Spirit Airlines has provided an update on its restructuring process following a proposal from Frontier Group Holdings, the parent company of Frontier Airlines.
On February 4, 2025, Frontier submitted a new restructuring proposal offering Spirit stakeholders US$400 million in second-lien debt and 19% of Frontier’s common equity following a proposed merger. The proposal would eliminate Spirit’s need for a previously announced US$350 million equity rights offering but required waiving a US$35 million termination fee. However, Spirit identified significant concerns, including that the proposal would deliver less value to its stakeholders than its existing restructuring plan, create delays, increase costs, and face regulatory and court approval uncertainties.
In line with its restructuring agreements, Spirit shared the offer with advisors for its senior secured and convertible noteholders. On February 6, the company entered into confidentiality agreements with key stakeholders, allowing them to review the proposal in detail.
On February 7, Spirit countered with a proposal maintaining Frontier’s stated valuation but incorporating market-based mechanisms to determine Spirit stakeholders’ equity in the combined company. Unlike Frontier’s proposal, Spirit’s counterproposal required Frontier to pay the US$35 million termination fee.
Frontier rejected Spirit’s counterproposal on February 10, and reiterated its initial offer. Spirit remains committed to advancing its restructuring plan, which aims to significantly reduce its debt and position the company for long-term success.
A confirmation hearing for Spirit’s reorganisation plan is scheduled for February 13, 2025. Approximately 99.99% of voting creditors have accepted the plan, with nearly all objections resolved. Spirit expects to complete the restructuring within the first quarter of 2025, ensuring a more stable financial future.
