Spirit Airlines, out of bankruptcy by summer
The American low-cost airline had resorted to Chapter 11 twice in one year. The plan is to include more premium class seats on board
After two bankruptcy proceedings in one year, US low-cost airline Spirit Airlines said it had reached an agreement with its creditors that will allow it to emerge from the latest 'Chapter 11' by early summer.
The carrier that will emerge will be leaner, with fewer routes and fewer planes, with an offer focused on peak demand periods, cuts in leasing contracts used to cover the lack of planes, and trying to make maximum use of the Airbuses that are already in the fleet. It will still focus on the low-cost offer, but with more options such as premium economy and a first class version with more legroom.
"Spirit will emerge as a strong, leaner competitor, able to offer a service that American consumers expect at the price they are willing to pay," said CEO Dave Davis still at the helm after two near-bankruptcies. Davis explained that the airline's previous request for protection was focused on debt reduction and capital raising, but after exiting that process last March, it had 'become clear that there was still a lot of work to be done'.
This latest plan, presented by the company's lawyers to the court, envisages a reduction of the total debt from USD 7.4 billion before the application for receivership to about USD 2.1 billion after the exit from the procedure. A separate chapter is the hypothesis that Spirit will find a way out through an acquisition, as had already happened with Frontier Group, another American low-cost company, a deal that was not finalised.
The low-cost carrier said it will strengthen its network during periods of higher demand, increasing aircraft utilisation on peak days, reducing flights during off-peak periods, and adjusting capacity to seasonal variations. The plan is to expand the offer of premium seats, including Spirit First and Premium Economy, and to boost loyalty programmes to encourage customer retention.
