Spirit Airlines Forges a Stronger Future: Strategic Moves to Reinforce America's Leading Value Airline

Spirit Airlines, a name synonymous with value and accessibility in air travel, is boldly charting a new course designed to fortify its financial foundation and secure a vibrant future. In a series of decisive strategic maneuvers, the airline has announced comprehensive plans aimed at enhancing liquidity, strengthening its balance sheet, and ensuring long-term profitability and sustainable growth.

At the heart of these actions is a landmark Voluntary Restructuring Support Agreement (RSA) with bondholders representing an overwhelming 88% of its 4.75% Convertible Senior Notes due 2025.

This critical agreement will see a substantial portion of these notes exchanged for new Second Lien Convertible Notes due 2029. This strategic move is poised to significantly reduce Spirit’s overall debt burden, extend crucial maturity timelines, and provide greater financial flexibility as the airline navigates the evolving economic landscape.

Further bolstering its financial resilience, Spirit has successfully completed a private placement of $150 million in new 2029 7.75% Convertible Senior Notes.

This infusion of capital comes from an affiliate of Oaktree Capital Management, L.P., a global investment manager renowned for its opportunistic strategies. The investment not only provides an immediate boost to Spirit’s liquidity but also signifies a strong vote of confidence from a major financial player in the airline's long-term potential.

In a pragmatic move to optimize its fleet and capital expenditure, Spirit has also reached a pivotal agreement with Airbus to defer the delivery of aircraft previously scheduled for the second quarter of 2025 through 2026.

These deferrals now push deliveries to 2030-2031. This strategic adjustment is expected to significantly improve Spirit's liquidity position by approximately $340 million over the next two years. More profoundly, it will result in a reduction of planned capital expenditures by over $2 billion through 2029, allowing the airline to reallocate resources towards maximizing operational efficiency and improving the guest experience.

While these strategic shifts promise a stronger tomorrow, they also necessitate difficult, yet temporary, adjustments.

As a direct consequence of the aircraft deferrals, Spirit anticipates furloughing approximately 260 highly valued pilots, effective September 1, 2024. The airline has expressed its deep regret for this unavoidable measure, emphasizing its commitment to supporting the affected pilots and its firm intention to recall them as soon as growth resumes, underscoring the temporary nature of this impact on its workforce.

Spirit’s leadership underscores that these actions are not merely about survival, but about building a more resilient, profitable, and guest-focused airline.

By slowing the pace of growth, the company can now direct its energy and resources toward enhancing operational reliability, refining the customer journey, and driving sustainable profitability. This deliberate focus ensures that when Spirit resumes a more aggressive growth trajectory, it will do so from a position of unparalleled strength and efficiency.

Ted Christie, President and Chief Executive Officer of Spirit Airlines, commented on the proactive measures, stating, "This comprehensive plan is a testament to our commitment to reinforcing our financial foundation and securing Spirit’s position as a leader in the value airline segment.

We are confident that these actions will enhance our liquidity, optimize our balance sheet, and allow us to continue delivering exceptional value to our guests for years to come." Scott Haralson, Executive Vice President and Chief Financial Officer, added, "The support from our bondholders and Oaktree Capital Management is a clear indication of the belief in our strategic direction and long-term potential.

We are taking decisive steps to create a more resilient and profitable airline."

As Spirit Airlines navigates this transformative phase, it remains steadfast in its mission to offer affordable travel options and an outstanding experience. These strategic moves represent a powerful commitment to its future, ensuring that America’s leading value airline is not just flying, but soaring towards a path of enduring success and value creation for its Guests, Team Members, and shareholders.