Spirit Airlines (NK, Fort Lauderdale International) has said that a proposed restructuring plan under its prearranged Chapter 11 process will lead to significant changes in its network, with capacity redeployed mainly out of Fort Lauderdale International and other core markets.
The cash-strapped budget carrier said that its new strategy will focus on "top value seeker cities" while cutting capacity in the worst-performing markets. It plans to redeploy 20 to 30 aircraft from the latter to the former.
It selected Fort Lauderdale as the first focus market "given consistent, high demand during the winter season and highest existing relevance level." The ch-aviation capacities module shows that Fort Lauderdale is Spirit's largest market, with an 11.8% market share in terms of the airline's scheduled weekly departure capacity.
This "comprehensive network realignment" will start within four to six months, and further focus cities will be developed after the first quarter of 2026, Spirit added.
By focusing on "mid-size value-seeking cities", Spirit aims to gain stronger pricing power in those markets. It targets a 50% capacity share in those markets; currently, it has a 28.4% market share in Fort Lauderdale. In its two other largest markets, Las Vegas Harry Reid and Orlando International, it has a 13.3% and 12.1% market share, respectively.
The network readjustment will also include more "less than daily" flights to thinner markets, as well as increased seasonal variation of the network to capitalise on peak seasons in various destinations but avoid losses during the low season. "Unproductive markets" will be eliminated. Spirit said it would continue its network realignment to maximise "out and back" flying, meaning rotations when the crew starts and ends a shift in the same city, to minimise operational challenges.
Bondholder support
Spirit Airlines also disclosed in its Chapter 11 filings that the terms of the prearranged restructuring support agreement had been approved by 78.6% of the holders of its 8.00% Senior Secured Notes due 2025, issued by Spirit's Cayman Islands-based affiliates holding its brand and loyalty assets, and 84.1% of holders of the 4.75% convertible senior notes due 2025 and 1.00% convertible senior notes due 2026.
The plan includes USD300 million debtor-in-possession funding, which will be repayable upon exiting the Chapter 11 process. At the end of the reorganisation, Spirit will issue a single class of common equity interests to its secured and convertible noteholders to raise USD350 million in new equity. It will also issue USD840 million of new senior secured notes to the current secured and convertible note holders.
The reorganisation will see the company wipe out its existing equity. It said that its existing common stock and other equity interests will be cancelled without "any distribution". Following this announcement, the New York Stock Exchange announced it had initiated the delisting process. Trading in Spirit's stock was suspended immediately.
