Court Approves Spirit Airlines’ Financial Reorganization Plan

The U.S. Bankruptcy Court for the Southern District of New York has approved Spirit Airlines’ (NK, Fort Lauderdale International) financial reorganization plan, clearing the way for the airline to exit Chapter 11 bankruptcy. Judge Sean Lane confirmed the plan on February 20, 2025.

Under the restructuring, Spirit Airlines will cancel its existing equity shares and transfer ownership to lenders and bondholders, including Citadel Advisors, Pacific Investment Management Co., and Western Asset Management Co. The plan allows Spirit to convert $795 million of debt into equity, secure $350 million in new investments, and issue $840 million in fresh senior secured debt to bondholders. Additionally, the airline will establish a $300 million revolving credit facility.

Despite opposition from the Securities and Exchange Commission (SEC) and the U.S. Trustee’s Office, the judge ruled that creditors could opt out of legal release provisions, addressing concerns over waived claims. The final ruling will be formalized in March 2025.

Spirit Airlines CEO Ted Christie called the approval a “major milestone”, emphasizing the strong support from bondholders. He reiterated the airline’s focus on cost reductions and strategic initiatives, while continuing normal operations across 80 airports in 14 countries.

Spirit Airlines filed for Chapter 11 in November 2024 after accumulating $1.6 billion in debt and following its failed merger with JetBlue Airways (B6, New York JFK). The airline expects to exit bankruptcy within weeks, staying on track for its Q1 2025 recovery timeline.

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Sources: AirGuide Business airguide.info, bing.com, ch-aviation.com