The airline industry has faced plenty of distress over the last three years as over 45 carriers around the world have shut down operations since the beginning of 2022.
Some of the 13 airlines that closed in 2022 included U.S. carrier ExpressJet, Genghis Khan Airlines from China, Blue Air from Romania, and Tel Aviv Air based in Germany, according to Allplane.tv.
💸💰 Don't miss the move: Subscribe to TheStreet's free daily newsletter 💰💸
Even more airlines shut down in 2023 with 18 carriers departing the industry, including GoFirst in India, Flyr from Norway, and Cascadia Air out of British Columbia, Canada.
Related: Spirit Airlines files for Chapter 11 bankruptcy (you can still fly on it)
So far in 2014, 14 airlines have ceased operations, including Lynx Air in Canada, LIAT of Antigua and Barbuda, and OTT Airlines in China.
Spirit Airlines, Frontier Airlines merger falls through
Low-budget carrier Spirit Airlines decided to file for Chapter 11 bankruptcy protection after a merger deal with rival Frontier Airlines recently collapsed.
Spirit had hoped that a merger would rescue it from financial distress as it struggled with massive debt coming due over the next two years. Once the deal fell through, the airline focused on negotiating with its prepetition lenders on a restructuring deal that would allow the company to keep operating.
The alarm bells sounded on Nov. 12 when the company released a statement asserting that it could not file its 2024 third-quarter report on Securities and Exchange Commission Form 10-Q by its required deadline without unreasonable effort or expense.
Failure to file quarterly reports by an SEC deadline sometimes precedes a bankruptcy filing.
Then reality set in as the Dania Beach, Fla.-based airline said it was having discussions with holders of about $1 billion in senior secured notes due in 2025 and about $500 million of unsecured convertible senior notes due in 2026. The company said it was also exploring strategic alternatives and ways to improve its liquidity.
Related: Major airline gets ready to file Chapter 11 bankruptcy
Those discussions lead to a restructuring support agreement to be implemented under a bankruptcy filing.
Shutterstock
Spirit Airlines will hand company control to lenders
Spirit Airlines filed for Chapter 11 protection on Nov. 18 seeking to restructure over $1.6 billion in outstanding funded debt through a restructuring support agreement reached with a supermajority of its noteholders that will eliminate $795 million in debt and hand about 76% ownership of a newly reorganized company to its senior secured noteholders.
More bankruptcy news:
- Struggling gas station chain liquidates in Chapter 7 bankruptcy
- Major healthcare provider files for Chapter 11 bankruptcy
- Distressed oil company files for Chapter 11 bankruptcy
The debtor's convertible noteholders would obtain a minority stake in the reorganized company, under the agreement. The senior secured and convertible noteholders would also receive a total of $840 million in new senior notes.
Spirit completed the restructuring support agreement with its ad hoc senior notes and convertible notes groups for a prepackaged Chapter 11 reorganization that will include $300 million in debtor-in-possession financing to fund its bankruptcy case and backstopped commitments for a $350 million equity investment from its noteholders.
Under the proposed plan, allowed other priority claims will be paid in cash or reinstated and general unsecured claims will be unimpaired and reinstated.
All existing interests in the company will be canceled and receive no distribution in the bankruptcy case.
The debtor listed $9.5 billion in assets and $9 billion in liabilities in court papers, which included a total of $3.6 billion in outstanding funded debt. The debtor had $800 million in cash and cash equivalents on its balance sheet when it filed bankruptcy.
Related: Veteran fund manager sees world of pain coming for stocks
