Both Spirit Airlines (NK, Fort Lauderdale International) and its bondholders have been recruiting advisers ahead of possible negotiations over debt the company holds exceeding USD1 billion, which comes due in 2025 and 2026, sources have told Bloomberg News.
In one report, on February 8, Bloomberg Law claimed that a group of bondholders had asked Akin Gump Strauss Hauer & Feld for legal advice. On February 12, Bloomberg News reported that the creditors had also tapped investment banking advisory firm Evercore in anticipation of the upcoming debt talks.
Spirit, meanwhile, is reportedly sourcing advice for itself from New York-based law firm Davis Polk & Wardwell and from the American investment bank Perella Weinberg.
The group of Spirit Airlines bondholders has a majority of the company’s 8% notes due in 2025, the insiders said. The carrier has declined to comment on the reports.
Last month, a federal judge blocked a planned acquisition of the ultra-low-cost carrier by JetBlue Airways (B6, New York JFK), a decision the carriers have appealed, and it is these developments that raised concerns over Spirit’s financial position which the sources said had prompted the creditors to act.
Spirit is also suffering the impact of the grounding of a chunk of its fleet due to Pratt & Whitney geared turbofan (GTF) engine availability issues. According to ch-aviation fleets data, sixteen of its eighty-five A320-200Ns are currently inactive. It has a further forty of the type due for delivery. In total, Spirit operates 207 aircraft, all of them Airbus narrowbodies.
On a quarterly earnings call last week, Spirit CFO Scott Haralson said that “the company is aware of its 2025 and 2026 debt maturities and is assessing options to address those maturities when the time is appropriate,” and in the meantime the carrier will continue to fight the court decision. In those earnings, the airline posted a smaller-than-expected quarterly loss and insisted it had enough liquidity to operate on its own.
