09:19 AM EST, 11/18/2024 (MT Newswires) -- Spirit Airlines ( SAVE ) filed for Chapter 11 bankruptcy protection on Monday with support from a supermajority of its bondholders, as the budget airline seeks to reduce its debt, attain increased financial flexibility and invest in passenger services.

The company initiated prearranged voluntary proceedings in the US Bankruptcy Court for the Southern District of New York to implement a restructuring support agreement with its bondholders to deleverage its balance sheet.

As part of the restructuring agreement, the airline secured $350 million in equity investment commitments from existing debtholders and will complete a deleveraging transaction to equitize $795 million of funded debt. Spirit's existing bondholders are also providing $300 million in debtor-in-possession financing which, combined with the company's available cash reserves and cash from operations, are expected to provide support throughout the Chapter 11 process.

"I am pleased we have reached an agreement with a supermajority of both our loyalty and convertible bondholders on a comprehensive recapitalization of the company, which is a strong vote of confidence in Spirit and our long-term plan," Chief Executive Ted Christie said in a statement. "This set of transactions will materially strengthen our balance sheet and position Spirit for the future while we continue executing on our strategic initiatives."

Spirit expects to continue operating its business as usual throughout the bankruptcy proceedings, with customers able to book and take flights without interruption. The company doesn't anticipate the process to impact payments to employees, vendors, aircraft lessors and holders of secured aircraft indebtedness. The airline also filed for a series of first-day motions to further facilitate its business operating normally, subject to court approval.

Spirit has been in talks with holders of its loyalty bond and convertible notes due in 2025 and 2026, respectively. In March, JetBlue Airways (JBLU) terminated its proposed $3.8 billion acquisition of Spirit Airlines ( SAVE ).

Last week, the company said in a filing with the Securities and Exchange Commission that it won't be able to file its quarterly report on Form 10-Q for the three-month period ended Sept. 30 in time due to its negotiations with the bondholders.

The airline aims to emerge from a streamlined Chapter 11 process in the first quarter of 2025. Spirit expects to be delisted from the New York stock exchange in the "near term."