Spirit Airlines Considers Chapter 11 Bankruptcy Filing to Facilitate Frontier Takeover, and More

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Spirit Airlines Bankruptcy Strategy Aims to Secure Frontier Acquisition

Spirit Airlines is in discussions with Frontier Group Holdings about filing for bankruptcy as a strategic move to facilitate a takeover by Frontier.

This potential merger comes after Spirit's failed attempt to merge with JetBlue Airways and its ongoing financial struggles, including 11 consecutive quarters of losses.

Key Points

• Spirit would likely need pre-approval from creditors to fast-track the bankruptcy process, allowing for continued operations without depleting cash reserves.
• The airline has approximately $2.5 billion in debt, including $1 billion in loyalty bonds and $500 million in unsecured convertible bonds.
• Spirit's shares surged 35% on the news of a possible merger with Frontier.
• The company recently pushed back its deadline to refinance $1.1 billion in debt and exhausted its $300 million credit line.
• Spirit has implemented cost-cutting measures, including furloughing 260 pilots and delaying aircraft deliveries.

What It Means

The discussions are still in the early stages and may not lead to a final agreement.

If successful, this potential merger represents a significant shift in the budget airline landscape. It could create a stronger low-cost carrier capable of competing more effectively with major airlines.

For Spirit, this move may be a lifeline to avoid complete financial collapse, while for Frontier, it presents an opportunity to expand its market share and operational capacity.

This deal could also face less regulatory scrutiny than the failed JetBlue merger due to Frontier's smaller size and reduced operational overlap with Spirit.

Other key Aviation and Aerospace Industry updates for today 👇

American Airlines Raises 2024 Profit Forecast Amid Strategy Shift

American Airlines reported a third-quarter net loss of $149 million despite record revenue of $13.6 billion.

The airline raised its 2024 profit forecast due to improved pricing and sales strategies, expecting adjusted earnings per share between $1.35 and $1.60.

This optimism follows strategic adjustments, including renegotiating corporate agreements and expanding sales support.

Southwest Airlines Settles with Elliott, Adds Six New Board Members

Southwest Airlines and Elliott Investment Management reached a settlement, averting a proxy fight.

The agreement includes adding six new board directors, five nominated by Elliott, and the accelerated retirement of Executive Chairman Gary Kelly. CEO Bob Jordan retains his position.

This resolution also led to Southwest's board being reduced to 13 members by 2025.

New Boarding Technology by American Airlines Targets 'Gate Lice'

American Airlines is testing a new system to deter line-cutting, often called "gate lice," during boarding.

The technology emits an audible alert when passengers attempt to board early, prompting gate agents to enforce proper boarding orders.

This initiative is being trialed at several airports and aims to enhance the boarding experience by ensuring orderly processes.

Collins Aerospace Secures Decade-Long MRO Deal with Air Europa

Collins Aerospace, an RTX business, has signed a 10-year contract with Air Europa to provide maintenance, repair, and overhaul services for its 787 fleet.

The agreement includes onsite support and predictive maintenance through the Ascentia platform.

Collins will also expand its 787 spares pool in Europe, enhancing service efficiency and reducing costs.

Machinists Reject Boeing's 35% Pay Hike Proposal, Strike Continues

Boeing machinists rejected a 35% pay raise proposal, continuing a six-week strike.

The union, seeking a 40% increase and pension reinstatement, voted 64% against the offer.

Boeing reported a $6 billion quarterly loss amid the strike's financial impact. This labor dispute heightens tensions and financial challenges for Boeing.

Historic FAA Rule Establishes Powered-Lift Aircraft Category

The FAA has introduced new regulations for "powered-lift" aircraft, marking the first new aircraft category in nearly 80 years.

This includes eVTOLs, which combine helicopter and airplane features for urban air mobility.

The rules cover pilot training and operational requirements, paving the way for commercial air taxi services in the U.S.

German Air Taxi Pioneer Lilium Nears Insolvency

Lilium, a German flying taxi company, is set to file for insolvency as its main subsidiaries, Lilium GmbH and Lilium eAircraft GmbH, are overindebted and unable to meet liabilities.

The firm failed to secure necessary funding, resulting in a 45% drop in its Nasdaq-listed shares. Insolvency proceedings under German law are imminent.