Spirit Airlines Files For Chapter 11 Bankruptcy, Will Remain Active As It Restructures
by CrownHeights.info
Discount airline Spirit Airlines has announced today that it has filed for Chapter 11 Bankruptcy in an agreement with shareholders geared at restructuring the company’s debt.
“I am pleased we have reached an agreement with a supermajority of both our loyalty and convertible bondholders on a comprehensive recapitalization of the Company, which is a strong vote of confidence in Spirit and our long-term plan,” said Ted Christie, Spirit’s President and Chief Executive Officer. “This set of transactions will materially strengthen our balance sheet and position Spirit for the future while we continue executing on our strategic initiatives to transform our Guest experience, providing new enhanced travel options, greater value and increased flexibility. I’m extremely proud of the Spirit team’s hard work and dedication, which is key to our sustained progress in advancing our business and delivering for our Guests.”
Spirit expects to continue operating its business in the normal course throughout this prearranged, streamlined chapter 11 process, with guests able to book and fly without interruption. All tickets, credits and loyalty points will be honored.
Unfortunately, not all is all rainbows and roses, with Spirit expecting to be delisted from the New York Stock Exchange in the near term over the Chapter 11 Bankruptcy. The Company expects that its common stock will continue to trade in the over-the-counter marketplace through the chapter 11 process, but shares are expected to be cancelled and have no value as part of Spirit’s restructuring.
In a press release from the company, it estimated its third quarter 2024 operating margin and adjusted operating margin will each be approximately 12 percentage points lower than the operating margin and adjusted operating margin reported for the third quarter 2023. This is due to lower total operating revenues and higher total operating expenses. Total operating revenues are estimated to have decreased approximately $61 million compared to the third quarter 2023, primarily due to lower average yields, including the negative impact from the Company no longer charging for change and cancellation fees. Total operating expenses are estimated to have increased approximately $46 million, and adjusted operating expenses are estimated to have increased approximately $52 million compared to the third quarter 2023.
Total operating expenses and adjusted operating expenses are estimated to be higher year over year primarily due to an increase in aircraft rent expense, other operating expense, salaries, wages and benefits, and landing fees and other rents expense. These increases were partially offset by a decrease in aircraft fuel expense.
