Spirit to Start Tapping $475 Million in New Bankruptcy Financing

(Bloomberg) -- Spirit Aviation Holdings Inc. won bankruptcy court permission to start tapping $475 million in new financing and implement a deal with its biggest aircraft lessor to return dozens of aircraft.

Both the new financing and the agreement with lessor AerCap Ireland Ltd. are poised to unlock more than $600 million in fresh liquidity to fund Spirit’s operations while it restructures in Chapter 11. Additional settlements with other aircraft lessors that will save the bankrupt carrier more money should be finalized in the coming days, Spirit lawyer Marshall Huebner said Friday during a court hearing in New York.

The new financing is being provided by a group of senior Spirit lenders who supported the company through its first trip through Chapter 11, which concluded earlier this year. The lenders include Citadel, Cyrus Capital Partners and Pacific Investment Management Co., according to a September disclosure.

Judge Sean Lane, who is overseeing the bankruptcy, said Friday he’d give Spirit interim approval of the Chapter 11 financing, which gives the company the ability to immediately draw $200 million. Spirit will seek later approval to draw the remaining amount, which is customary. The financing includes a roll-up of roughly $856 million in existing senior notes that pushes those obligations to the top of the repayment line, according to court documents.

Separately, Spirit would save money under its agreement with Aercap. Under the agreement, Aercap will pay the bankrupt carrier $150 million. In return, Spirit would return 27 leased aircraft, according to court papers. Spirit has said the deal will reduce its operating costs “by hundreds of millions of dollars.”

The company filed Chapter 11 in August, less than a year after emerging from an earlier bankruptcy that cut debt from its debts but didn’t address Spirit’s operating expenses.

The case is Spirit Aviation Holdings, Inc., 25-11897, US Bankruptcy Court, Southern District of New York (Manhattan).

--With assistance from Mary Schlangenstein.

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