing its financial agility. As part of this plan, Spirit has secured commitments that ensure a $350 million equity investment from its current bondholders and is poised to implement a deleveraging strategy to convert $795 million of funded debt into equity.

Furthermore, the existing bondholders are contributing $300 million in debtor-in-possession (DIP) financing. In combination with Spirit's liquid cash reserves and operational cash inflow, this financing is expected to bolster the company throughout the Chapter 11 proceedings.

During this prearranged and streamlined Chapter 11 process, Spirit intends to maintain regular business operations.

Consequently, due to the Chapter 11 filing, the company foresees its delisting from the New York Stock Exchange in the near future.