Spirit Airlines today received the court approval to leave bankruptcy – after rejecting a takeover bid from a rival.
It ends the fear of significant reductions of routes and staff for the sixth largest courier in the US – or even a total elimination.
The American bankruptcy judge Sean Lane signed up on the restructuring plan of the airline during a hearing in White Plains, New York. On Thursday.
Although jobs and routes have been saved – for now – there are victims of the deal. All existing shares have been canceled, which means that ordinary investors lose.
Ownership has been handed over to Spirit's Lenders, including investment funds managed by Citadel Advisors.
The plan includes collecting $ 350 million in extra financing through new stock sales. Spirit expects to come out of bankruptcy in early 2025.
When the news about the bankruptcy of Spirit arose in November, the share price dropped 45 percent in just a few seconds – and hundreds of millions knew in the market value of the courier. In the past year it has fallen 90 percent.
Spirit recently rejected a proposed takeover by fellow budget airline, and said that the proposed buy -out offered less value for the creditors of Spirit than the restructuring of the bankruptcy.
The share price of Spirit Airlines fell 45 percent in aftermarket -trading in November after the news that it would be established to submit a bankruptcy was reported by the Wall Street Journal. The decline happened in seconds when investors hurried to sell the share. It recovered shortly before it fell back. This graph shows the stock price one hour after the news
Spirit Airlines is reportedly planning to submit bankruptcy after the failed merger with Jetblue
The cheap airline, based in Florida, owed more than $ 3 billion. Spirit has submitted for chapter 11, a form of bankruptcy that could continue to work while restructured.
Even before the bankruptcy application, it had reduced growth plans last year, illuminated staff and a plan inked to sell 23 aircraft.
Spirit has submitted for Chapter 11, a form of bankruptcy with which it continues to work because it can lower its debts.
It was feared that it could mean a significant reduction in routes and staff. If cost -saving efforts fail, the airline can experience the prospect of a complete closure.
The carrier has lost money despite a strong travel question.
Part of the enormous debts of $ 3.3 billion will soon be due – including more than $ 1.1 billion in secure bonds that owe in less than a year.
Spirit has been struggling with losses and falling income since its pandemic.
Although it may have made a profit for a few quarters, it has not made an annual profit even since the Pandemie.
When travelers started the air again, many turned to larger airlines, so that Spirit and other budget airlines struggled to get a foothold in the market.
Spirit Airlines CEO Ted Christie said earlier in June that the airline is not considering submitting a bankruptcy of Chapter 11, instead he said he was 'encouraged' by the plan that it had after the deal with Jetblue fell through
Spirit Managers saw the merger with Jetblue as a way to claw a market share, but the Ministry of Justice argued that such a deal would violate anti-trust laws
Frontier Airlines and Spirit Airlines were planning to merge for the first time in 2022, but Jetblue Airways delved with a higher bid. That won the shareholders of Spirit.
Spirit managers saw the merger with Jetblue as a way to claw back a market share, but the Ministry of Justice argued that such a deal would violate anti-trust laws, and a judge agreed.
As a result, Jetblue withdrew from a merger agreement.
Spirit was again in conversation with Frontier in October, because it hoped to breathe new life into merger discussions.
The last offer of Frontier would have enabled Spirit Airlines to maintain 19 percent of the company's equity.
But Spirit said that the offer bore additional financial costs, including costs related to a longer residence in bankruptcy, and more risks, including the risk that American supervisors would reject the merger of the two airlines.
In the meantime, Silver Airways also presented chapter 11 in December. The airline flies to holiday hotspots in Florida and the Caribbean – some fear of the fate of travel planned by Americans looking for winter sun.
