General
What did Spirit announce?
Spirit entered into a restructuring support agreement (the “RSA”) supported by a supermajority of Spirit’s loyalty and convertible bondholders on the terms of a comprehensive balance sheet restructuring.
The comprehensive recapitalization includes:
- Backstopped commitments for a $350 million equity investment from existing bondholders.
- A deleveraging transaction to equitize $795 million of funded debt.
- $300 million in DIP 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 RSA is expected to reduce Spirit’s debt, provide increased financial flexibility, position Spirit for long-term success and accelerate investments providing Guests with enhanced travel experiences and greater value.
To implement the deleveraging transaction outlined in the RSA, and bind the small percentage of bondholders not yet RSA signatories, Spirit has commenced a voluntary prearranged chapter 11 process.
Spirit expects to continue operating our business in the normal course throughout the prearranged, streamlined chapter 11 process. Guests can continue to book and fly without interruption and can use all tickets, credits and loyalty points as normal.
Why does Spirit need to restructure financially?
The airline industry as a whole is facing significant challenges, including rising operational costs, changing consumer preferences and fluctuating demand, and we are not immune to them.
To address these headwinds, we have aggressively moved to adapt our business, and over the past several months we have been implementing a comprehensive transformation plan to help us better compete, materially strengthen our balance sheet and return to profitability.
To support the continued momentum for our long-term transformation, we’ve been engaged in ongoing discussions with our bondholders to explore options to optimize our capital structure and enhance our liquidity.
This agreement with our bondholders represents a critical milestone in the ongoing process to transform our business, strengthen our capital structure and best position Spirit for the future.
Does this mean Spirit is going out of business?
Absolutely not! This is a recapitalization of our balance sheet that should affect only our stockholders and certain debtholders.
We expect to continue operating our business in the normal course throughout the prearranged, streamlined chapter 11 process. Guests can continue to book and fly without interruption and can use all tickets, credits and loyalty points as normal.
Vendors, aircraft lessors and holders of secured aircraft indebtedness will continue to be paid in the ordinary course and will not be impaired by the chapter 11 filing.
Many airlines operating successfully today, including American, Delta and United, have taken this same path. It is quite common across many industries.
What happens during the chapter 11 process?
The challenges facing the airline industry as a whole, including rising operational costs, changing consumer preferences and fluctuating demand, have not subsided over the last few months. We have aggressively moved to adapt our business to respond to these challenges, and over the past several months we have been implementing a comprehensive transformation plan to help us better compete, materially strengthen our balance sheet, and return to profitability.
To support the continued momentum for our long-term transformation, we’ve been engaged in ongoing discussions with our bondholders to explore options to optimize our capital structure and enhance our liquidity.
This agreement with our bondholders represents a critical milestone in the ongoing process to transform our business, strengthen our capital structure and best position Spirit for the future.
Will Spirit continue to fly during the chapter 11 process?
Yes, absolutely. We expect to continue operating our business in the normal course throughout the prearranged, streamlined chapter 11 process.
Guests can continue to book and fly without interruption and can use all tickets, credits and loyalty points as normal.
How long will the chapter 11 process take? When do you expect to emerge from chapter 11?
Spirit expects to emerge from our prearranged, streamlined chapter 11 process in the first quarter of 2025.
I have additional questions about the restructuring, how can I obtain more information?
We have set up an information line to answer questions about this announcement. The information line can be reached by calling (888) 863-4889 or emailing SpiritGoForward@epiqglobal.com.
Court filings and other information related to the restructuring proceedings are available at the following website: https://dm.epiq11.com/SpiritGoForward.
Guests
What does this mean for Guests?
Guests can continue to book and fly without interruption and can use all tickets, credits and loyalty points as normal.
Guests can continue to benefit from the same loyalty program, Saver$ Club perks and credit card terms.
We are confident that this process will allow us to emerge as a stronger company, and we remain committed to delivering low fares and outstanding service to our Guests.
For more information, please see here.
Do you expect there to be any disruptions to ticketing or flight schedules?
Guests can continue to book and fly without interruption and can use all tickets, credits and loyalty points as normal.
However, we regularly evaluate our network and make adjustments to support our business strategy. If we have any changes to our flight schedules, Guests with affected travel plans will be notified directly of their options.
Will Spirit’s new premium options still be offered, or will Spirit go back to its ULCC model?
Our long-term vision for Spirit remains unchanged. We’re focused on executing our strategic initiatives to transform our Guest experience, providing new enhanced travel options, greater value and increased flexibility. We’re committed to positioning the airline for long-term success.
Team Members
Where can I find more information?
For more information, please visit Spirit LiNK
Vendors
What is an “All Trade” Motion? Does it apply here?
This motion filed with the Court seeks the authority to allow us to pay any and all valid invoices, regardless of when services were performed or goods were delivered.
In this case, there is an “All Trade” motion.
Will I be paid for goods and services provided to Spirit prior to the filing date?
As a result of the “All Trade” motion, all valid invoices will be paid – regardless of prepetition or postpetition status.
Do I still need to file a claim?
As a result of the “All Trade” motion, all valid invoices will be paid – regardless of prepetition or postpetition status.
If you have any further questions regarding filing a claim, please consult a lawyer.
Do I need to submit invoices differently to be paid going forward?
No. You should continue to submit invoices following the instructions previously provided.
Investors
What will happen to my Spirit stock?
Spirit expects to be delisted from the New York Stock Exchange in the near term. The Company expects 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 cancelled and have no value as part of Spirit’s restructuring.