Spirit Airlines and Bondholders Gear Up for Debt Negotiations
Spirit Airlines (NK, Fort Lauderdale International) and its bondholders are actively seeking advisory services in preparation for upcoming discussions concerning the airline’s debt, which exceeds USD1 billion and is set to mature in 2025 and 2026. According to sources familiar with the matter who spoke to Bloomberg News, both parties are taking steps to ensure they are well-equipped for the negotiation process.
A report from Bloomberg Law on February 8 highlighted that a group of bondholders had engaged Akin Gump Strauss Hauer & Feld for legal counsel. Subsequently, on February 12, Bloomberg News revealed that the same creditors had also secured the services of investment banking firm Evercore to provide financial guidance ahead of the debt discussions.
In parallel, Spirit Airlines is reportedly consulting with Davis Polk & Wardwell, a prestigious law firm based in New York, and Perella Weinberg, a notable American investment bank, for advice on managing its financial obligations.
The bondholders in question reportedly hold a majority of Spirit Airlines’ 8% notes due in 2025. While Spirit Airlines has refrained from commenting on these developments, the move to seek advisory services underscores the significance of the negotiations for both the airline and its creditors.
The backdrop to these preparations includes a recent federal court ruling that obstructed Spirit’s planned merger with JetBlue Airways (B6, New York JFK), a decision that both airlines are appealing. This legal hurdle, combined with operational challenges such as the grounding of a portion of Spirit’s fleet due to issues with Pratt & Whitney geared turbofan (GTF) engines, has prompted concerns about Spirit’s financial health, prompting action from creditors.
As reported by ch-aviation fleets data, Spirit Airlines is currently facing operational constraints with sixteen of its eighty-five A320-200Ns grounded. The airline, which operates a fleet of 207 Airbus narrowbodies, is awaiting the delivery of an additional forty A320-200N aircraft.
During a recent quarterly earnings call, Spirit Airlines CFO Scott Haralson addressed the company’s debt maturities, stating that the airline is exploring options to manage these obligations and remains committed to contesting the court’s ruling against the JetBlue merger. Despite a challenging financial landscape, Spirit reported a smaller-than-anticipated quarterly loss and affirmed its liquidity position as sufficient to sustain independent operations.