Spirit wins $475M lifeline, AerCap deal trims 27 leases

Published on Oct 13, 2025, 3:42 pm CDT

5 min read

Spirit Airlines secured court approval for $475 million in debtor-in-possession financing and a settlement with its largest aircraft lessor, AerCap. The financing, backed by existing bondholders, provides immediate liquidity for operations. Separately, the court cleared a tentative agreement that lets Spirit reject 27 aircraft leases and receive $150 million from AerCap, part of a broader fleet reset. The approvals follow Spirit's second Chapter 11 filing in a year and come amid aggressive cost cuts, including a 25 percent November schedule reduction and furloughs.

Key points

Why it matters: Court approvals shore up cash and shrink fleet obligations during Chapter 11.
Travel impact: Fewer routes and frequencies this fall as the carrier prioritizes core markets.
What's next: Additional network pruning and workforce actions while the restructuring plan advances.
DIP details: Up to $475 million with $200 million initially accessible.
Fleet actions: 27 lease rejections and a $150 million AerCap payment to Spirit.

Snapshot

Friday's rulings give Spirit breathing room to keep flying while it restructures debt and resets its fleet plan. The DIP facility, funded by existing bondholders, provides near-term liquidity to cover operations and vendor payments. The AerCap settlement resolves contentious lease disputes by allowing Spirit to shed 27 aircraft commitments in exchange for a $150 million cash infusion from the lessor. Management continues to align capacity with demand, slashing November flying by about 25 percent year over year and preparing workforce reductions. Executives say these steps position Spirit to focus on profitable routes, simplify schedules, and reduce unit costs while negotiating with creditors on a longer-term plan.

Background

Spirit's first-half losses and elevated unit costs, compounded by engine-related constraints and a blocked JetBlue merger, forced another restructuring in 2025. Management previously warned the balance sheet needed fresh liquidity and lower fixed obligations. Over the summer, the airline announced pilot furloughs and captain downgrades, followed by notices to about a third of flight attendants as schedules tightened. In recent weeks, Spirit has exited or announced exits from more than a dozen U.S. airports and suspended roughly 40 routes as it consolidates around higher-performing stations. The AerCap dispute, which included terminated new-aircraft leases and default claims, had threatened future fleet deliveries. The settlement trades near-term capacity for cash and certainty while Spirit explores a slimmer fleet path.

Latest developments

Court approves DIP financing and AerCap settlement

The U.S. Bankruptcy Court approved up to $475 million in DIP financing for Spirit, with an initial $200 million available to support operations and vendor obligations. In a linked ruling, the court authorized Spirit and AerCap to proceed with a settlement that cancels 27 existing leases and provides a $150 million payment from AerCap to Spirit. The agreement also resolves outstanding disputes tied to undelivered A320neo-family aircraft and sets parameters for future leasing paths. Management reiterated that November capacity will be down about 25 percent versus last year, with additional staffing actions timed to the smaller schedule. The airline also confirmed plans to concentrate service in core markets while winding down weaker routes and stations as it moves through Chapter 11.

Analysis

For travelers, the near-term effect is schedule thinning rather than a full-scale shutdown. The DIP facility stabilizes operations, which reduces the risk of abrupt cancellations from a cash crunch. At the same time, Spirit's capacity cuts tighten seat supply on certain leisure routes, which can nudge fares higher in those city pairs, especially where only one or two low-cost competitors remain. The AerCap settlement is unusual in its optics, a lessor writing a check as leases are rejected, but it reflects a pragmatic trade, immediate certainty for both sides and an exit from contested frames that no longer match Spirit's plan. Strategically, shrinking to profitability hinges on matching the fleet to dependable demand, trimming station complexity, and restoring operational reliability. Execution risks remain, including fuel prices, competitive capacity redeployments by rivals, and the need to maintain brand trust during a period of reduced frequencies. If the carrier can hold on to cash, keep completion factors high, and re-grow around proven markets, this restructuring could set a floor for a modest rebound into 2026.

Final thoughts

The court-approved financing and AerCap settlement buy Spirit time to right-size its fleet and network while it negotiates a confirmable plan. Travelers should expect leaner schedules and fewer marginal routes in the months ahead, with the airline concentrating on core stations and peak travel windows. The combination of cash, lease relief, and capacity discipline is the clearest path to stabilization, though competitive and macro headwinds linger. For now, the restructuring thesis remains simple, fly less, fly better, and convert lower costs into sustainable margins under Chapter 11, a necessary step for Spirit Airlines bankruptcy recovery.