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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.

Spirit Airlines Inc. bondholders, growing increasingly worried about the company’s ability to manage its more than $3 billion of borrowings, are mapping out a strategy that they think may insulate them from devastating losses in the event the air carrier can’t repay its obligations, Bloomberg News reported. The plan, dubbed a “triple-dip” by some of the creditors, would aim to capitalize on a series of moves the airline made during a 2020 bond sale. Certain company units sold notes backed by Spirit’s loyalty program and intellectual property, and sent proceeds of the deal to the airline’s parent company, which also guaranteed the debt. The mechanics of the deal resemble a structure known as the “double-dip” that has helped struggling companies raise fresh financing in exchange for giving lenders two claims on the company’s assets. In Spirit’s case, the bondholders believe they have three claims — to Spirit’s guarantee, the intercompany loan and the loyalty program and related assets. A “triple-dip” hasn’t yet been tested in court, but “double-dip” creditors have ended up with improved recoveries in past bankruptcies.

The Brazilian airline Azul SA is working with Citigroup Inc. and Guggenheim Partners as it explores a potential offer for its troubled competitor Gol Linhas Aereas Inteligentes SA, Bloomberg News reported. Shares in both companies rallied. The companies are advising Azul as it weighs several options, including an outright acquisition of its rival. Azul still could decide to shelve the idea. Any offer would need approval from the country’s regulator — known as Cade. A tie-up between Azul and Gol would help them cut costs and boost revenue, helping support share prices, Bradesco BBI analyst led by Victor Mizusaki wrote in a note. Sao Paulo-based Gol filed for chapter 11 after grappling with $2.7 billion in near-term liabilities and carrying out a dozen debt exchanges. Under the process, it has managed to increase its debtor-in-possession financing to $1 billion from $950 million. Moody’s Investors Service on Tuesday upgraded Gol parent Abra Group’s credit rating to Caa1 from Caa3 and lifted the outlook to stable from negative. The upgrade hinged on Gol securing the $1 billion DIP financing, the ratings company said.

JetBlue Airways Corp. formally abandoned its pursuit of Spirit Airlines Inc. more than a month after a federal judge blocked the $3.8 billion acquisition on antitrust grounds, Bloomberg News reported. The carriers reached an agreement to walk away after determining that required legal and regulatory approvals “were unlikely to be met” by dates specified in the deal, JetBlue said Monday in a statement. The company — which is also facing pressure from activist investor Carl Icahn to return to sustainable growth — will pay Spirit $69 million and the agreement resolves all outstanding matters related to the deal. “The probability of getting the green light to move forward with the merger anytime soon is extremely low,” JetBlue Chief Executive Officer Joanna Geraghty told employees in an internal message. “The lingering uncertainty is distracting and taking our resources away from more pressing priorities.” The decision ends JetBlue’s lengthy quest for Spirit and marks a sharp reversal after the companies pledged to fight for the tie-up — even as analysts said an appeal had little chance of succeeding. JetBlue had hoped to accelerate its growth with a quick infusion of Spirit’s planes and pilots at a time when both are in short supply.

Bankrupt Brazilian airline Gol received U.S. court approval on Wednesday for a $1 billion loan, after resolving the concerns of a group of lenders that feared they would be sidelined by the new loan, Reuters reported. Gol had previously proposed borrowing $950 million in bankruptcy, but it allowed the objecting lenders to kick in an additional $50 million on the new loan and receive interest on that new debt, Gol's attorney Justin Cunningham said at a hearing in Manhattan. Bankruptcy Judge Martin Glenn approved the loan at the hearing in Manhattan, saying he was pleased to see a compromise. "It's nice when more people want to put money in," Judge Glenn said. The previously objecting lenders, a group of investment funds that had loaned money to Gol in 2020, will not receive the same level of fees as the original group of lenders, who could receive up to $47.5 million in additional commitment fees and backstop fees under the loan agreement, according to court documents. Gol instead agreed to pay them $800,000 for attorneys' fees and costs related to the renegotiation of the loan. Gol filed for chapter 11 bankruptcy protection in the United States on Jan. 25. The airline had been suffering from long-term impacts of the COVID-19 pandemic on travel and has had difficulty sourcing sufficient Boeing 737 Max aircraft to meet a surge in post-pandemic demand for air travel, according to court documents. Judge Glenn previously approved a portion of the loan, allowing Gol to borrow up to $350 million at a court hearing in January.

A group of Spirit Airlines Inc. bondholders have tapped Evercore Inc. as adviser in anticipation of upcoming debt talks, Bloomberg News reported. Evercore’s selection follows the earlier retention of Akin Gump Strauss Hauer & Feld for legal advice, Bloomberg previously reported. Spirit’s ability to manage more than $1 billion of debt that comes due in 2025 and 2026 has come into question after a federal judge blocked a tie-up with JetBlue Airways Corp. The group holds a majority of the company’s 8% notes due in 2025. That debt trades at around 72.25 cents on the dollar, up from lows of 51.5 cents a day after the court ruling. The budget airline is getting advice from law firm Davis Polk & Wardwell and investment bank Perella Weinberg Partners. On last week’s quarterly earnings call, Spirit Chief Financial Officer Scott Haralson said “the company is aware of its 2025 and 2026 debt maturities and is assessing options to address those maturities when the time is appropriate,” though it is also appealing the court decision. The Miramar, Fla.-based airline reported a smaller-than-expected quarterly loss and said it has enough liquidity to operate on its own.

Bankrupt Brazilian airline Gol Linhas Aereas Inteligentes SA won court permission to investigate whether its rival Latam Airlines Group SA sought to take unfair advantage of its recent chapter 11 filing by improperly soliciting major Boeing Co. aircraft suppliers, Bloomberg News reported. Judge Martin Glenn said Monday there is merit in investigating allegations Latam tried to either poach or interfere with Boeing 737 aircraft lessors doing business with Gol after the Brazilian budget airline filed bankruptcy last month. Judge Glenn cited a letter Latam sent to aircraft lessors the day after Gol filed bankruptcy. A Latam lawyer said the Jan. 26 letter was the fist time in recent years the company had inquired about a type of narrowbody Boeing 737 aircraft flown by Gol. Latam has historically flown a fleet of Airbus aircraft, according to court documents. It would be “preposterous” to assume it was merely a coincidence Latam sent the letter immediately after Gol filed Chapter 11, Glenn said. In the letter, Latam said it was seeking more aircraft, which the airline said might be of interest to lessors “given the recent events in the industry.” Judge Glenn granted the Sao Paulo-based airline’s request to get documents and conduct depositions of Latam officials in order to gather evidence, should any exist, substantiating claims that Latam sought to interfere with Gol’s business or violate its chapter 11 stay, which protects companies in bankruptcy. Latam has denied the allegations and argued Gol is seeking such information to gain an unfair edge on its rival.

Spirit Airlines is working with advisers to address its debt maturities after a proposed acquisition by JetBlue Airways was blocked last month, WSJ Pro Bankruptcy reported. The regional airline has brought on law firm Davis Polk & Wardwell and investment bank Perella Weinberg to explore ways to address its $1.1 billion of 8% senior secured notes due 2025 and $500 million of convertible bonds maturing 2026. The company has said that it is exploring ways to refinance its near-term maturities. Analysts following the company said Spirit has a number of options, including distressed exchanges such as swapping the debt, which is trading at depressed levels, for a combination of debt and equity to extend the maturity on the notes. The 2025 notes last traded at roughly 70 cents for a yield of about 33% Thursday morning, according to a trader. Spirit on Thursday reported lower revenue for the fourth quarter, but the loss came in narrower than expected. The company outlined some of its plans to turn things around after years of losses. Chief Executive Ted Christie said demand for domestic U.S. flights appears to be rebounding to start the new year.

Scandinavian airline SAS said it would file a second amended chapter 11 plan of reorganization with the U.S. Bankruptcy Court for the Southern District of New York on Monday and said it had obtained the support of the unsecured creditors' committee, Reuters reported. The company said it expected about $325 million to be allocated to general unsecured creditors as part of the amended plan, consisting of up to $250 million in cash and $75 million in new equity. The $75 million in new equity to be allocated to creditors would be distributed to general unsecured creditors like the Danish, Norwegian, and Swedish states, aircraft lessors, pilot unions, and key suppliers, the company said. Other creditor classes, including holders of the listed commercial hybrid bonds, are expected to receive a cash-only recovery. The airline said that holders of the company's listed commercial hybrid bonds would receive an initial cash recovery of 6.9%–9.4% of the nominal value of claims after emerging from the chapter 11 process. SAS, Scandinavia's biggest carrier, reiterated that there would be no value for its existing shareholders and all of its common shares and listed commercial hybrid bonds will be cancelled, redeemed and delisted.

Brazilian airline Gol does not expect its chapter 11 proceedings to trigger job cuts, its chief executive said on Friday, reiterating that the carrier's operations will remain as usual while it is under bankruptcy protection, Reuters reported. Gol, Brazil's second-largest airline in terms of passengers transported, filed for bankruptcy protection in the United States on Thursday as it grapples with high debt seen at around 20 billion reais ($4.07 billion). CEO Celso Ferrer in an interview with CBN radio said that the carrier's main goal with the move is to restructure its balance sheet so it can grow again. "There will not be layoffs related to this process. From now on we want to grow," Ferrer said, adding that operationally the carrier has been seeing a "significant recovery" after positive results in recent quarters. Gol is the latest in a series of Latin American carriers to seek bankruptcy protection after the COVID-19 pandemic, following the path of sister company Avianca, Mexico's Aeromexico and Chile-based LATAM Airlines.