Spirit is going private (here is what you need to know)

The low-cost airline first asked for Chapter 11 protection in November 2024.

Feb 21, 2025 - 15:18

Spirit is going private (here is what you need to know)

After announcing that it was filing for bankruptcy protection in November 2024, low-cost airline Spirit Airlines (SAVE) has continued to run flights within the U.S. and to nearby international destinations as stockholders and analysts speculated on its future.

By mid-February, Spirit had rejected a merger offer by rival Frontier Airlines (FRON) twice over what is saw as an uncompeling amount of take-back debt and equity while reassuring shareholders that it would continue to look for ways to emerge from over $4 billion in debt.

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Spirit announces take-private deal, to emerge from bankruptcy in 'coming weeks'

On Feb. 20, Spirit announced that a bankruptcy court in the Southern District of New York had approved a reorganization plan that will take Spirit private and give control to its biggest bondholders.

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"Today's approval is a major milestone as we progress toward the successful conclusion of our in-court process," Spirit CEO Ted Christie said in a statement. "We will emerge as a stronger airline with the financial flexibility to continue providing guests with enhanced travel experiences and greater value."

With the plan approved by bankruptcy judge Sean Lane, Spirit could now formally emerge from bankruptcy in what it says will be "coming weeks."

The bondholders between whom ownership will be shared include investment firms Citadel Advisors, Pacific Investment Management Company and UBS Asset Management. The plan also includes turning $795 million of funded debt into equity, raising $350 million of new equity shares and issuing $840 million of new senior secured debt to current bondholders.

Not all shareholders are happy with Spirit's bankruptcy emergence plan

While Christie and Spirit are positioning this solution as having "virtually unanimous support" from bondholders, some have already started speaking out about how it will hurt their investment.

At the start of December, another shareholder sent out a letter calling out Spirit for the $5.3 million in retention bonuses that Spirit is paying executives — $3 million for Christie and $850,000 for Chief Operating Officer John Bendoraitis in particular — despite the bankruptcy.

"Spirit Airlines has graciously entered into a restructuring support agreement to slash its debt, bolster financial flexibility and ensure its longterm success — meanwhile, shareholders can proudly watch their equity vanish into thin air as part of the grand plan," one mock website that calls itself "Spirit Go Away" and calls Christie a number of slurs writes.

In its announcement, Spirit said that the bankruptcy emergence will not affect existing vendors and plane lessors but the company will continue its cost-reduction strategy in an effort to eventually get back to profit. The most recent decisions in this regard involved significantly downsizing its flight schedule out of cities like Boston, Atlanta and Los Angeles as well as selling off 23 planes, or 10% of its fleet, to free up $519 million.

"Throughout this process, we've had virtually unanimous support from our bondholders, who recognize Spirit's value and potential," Christie said further. "As we move forward, our leadership team remains focused on reducing costs while also advancing our strategic initiatives to transform our Guest experience and position Spirit for success."