checkgear

It might be that they want to see the outcome of our big “transformation”, but could also be waiting until after the election in hopes that a different government wouldn’t deny a potential merger. I guess the only people that know are those in the negotiating room so to speak and I doubt they’ll be telling FA’s or line pilots what the plan is.

The earnings will paint a clearer picture of future monetary trajectory. Fingers crossed we beat the forecast but on past performance alone I think it’ll be a miss. Probably still looking at 400-600 furloughs in the short term.

Macjet

The creditors have NOTHING to do with this. This is a deadline imposed by our credit card processor.

https://www.wlrn.org/business/2024-1...broward-county

redhot

Credit card processor is the same issue Frontier had before declaring Chapter 11 BK... Then Indigo swooped in and bought them for pennies on the dollar. It's almost like history is repeating itself.

Alexjones

Enlighten us how have you come up with 600 more furloughs

Macjet

Neeleman thinks a F9/NK tieup is likely. The even worse news is that he forecasts NK pilot pay being brought down to F9 levels.

SSlow

Nah, there would not be an airline left to run with the amount of legacy hiring going on over the next few years.

The legacies will happily orchestrate a mass exodus and run them out of business.

B200 Hawk

I don’t think they’ll care about being a revolving door for the legacies. You’ll have senior pilots that enjoy the schedule and good enough pay that won’t leave the seniority to start over while they babysit CFIs skipping the regionals sitting right seat for a year or 2 before bailing for the legacies. In fact that’s probably preferred for the bottom line.

FriendlyPilot

US Bank gave them the extension, not the bondholders.

The "creditors" are not demanding a renegotiaion of the bonds. They already have a deal in place, which is that $1.1B is due in a balloon payment next September.

The credit card processing company, US Bank, wants a new deal on their credit card processing fees, given that they are concerned that if Spirit declares BK that they could be stuck not getting paid since they will be listed as a creditor in the BK court. So they are basically telling Spirit that they will negotiate a new deal with them to process credit cards ONLY after they make their bond deal (which right now they can't pay and no way they could raise any cash for) so that they are less likely to file BK. This extension is probably because the bond holders don't want to take a haircut and since these bonds are senior notes, they get paid first. There is enough equity if the airline is sold off that they will get paid in full, so why would they care if Spirit operates or not? They have a fiduciary obligation to their bond owners and nothing to Spirit.

I'm sure whatever deal that US Bank made was done in a different default risk scenario and is underwritten based on that. This is one of the negative things about doing poorly financially, is that the deals you get become worse and worse and create an even greater drag on the ability to operate.

Also considering that Spirits bonds are at 8% now, they are selling for about 50% face value in the secondary markets, which means the effective interest rate is 17.33% if the bonds have a 10 year maturity. Even if spirit returns to pre-Covid profits, it can't afford to pay a 17% interest rate on $2B in debt. Why would anyone REFI spirits debt at less than 17% when you can just buy the bonds at half of the face value?

This whole mess is bad timing from the Pandemic followed by a bad decision to raise 8% debt followed by not pivoted fast enough followed by waiting for a merger than never happened. All during that time Spirit was bleeding cash and wrecking its balance sheet. Unless a white knight or sweetheart deal is made its going to be very tough for Spirit under the weight of debt while other airlines are still adding capacity and Basic Economy becomes even more of a competitor.

Good luck to all of you.

LR45DRIVER

Correct, except that was when Republic bought Frontier Holdings, not Indigo. 2009. Indigo acquired Frontier from Republic.

checkgear

Run the numbers for an average fleet of 170 for 2025 at 15 pilots per plane and compare that to the current size of the airline. Doesn’t take an aeronautical engineer to work that one out.