Spirit Airlines ends Airbus deal in bankruptcy settlement with AerCap

[Spirit Airlines Airbus A320.]
DaveAlan/iStock Unreleased via Getty Images

Spirit Airlines (OTC:SAVEQ [https://seekingalpha.com/symbol/SAVEQ]) dropped plans to purchase 52 Airbus (OTCPK:EADSF [https://seekingalpha.com/symbol/EADSF]) (OTCPK:EADSY [https://seekingalpha.com/symbol/EADSY]) jets, along with options for 10 more, as part of a bankruptcy settlement with aircraft leasing giant AerCap Holdings (NYSE:AER [https://seekingalpha.com/symbol/AER]), Reuters reported.

The aircraft orders will instead be transferred to AerCap (NYSE:AER [https://seekingalpha.com/symbol/AER]), according to a deal approved Friday by the U.S. Bankruptcy Court for the Southern District of New York.

The agreement ends a dispute that played a major role in pushing Spirit into its second bankruptcy. In August, AerCap (AER [https://seekingalpha.com/symbol/AER]) terminated lease agreements for 36 Airbus A320neo aircraft slated for delivery between 2027 and 2028 and declared the carrier in default on leases for 37 jets already in use. Spirit rejected those claims but ultimately filed for bankruptcy protection after much of its fleet and future aircraft deliveries were put at risk.

TERMS OF THE DEAL

Under the settlement, Spirit (OTC:SAVEQ [https://seekingalpha.com/symbol/SAVEQ]) will relinquish 27 of the 37 aircraft leases and allow AerCap to retain $9.7 million in cash deposits. AerCap is also permitted to file an unsecured claim of up to $572 million against the airline, though the recoverable amount remains uncertain. Spirit will forfeit its rights to 36 undelivered Airbus jets but will enter into new lease agreements for 30 A320 or A321 aircraft to be delivered evenly across 2027, 2028, and 2029.

AerCap will also provide a $150 million cash infusion to Spirit as part of the deal.

FINANCING AND RESTRUCTURING PLANS

Separately, Spirit (OTC:SAVEQ [https://seekingalpha.com/symbol/SAVEQ]) announced that the court has approved up to $475 million in debtor-in-possession financing from its existing bondholders, with $200 million immediately available. The airline said these measures will lower its operating costs by hundreds of millions of dollars.

Spirit intends to scale back operations significantly, with plans to furlough about 1,800 flight attendants, roughly one-third of its cabin crew, starting December 1. The carrier, which currently operates 214 aircraft, expects to reduce its fleet by nearly half as it restructures, Reuters reported.

MORE ON SPIRIT AIRLINES, AERCAP, ETC.

* Boeing And Airbus Clash: Who Wins The 2025 Jet Race? [https://seekingalpha.com/article/4825582-boeing-and-airbus-clash-who-wins-the-2025-jet-race]
* AerCap: Still Has Plenty Of Upside Ahead [https://seekingalpha.com/article/4825457-aercap-still-has-plenty-of-upside-ahead]
* Airbus: How Is Boeing's Rival Performing On Orders And Deliveries? [https://seekingalpha.com/article/4824808-airbus-how-is-boeings-rival-performing-on-orders-and-deliveries]
* Airbus boosts September deliveries as it races toward annual target [https://seekingalpha.com/news/4502730-airbus-boosts-september-deliveries-as-it-races-toward-annual-target]
* Airbus A320 surpasses Boeing 737 as world’s most-delivered jetliner [https://seekingalpha.com/news/4502413-airbus-a320-surpasses-boeing-737-as-world-s-most-delivered-jetliner]