2 weeks Ago By Rytis Beresnevičius
Spirit Airlines has asked the court overseeing its bankruptcy case to expedite a hearing related to a sale-and-leaseback (SLB) transaction of four Airbus A321neo aircraft that the low-cost carrier is scheduled to take delivery between December 19 and April 2025. Determining the fate of four A321neos On December 10, Spirit Airlines filed a motion with the United States Bankruptcy Court for the Southern District of New York to approve an SLB transaction for four to-be-delivered A321neo aircraft. In a subsequent filing, the carrier requested to expedite the process.
The court approved the motion on December 11 and added the matter to the court’s agenda for a hearing on December 17. “Although [Spirit Airlines believes] that the Aircraft Sale Leaseback Transactions are in the ordinary course of business and that delivery of this Aircraft is within the ordinary course of business of Spirit and as such do not require Court approval pursuant to section 363 of the Bankruptcy Code, [Spirit Airlines has], out of an abundance of caution, sought the Court’s authorization to consummate the Aircraft Sale Leaseback Transactions and to pursuant thereto accept delivery of the contemplated Aircraft to provide comfort to all counterparties and transparency to the Court.” Thus, since the first of four subject A321neos is scheduled to be delivered on December 19, Spirit Airlines requested that the court hear the SLB motion and any related matters “on an expedited basis.
” Out of the 23 aircraft, Spirit Airlines has already stored 11 at Phoenix Goodyear Airport. Critical transaction Spirit Airlines highlighted that the SLB transaction was critical since it would provide crucial liquidity by converting what would be required up-front purchase payments into long-term leases. If the airline is unable to complete the transaction, it would be required to pay the full price, which would be tens of millions of dollars, with the carrier not specifying the exact amount, on December 19, unless Airbus agrees to push back the delivery of the first A321neo.
“Airbus, however, has so far not consented to a delay. Relying solely on further negotiations with Airbus over delaying the Scheduled Delivery Date to avoid a default under the Purchase Agreement risks introducing even more uncertainty into the Chapter 11 Cases, hampering Spirit’s ability to efficiently reorganize and manage its business.” Furthermore, in addition to liquidity concerns, Spirit Airlines has already made plans to introduce the quartet into service.
If the airline is unable to take delivery of the A321neos, it could cause flight disruptions that would affect passengers and its relationship with the original equipment manufacturer (OEM). The latter will be key to the airline’s post-Chapter 11 fleet strategy, and little could undermine those efforts more than Spirit Airlines’ inability to fulfill its obligations on time. The four subject A231neo are aircraft that Airbus should deliver on December 19 (manufacturer serial number (MSN) 12324), February 2025 (MSN 12330), March 2025 (MSN 12333), and April 2025 (MSN 12425).
All four aircraft will be sold to Jackson Square Aviation (JSA), a US-based aircraft lessor. Unfortunately, the court filings have concealed the purchase price, the lease term, and the rent for the quartet. However, Aviation Flights Group data showed that MSN 12324, temporarily registered as D-AVZB, has yet to operate its first flight.
While Airbus will undoubtedly be pushing to reach its 770 annual delivery goal – year-to-date (YTD), as of November 30, it had 643 deliveries – it could mean that the planned December 19 delivery would be delayed. American Airlines, Breeze Airways, Delta Air Lines, Frontier Airlines, JetBlue, Spirit Airlines, and United Airlines took in 21 Airbus jets in Nov. Disgruntled shareholders Since Spirit Airlines has filed for Chapter 11 bankruptcy proceedings on November 18 , which will enable the airline to restructure its debts, some disgruntled shareholders have pleaded with Judge Sean Lane to investigate “suspicious activities” and “egregious actions” by the carrier’s leadership.
Nevertheless, the company entered into the proceedings with a restructuring support agreement (RSA) with the “supermajority” of its loyalty and convertible bondholders, with the agreement improving the airline’s liquidity by over $1.3 billion. Other liquidity-related measures included a $300 million debtor-in-possession (DIP) financing agreement.
“The restructuring is expected to reduce Spirit's debt, provide increased financial flexibility, position Spirit for long-term success and accelerate investments providing Guests with enhanced travel experiences and greater value.” When it finally published its Q3 results on November 25 , which included a nine-month net loss of $ 643.8 million, it had $423.
5 million of cash and cash equivalents, with other assets taking its liquidity to $710.7 million as of September 30. However, while it planned its long-term debt principal payments to be $33.
5 million during the last three months of 2024, in 2025, the payments would have amounted to $1.2 billion, with the following year’s payments being $674.1 million.
Its total long-term debt was $3.2 billion. As of September 30, Spirit Airlines had 97 pending A320neo family aircraft deliveries, three of which Airbus would hand over by the end of the year.
Ch-aviation data showed that the airline welcomed two A321neo aircraft since Q3 ended: N741NK and N740NK. Another A321neo, registered as N726NK, was delivered on September 30. Spirit Airlines disclosed that it had over $590 million of cash as of September 30.
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