Spirit Aviation Holdings, Inc., the parent company of Spirit Airlines, LLC – an American ultra-low cost airline that is headquartered in Dania Beach, Florida, in the Miami metropolitan area and operates scheduled flights throughout the United States, the Caribbean, and Latin America, has announced that the carrier has successfully completed its financial restructuring. This process involved a consensual deleveraging transaction that has converted approximately $795 million of funded debt into equity. As a result, Spirit is now significantly less burdened by debt and possesses enhanced financial flexibility, positioning the company for improved long-term success.
Spirit sought bankruptcy protection in November of last year following several years of financial losses, unsuccessful merger efforts, and significant debt. It became the first major American airline to go into Chapter 11 in the last 14 years, reporting a net loss of $1.2 billion for the previous year.
In conjunction with the restructuring, the Company has secured a $350 million equity investment from current investors to facilitate Spirit’s future projects, which aim to enhance travel experiences and provide greater value to Guests. The United States Bankruptcy Court for the Southern District of New York has confirmed Spirit’s Plan of Reorganization, receiving strong backing from a supermajority of the Company’s loyalty and convertible noteholders.
Ted Christie will continue to lead Spirit as President and Chief Executive Officer, supported by the existing executive team.
“We’re pleased to complete our streamlined restructuring and emerge in a stronger financial position to continue our transformation and investments in the Guest experience,” said Mr. Christie. “Throughout this process, we’ve continued to make meaningful progress enhancing our product offerings, while also focusing on returning to profitability and positioning our airline for long-term success. Today, we’re moving forward with our strategy to redefine low-fare travel with our new, high-value travel options.”
Modern US flyers are increasingly leaning towards full-service airlines, driven by middle- and upper-income households seeking premium travel experiences, therefore Spirit would try to enhance its offerings to attract a greater number of high-spending travelers.
Spirit Airlines has already announced that it would shift its focus from budget-conscious customers to wealthier travelers – a change it anticipates will result in a 13% increase in revenue per passenger. To draw in these affluent flyers, the carrier intends to revamp its loyalty program and form partnerships with other airlines.
Spirit has also introduced a newly restructured Board of Directors. Alongside Mr. Christie, the Board will feature six directors who possess extensive experience in industry and financial leadership: Robert A. Milton, David N. Siegel, Timothy Bernlohr, Eugene I. Davis, Andrea Fischer Newman, and Radha Tilton.
“I’m incredibly proud of our Team Members for their continued dedication to our Guests and each other throughout this process. Despite the challenges we’ve faced as an organization, we’re emerging as a stronger and more focused airline. On behalf of the executive team, I would also like to thank our outgoing board members for their contributions and invaluable service to our airline,” Mr. Christie continued.
Following the emergence of Spirit from Chapter 11, the common stock previously issued by Spirit Airlines, Inc. has been cancelled. The newly issued shares, now owned by Spirit’s new stakeholders, are anticipated to be traded in the over-the-counter market. The Company aims to re-list its shares on a stock exchange at the earliest opportunity after the Effective Date of Spirit’s Plan of Reorganization.