By Leslie Josephs
Copyright cnbc
Spirit is planning to reject leases on 27 Airbus narrow-body aircraft from Ireland-based leasing giant AerCap, 25 of them airplanes that are grounded or will be grounded for inspection due to a Pratt & Whitney engine defect, Huebner said in court. AerCap will pay Spirit $150 million as part of the agreement, under which Spirit would still plan to take delivery of 30 more airplanes, the company said.
AerCap did not immediately comment on the plan.
Spirit said it is also planning to reject 12 airport leases and 19 ground handling agreements as the carrier shrinks to cut costs, a plan the court approved.
Another hearing is scheduled for Oct. 10. If the debtor-in-possession financing is approved, $200 million would be available immediately.
“These are significant steps forward in a short period of time to build a stronger Spirit and secure a future with high-value travel options for American consumers,” Spirit CEO Dave Davis said in a news release later Tuesday. “While there’s more work to be done, we’re grateful to our stakeholders who have stepped up to support us during the restructuring.”
Senior secured noteholders at Spirit include Citadel Americas, Ares Management, AllianceBernstein, Arena Capital Advisors and Pacific Investment Management Company, according to a court filing.
Spirit’s competitors United Airlines, Frontier Airlines, JetBlue Airways and Allegiant Airlines have announced new routes in hopes of capturing Spirit’s customers. United CEO Scott Kirby went a step further, saying earlier this month that he expects Spirit to go out of business.
Spirit has struggled for years with an engine recall, a failed acquisition by JetBlue, higher costs and a shift in consumer tastes for more upmarket offerings. The Dania Beach, Florida-based airline has altered its business strategy to offer higher-end products in recent months.
