Originally Posted by
FlyFlorida2025
Sure! Because Spirit built their entire restructuring around aligning everyone’s interests so that everyone gets paid — or the whole thing collapses. Frontier is only one of three parties that are currently being vetted. The reason the pilots get paid is because Spirit has structured everything in a way that makes it almost impossible for a buyer to acquire them without paying everyone. All the aircraft lessors, pilots, DIP lenders, etc., have been cooperating and making concessions. If they are impaired in any way, all the concessions everyone agreed to fall apart, and then you have a mess. They also slipped in a $1.1 billion internal loan that has to be paid as well, which will most likely result in residual value for equity. At the end of the day, I believe Southwest will be the buyer. Here is a clue — research the implications of page 24, sections (iv) and (v).
https://document.epiq11.com/document...=SPJ&source=DM
I think I'm following your line of thought.
1. All the creditors are similarly impaired and their support is needed to get whatever deal transpires through the court confirmation - IE you can't have too many parties contesting the confirmation. No one party is getting singled out for impairement.
2. Intracompany loans inflate the enterprise value, which means the purchaser has to put down more money/new financing to acquire Spirit. IE Spirit has engineered itself against being bought on a low-ball bid, and would be a massive balance sheet hit for a small airline to acquire.
3. Therefore Spirit can only be acquired by an airline with the balance sheet and financing ability to put down a bid that will see some recovery for everyone included in the bankruptcy estate.
I agree with your logic. I think a Frontier acquisition doesn't really address either Spirit or Frontier's issues, and would waste precious capital needed to turn Frontier around. I also agree that the best outcome for Spirit is to be acquired by what I would call a "viable" airline. I am aware that Spirit is or was engaged with at least three entities over conducting a transaction. Perhaps one of them is such a large and well capitalized airline like SouthWest. Where I am lost is how you seem to be very sure that SouthWest was one of those entities, and that SouthWest is even now bidding on/acquiring Spirit. Can you explain that part of your thesis? I would love for it to be true. I just don't see anything definitively pointing towards that outcome.