Short on time and running out of options after its scuttled merger with JetBlue Airways Corp., Spirit Airlines Inc. is left looking to debtholders for a lifeline. They will want a lot in return. Lenders whose bonds hemorrhaged value as the deal failed are getting creative to plot a rescue of the airline — and their investment in it, Bloomberg News reported. The mission involves navigating two novel features of Spirit’s debt in order to protect themselves along the road to recovery. First, a proposal under consideration by the lender group involves asserting a “triple-dip” legal claim that market observers say has never been seen before in corporate debt negotiations, according to people with knowledge of the discussions. Meanwhile, resulting debt talks could also present the first-ever restructuring of debt backed by loyalty programs, a pandemic-era practice among cash-strapped airlines. The nascent plans come as the struggling airline needs to shore up its coffers. In the 20 months since JetBlue’s now-dead $3.8 billion offer, Spirit has continuously burned cash and lost profit margin. Wall Street analysts have speculated that it could be forced into bankruptcy reorganization or even liquidation. Spirit says it has sufficient liquidity to stand on its own.
