Spirit Airlines has reached a series of proposed deals with its principal aircraft leasing firm that would deliver a cash infusion to the troubled budget carrier, according to filings in U.S. Bankruptcy Court posted Tuesday.
The Dania Beach-based airline filed for Chapter 11 bankruptcy protection from creditors on Aug. 29, its second such filing in less than a year. At the time of the most recent filing, Spirit pointed to a decision by AerCap Ireland Ltd., which owns many of the planes on lease to Spirit, to declare the airline in default on various Airbus jetliners as a trigger for the return trip to bankruptcy court.
But now, according to a motion and an affidavit filed in U.S. Bankruptcy Court in New York, Spirit management and AerCap have resolved their disagreements and placed the airline on a clearer path toward restructuring its finances and slimming down its fleet. As part of the deal, AerCap would deliver an unspecified cash infusion to Spirit. The amount of cash involved is unknown as the figure is blacked out in the court filings, which are heavily redacted for competitive reasons.
A hearing on a motion for court approval is scheduled for Sept. 30.
A Spirit spokesman declined comment, saying the airline would refrain from making any statements until after the hearing. No one immediately responded to an emailed message sent to AerCap’s office in Miami.
Both before and after filing the latest Chapter 11, Spirit has mounted a major assault on its costs, most recently making the painful decisions of furloughing one-third or 1,800 of its 5,200 flight attendants, furloughing 270 pilots and demoting 140 others, and shrinking its fleet and route system.
When Spirit filed for Chapter 11, the airline had 214 planes in its fleet, with 166 of them leased, according to court papers.
After the bankruptcy filing, the two sides entered into “weeks of negotiations,” according to the motion for approval of a “Global Restructuring” agreement involving Airbus A319s, 320s and 321s.
Under the deal, some leases would be continued while others would be rejected. A dispute over undelivered leased aircraft is also resolved. Time-consuming litigation would be avoided, and most importantly, AerCap is committed to providing Spirit with funding. The amount is redacted from the court filing.
“AerCap has committed to a significant liquidity infusion, which will provide meaningful funding to the Debtors in these Chapter 11 Cases and permit the Debtors to operate their business,” Spirit said in the filing.
The multiple deals in the agreement, the filing adds, “will assist the Debtors with their fleet optimization process, reduce equipment costs and provide critical liquidity to the Debtors and their estates.”
“Indeed,” the filing says, the transactions “will serve as a cornerstone of the Debtors’ efforts to construct a new, slimmer fleet.”
