US discounter Spirit Airlines has secured an additional $300 million in financing from debt holders as it prepares to exit Chapter 11 bankruptcy proceedings.
The struggling Miramar, Florida-based ultra-low-cost carrier (ULCC) disclosed in a 16 January filing with the US Securities and Exchange Commission that the “exit revolving credit facility” will be available to draw upon once it emerges from financial restructuring.
“The company’s use of the proceeds… shall include, among other items, working capital and other general corporate needs of the company and its subsidiaries following emergence” from Chapter 11.
The cash infusion will provide Spirit with a lifeline as it attempts to rebound financially and move forward with a new business plan. The news comes amid reports that the company has cut a further 200 employees at it nears completion of the bankruptcy process.
Spirit says in the filing that it expects to publish its May-August flight schedule on 31 January, which will likely provide a view into its post-restructuring strategy.
Analysts say Spirit grew its fleet of large Airbus narrowbody jets too quickly in the years leading up to the Covid-19 pandemic, flooding the market with low-cost seats to popular leisure destinations. Some question whether Spirit’s underlying issues, such as its cost structure, will be addressed by restructuring.
The carrier has attempted to pivot by making changes aimed at attracting higher paying customers and creating new streams of revenue, while moving away from long signatures of the low-cost operating model.
Like other discounters, Spirit has struggled to be profitable in the post-pandemic domestic landscape. It has in recent months resorted to selling more than 20 A320-family jets, deferring deliveries of new aircraft, furloughing hundreds of pilots and drastically cutting back on passenger capacity across its network.
Spirit filed for bankruptcy in November and was de-listed from the New York Stock Exchange the following month.
