Spirit Airlines has successfully navigated a critical phase of its financial restructuring by reaching a comprehensive settlement with AerCap, the world's largest aircraft leasing company. This crucial three-way agreement, which also involves Airbus, was approved on Friday by the U.S. Bankruptcy Court for the Southern District of New York. The settlement resolves a contentious dispute that had previously forced Spirit into its second bankruptcy filing.

The roots of the conflict trace back to late August when AerCap unexpectedly terminated lease agreements for 36 new Airbus A320neo family jets, originally scheduled for delivery to Spirit between 2027 and 2028. Additionally, AerCap claimed default on leases for 37 aircraft already integrated into Spirit's operational fleet. Despite Spirit disputing the validity of these claims, the potential jeopardy to a significant portion of its current and future fleet compelled the airline to seek bankruptcy protection.

Under the terms of the settlement, Spirit Airlines will reject its commitment to acquire 52 new Airbus planes, along with options for 10 others, with AerCap stepping in to take over these aircraft orders. Furthermore, Spirit will formally reject 27 out of the 37 existing aircraft leases it holds with AerCap. In a financial component of the agreement, AerCap has been granted permission to retain $9.7 million in cash security deposits that Spirit had provided for the canceled aircraft leases. The Irish leasing giant also has approval to file an unsecured claim against Spirit totaling up to $572 million, though the amount it will ultimately collect remains undetermined. Spirit will also relinquish all its rights to the 36 previously undelivered jets that were part of the initial dispute.

Looking ahead, Spirit will enter into new lease agreements with AerCap for 30 new Airbus A320 or A321 airplanes. The deliveries for these aircraft are slated to be spread equally across 2027, 2028, and 2029. As a direct component of this complex deal, AerCap will provide a cash injection of $150 million into the bankrupt airline, offering much-needed liquidity during its restructuring.

Separately, the court also approved a debtor-in-possession (DIP) financing facility for Spirit, amounting to up to $475 million, secured from its existing bondholders. Of this total financing, $200 million is immediately accessible to the carrier. Spirit anticipates that this multifaceted agreement will lead to a reduction in operating costs by hundreds of millions of dollars, aligning with its broader strategy to shrink operations and restore financial stability. As part of this cost-reduction effort, Spirit plans to furlough approximately 1,800 flight attendants, representing about one-third of its cabin crew, effective December 1. The airline, which currently operates a fleet of 214 aircraft, also intends to reduce its fleet by nearly 100 aircraft, effectively cutting almost half of its operational planes.