A Spirit Airlines Airbus A320 taxis at Los Angeles International Airport after arriving from Boston on September 1, 2024 in Los Angeles, California.
Kevin Carter | Getty Images News | Getty Images
WHITE PLAINS, N.Y. — Spirit Airlines is making “massive progress” to revitalize the airline, the carrier’s restructuring lawyer Marshall Huebner said in a court hearing Tuesday.
The struggling budget airline has reached an agreement with some of its debtholders for up to $475 million in debtor-in-possession financing, as well as $150 million from a major aircraft lessor, Huebner said. The agreements are subject to court approval.
Spirit last month filed for its second Chapter 11 bankruptcy protection in less than a year after high costs, weaker demand and a host of other lingering problems drove more than $250 million in losses from when it emerged from its first bankruptcy in March through June.
The carrier has been racing to cut costs and recently announced plans to cut 40 routes and furlough about one-third of its flight attendants. The airline is in talks with its pilots’ union and is seeking about $100 million in cuts from that group.
Huebner, a partner at Davis Polk & Wardwell, said in U.S. Bankruptcy Court on Tuesday that people who are pessimistic about the struggling carrier’s turnaround prospects should “say less” and observe what it’s doing.
Spirit is planning to reject leases on 27 Airbus narrow-body aircraft from Ireland-based leasing giant AerCap, 25 of them airplanes that are grounded or will be grounded for inspection due to a Pratt & Whitney engine defect, Huebner said in court. AerCap will pay Spirit $150 million as part of the agreement, under which Spirit would still plan to take delivery of 30 more airplanes, the company said.
Aercap didn’t immediately comment on the plan.
Spirit is also planning to reject 12 airport leases and 19 ground handling agreements as the carrier shrinks to cut costs.
Another hearing is scheduled for Oct. 10. If the debtor-in-possession financing is approved, $200 million would be available immediately.
“These are significant steps forward in a short period of time to build a stronger Spirit and secure a future with high-value travel options for American consumers,” Spirit CEO Dave Davis said in a news release later Tuesday. “While there’s more work to be done, we’re grateful to our stakeholders who have stepped up to support us during the restructuring.”
