Notes to Consolidated Financial Statements
1.Summary of Significant Accounting Policies
Basis of Presentation
The accompanying consolidated financial statements include the accounts of Spirit Aviation Holdings, Inc. ("Spirit") and its consolidated subsidiaries (the "Company"). The term "Company" is used to refer to (a) Spirit and its consolidated subsidiaries for periods on or after the Emergence Date (as defined below) and (b) Spirit Airlines, Inc. ("Former Spirit") and its consolidated subsidiaries for periods prior to the Emergence Date. Spirit is headquartered in Dania Beach, Florida, and offers affordable travel to value-conscious customers and serves destinations throughout the United States, Latin America and the Caribbean. Spirit manages operations on a system-wide basis due to the interdependence of its route structure in the various markets served.
The classification of certain prior year amounts has been adjusted on the Company's consolidated financial statements and these Notes to conform to current year classifications.
The Company evaluates events that occur after the balance sheet date, but before the financial statements are issued for potential recognition or disclosure.
2024 Chapter 11 Bankruptcy and Emergence
On November 18, 2024, Spirit Airlines commenced a voluntary case under Chapter 11 of Title 11 of the United States Code (the “Bankruptcy Code”) in the United States Bankruptcy Court for the Southern District of New York (the “Bankruptcy Court”), and, on November 25, 2024, certain of Spirit Airlines' subsidiaries (together with Spirit Airlines, the “Company Parties”) also filed voluntary petitions seeking relief under Chapter 11 of the Bankruptcy Code in the Bankruptcy Court and joined the 2024 Bankruptcy Case (the “Prior Bankruptcy", "2024 Bankruptcy” or "2024 Chapter 11 Bankruptcy"). On February 20, 2025, the Bankruptcy Court entered an order confirming the 2024 Bankruptcy's First Amended Joint Chapter 11 Plan of Reorganization of Spirit Airlines, Inc. and Its Debtor Affiliates (the “Plan of Reorganization” or the “Plan”). On March 12, 2025 (the “Emergence Date” or "Effective Date"), the Company Parties emerged from the 2024 Bankruptcy in accordance with the confirmed Plan of Reorganization. Refer to Note 4, Emergence from Voluntary Reorganization under the 2024 Chapter 11 Bankruptcy, for additional information.
Between the filing for the 2024 Bankruptcy and the Emergence Date, the Company Parties operated as debtors-in-possession under the supervision of the Bankruptcy Court. The effect of the Company’s emergence from bankruptcy has been applied to the financial statements as of close of business on March 12, 2025. As used herein, the following terms refer to the Company and its operations:
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| "Predecessor" | The Company, before the Emergence Date |
| "Current Predecessor Period" | The Company's operations, January 1, 2025 – March 12, 2025 |
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| "Successor" | The Company, after the Emergence Date |
| "Successor Period" | The Company's operations, March 13, 2025 - December 31, 2025 |
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In accordance with ASC 852, with the application of fresh start accounting to the Successor Period, the Company allocated its reorganization value to its individual assets and liabilities based on their estimated fair value in conformity with FASB ASC Topic 820 - Fair Value Measurements and FASB ASC Topic 805 - Business Combinations. Accordingly, the Successor Period's consolidated financial statements after March 12, 2025 are not comparable with the Predecessor's consolidated financial statements as of or prior to that date. The Effective Date fair values of certain of the Successor’s assets and liabilities differ from their recorded values as reflected on the historical balance sheet of the Predecessor. Refer to Note 4, Emergence from Voluntary Reorganization under the 2024 Chapter 11 Bankruptcy and Note 5, Fresh Start Accounting- 2024 Bankruptcy, for additional information.
All estimates, assumptions, valuations and financial projections related to fresh start accounting, including the fair value adjustments, the enterprise value and equity value projections, are inherently subject to significant uncertainties and the resolution of contingencies beyond the Company's control. Accordingly, no assurances can be provided that the estimates, assumptions, valuations or financial projections will be realized, and actual results could vary materially. For information about the use of estimates relating to fresh start accounting, refer to Note 5, Fresh Start Accounting- 2024 Bankruptcy.
Notes to Consolidated Financial Statements—(Continued)
During the Current Predecessor Period, the Predecessor applied ASC 852 in preparing the unaudited financial statements, which requires distinguishing transactions associated with the reorganization separate from activities related to the ongoing operations of the business. Accordingly, pre-petition liabilities that could have been impacted by the 2024 Bankruptcy were classified as liabilities subject to compromise. These liabilities were reported at the amounts the Company anticipated would be allowed by the Bankruptcy Court. Additionally, certain expenses, realized gains and losses and provisions for losses that were realized or incurred during the Current Predecessor Period and directly related to the 2024 Bankruptcy, including fresh start valuation adjustments and gains on liabilities subject to compromise were recorded as reorganization items, net in the consolidated statements of operations in the Current Predecessor Period.
Due to the lack of comparability with historical financials, the Company’s unaudited financial statements and related footnotes are presented with a “black line” that separates the Predecessor and Successor periods to emphasize the lack of comparability between amounts presented as of and after March 12, 2025 (the “Fresh Start Reporting Date”) and amounts presented for all prior periods. The Successor’s financial results for future periods following the application of fresh start accounting will be different from historical trends and the differences may be material. Refer to Note 5, Fresh Start Accounting- 2024 Bankruptcy, for additional information.
2025 Voluntary Petitions for Reorganization under Chapter 11
On August 29, 2025 (the “Petition Date”), Spirit, as well as Spirit Airlines, LLC (formerly known as Spirit Airlines, Inc.) (“Spirit Airlines”), Spirit IP Cayman Ltd. (“Brand IP Issuer”), Spirit Loyalty Cayman Ltd. (“Loyalty IP Issuer” and, together with Brand IP Issuer, the “Co-Issuers”), Spirit Finance Cayman 1 Ltd., Spirit Finance Cayman 2 Ltd. (collectively, the “Debtors”) each a direct or indirect subsidiary of Spirit, filed voluntary petitions under Chapter 11 of the Bankruptcy Code in the Bankruptcy Court (the “Chapter 11 Cases” or "2025 Bankruptcy" or "2025 Chapter 11 Bankruptcy Proceedings").
The Company has applied Accounting Standards Codification (“ASC”) 852 - Reorganizations in preparing the consolidated financial statements. ASC 852 requires the financial statements, for periods subsequent to the commencement of the Chapter 11 Cases, to distinguish transactions and events that are directly associated with the reorganization from the ongoing operations of the business. In addition, pre-petition Debtor obligations that may be impacted by the Chapter 11 Cases have been classified as liabilities subject to compromise on the Company's consolidated balance sheets as of December 31, 2025. These liabilities are reported at the amounts the Company anticipates will be allowed by the Bankruptcy Court, even if they may be settled for lesser amounts.
The Company will continue to operate its business as a “debtor-in-possession” under the jurisdiction of the Bankruptcy Court and in accordance with the applicable provisions of the Bankruptcy Code and the orders of the Bankruptcy Court. Refer to Note 3, 2025 Chapter 11 Bankruptcy Proceedings for additional information.
Going Concern
On March 12, 2025, the Company emerged from the 2024 Bankruptcy in accordance with the Plan. As part of the reorganization, the Company successfully restructured certain of its debt obligations, established new financing arrangements, and issued new equity securities consisting of new Common Stock and new warrants. However, the Company has continued to be affected by adverse market conditions, including elevated domestic capacity and continued weak demand for domestic leisure travel, resulting in a difficult pricing environment and diminished revenues. As a result, the Company continues to experience challenges and uncertainties in its business operations.
Since its emergence from the 2024 Chapter 11 Bankruptcy, the Company has taken certain measures to address these challenges, including the implementation of product enhancements, strategic reductions in certain markets and capacity, consummation of sale-leaseback transactions related to certain of its owned spare engines, and other discretionary cost reduction strategies, including the pilot furloughs announced in July and October 2025 and the flight attendant furloughs announced in September 2025. Also, on August 21, 2025, the Company borrowed the entire available amount of $275.0 million under the Exit Revolving Credit Facility (as defined below). Borrowings under the Exit Revolving Credit Facility will mature on March 12, 2028.
Effective August 15, 2025 and August 20, 2025, the Company entered into the Amendments (as defined below) with its primary credit card processor. On August 15, 2025, the Company agreed to make an additional transfer of $50.0 million in cash to a pledged account in favor of the credit card processor. This amount is recorded in restricted cash within the Company's consolidated balance sheets. On August 20, 2025, the Company agreed to allow the processor (i) to hold back up to $3.0 million per day until the processor’s exposure is fully collateralized and (ii) to remain fully collateralized as the processor’s exposure increases or decreases. In exchange, the processor agreed (i) to extend the term of the Card Processing Agreement from the then
Notes to Consolidated Financial Statements—(Continued)
current December 31, 2025 expiration date to December 31, 2027, with two automatic one-year extensions unless either party provides a notice of non-renewal not less than 90 days prior to the end of the then-effective term, and (ii) to remove the existing minimum liquidity trigger for holdbacks under the Card Processing Agreement.
On August 29, 2025, the Company and its Debtor affiliates filed voluntary petitions under Chapter 11 of the Bankruptcy Code in the Bankruptcy Court. Since the Petition Date, Spirit has been operating its businesses as a debtor-in-possession under the jurisdiction of the Bankruptcy Court in accordance with the applicable provisions of the Bankruptcy Code and orders of the Bankruptcy Court. Spirit received approval from the Bankruptcy Court for a variety of “first day” motions to continue its ordinary course operations during the Chapter 11 Cases, and approval of various post-petition liquidity initiatives described in further detail below. However, for the duration of the Chapter 11 Cases, the Company’s operations and ability to develop and execute its business plan, its financial condition, liquidity and its continuation as a going concern are subject to a high degree of risk and uncertainty associated with the Chapter 11 Cases. The Company’s ability to continue as a going concern is dependent upon, among other things, its ability to become profitable and maintain profitability, its ability to access sufficient liquidity and its ability to obtain approval of and successfully implement a proposed plan of reorganization ("the Proposed Plan"). As discussed further below, Spirit has entered into a DIP Facility for purposes of accessing ongoing liquidity during the Chapter 11 Cases. Refer to Note 3, 2025 Chapter 11 Bankruptcy Proceedings for additional information. The outcome of the Chapter 11 Cases is dependent upon factors that are outside of the Company’s control, including actions of the Bankruptcy Court. The Company can give no assurances that it will be able to secure additional sources of funds to support its operations, or, if such funds are available to the Company, that such additional financing will be sufficient to meet its needs.
The Company has evaluated whether there are any conditions and events, considered in the aggregate, that raise substantial doubt about its ability to continue as a going concern within one year from the filing of this Annual Report on Form 10-K. Based on such evaluation, management believes there is substantial doubt about the Company’s ability to continue as a going concern. During the Chapter 11 Cases, the Company’s ability to continue as a going concern is contingent upon the Company’s ability to obtain approval of and successfully implement the Proposed Plan, among other factors.
The Company’s consolidated financial statements have been prepared assuming that it will continue to operate as a going concern, which contemplates the Company’s ability to obtain approval of and successfully implement the Proposed Plan, its continuity of operations, realization of assets and liquidation of liabilities in the normal course of business and do not include any adjustments to reflect the possible future effects on the recoverability and classification of assets or the amounts and classifications of liabilities that may result from uncertainty related to its ability to continue as a going concern.
Use of Estimates
The preparation of financial statements in accordance with generally accepted accounting principles in the United States of America requires the Company's management to make estimates and assumptions that affect the amounts reported in the consolidated financial statements and accompanying notes. The Company's estimates and assumptions are based on historical experience and changes in the business environment. However, actual results may differ from estimates under different conditions, sometimes materially.
Cash and Cash Equivalents
The Company considers all highly liquid investments with maturities of less than three months at the date of acquisition to be cash equivalents. Investments included in this category primarily consist of cash and money market funds. Cash and cash equivalents are stated at cost, which approximates fair value.
Restricted Cash
The Company's restricted cash is comprised of cash held in accounts subject to restrictions imposed by the Bankruptcy Court or otherwise pledged as collateral against the Company's letters of credit and other agreements. As of December 31, 2025, the Company's restricted cash is to be used to secure standby letters of credit, as collateral for the Exit Secured Notes (as defined below), restricted cash held in an account subject to a control agreement under its credit card processing agreement, restricted cash held in accounts subject to control agreements to be used for the payment of interest and fees on the Exit Secured Notes and pledged cash pursuant to its corporate credit cards, and to fund required escrow accounts due to the 2025 Bankruptcy filing.
Short-term Investment Securities
The Company's short-term investment securities, if any, are normally classified as available-for-sale and generally consist of U.S. Treasury and U.S. government agency securities with contractual maturities of twelve months or less. The Company's short-term investment securities are categorized as Level 1 instruments, as the Company uses quoted market prices in active
Notes to Consolidated Financial Statements—(Continued)
markets when determining the fair value of these securities. For additional information, refer to Note 10, Short-term Investment Securities. These securities are stated at fair value within current assets on the Company's consolidated balance sheet. For all short-term investments, at each reset period or upon reinvestment, the Company accounts for the transaction as proceeds from the maturity of short-term investment securities for the security relinquished, and purchase of short-term investment securities for the security purchased, in the Company's consolidated statements of cash flows. Realized gains and losses on sales of investments, if any, are reflected in non-operating other (income) expense in the consolidated statements of operations. Unrealized gains and losses on investment securities are reflected as a component of accumulated other comprehensive income, ("AOCI").
Accounts Receivable
Accounts receivable primarily consist of amounts due from credit card processors associated with the sales of tickets, amounts due from the Internal Revenue Service related to federal excise fuel tax refunds and amounts expected to be received related to the CARES Employee Retention credit. The Company records an allowance for amounts not expected to be collected. The Company estimates the allowance based on historical write-offs and aging trends as well as an estimate of the expected lifetime credit losses. The allowance for doubtful accounts was immaterial as of December 31, 2025 and 2024.
In addition, the provision for doubtful accounts and write-offs for the Successor Period, the Current Predecessor Period, 2024 and 2023 were each immaterial.
Property and Equipment
Property and equipment is stated at cost, less accumulated depreciation and amortization. Depreciation of operating property and equipment is computed using the straight-line method applied to each unit of property. Residual values for new aircraft, new engines, major spare rotable parts, avionics and assemblies are generally estimated to be 10%. Property under finance leases and related obligations are initially recorded at an amount equal to the present value of future minimum lease payments computed using the Company's incremental borrowing rate or, when known, the interest rate implicit in the lease. Amortization of property under finance leases is recorded on a straight-line basis over the lease term and is included in depreciation and amortization expense.
The depreciable lives used for the principal depreciable asset classifications are:
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| | Estimated Useful Life |
| Aircraft, engines and flight simulators | 25 |
| Spare rotables and flight assemblies | 7 to 25 years |
| Other equipment and vehicles | 5 to 7 years |
| Internal use software | 3 to 10 years |
| Finance leases | Lease term or estimated useful life of the asset |
| Leasehold improvements | Lesser of lease term or estimated useful life of the improvement |
| Buildings | Lesser of lease term or 40 years |
As of December 31, 2025, the Company had 61 aircraft (including 13 aircraft that would have been deemed finance leases resulting in failed sale leaseback transactions), 18 spare engines and 4 flight simulators capitalized within flight equipment with depreciable lives of 25 years.
The Company owns an 8.5-acre parcel of land purchased for $41.0 million and has a 99-year lease agreement for the lease of a 2.6-acre parcel of land, in Dania Beach, Florida, where the Company built its new headquarters campus and a 200-unit residential building. As of December 31, 2025, the 8.5-acre parcel of land and related construction costs were capitalized within other property and equipment on the Company's consolidated balance sheets. The 99-year lease was determined to be an operating lease and is recorded within operating lease right-of-use asset and operating lease liability on the Company's consolidated balance sheets.
Notes to Consolidated Financial Statements—(Continued)
The following table illustrates the components of depreciation and amortization expense (in thousands):
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| Successor | | | Predecessor |
| Period from March 13, 2025 through December 31, 2025 | | | Period from January 1, 2025 through March 12, 2025 | | Twelve Months Ended December 31, 2024 | | Twelve Months Ended December 31, 2023 |
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| Depreciation | $ | 105,158 | | | | $ | 27,457 | | | $ | 177,872 | | | $ | 218,106 | |
| Amortization of heavy maintenance | 56,440 | | | | 21,074 | | | 113,522 | | | 79,768 | |
| Amortization of capitalized software | 28,646 | | | | 6,322 | | | 33,879 | | | 22,998 | |
| Total depreciation and amortization | $ | 190,244 | | | | $ | 54,853 | | | $ | 325,273 | | | $ | 320,872 | |
The Company capitalizes certain internal and external costs associated with the acquisition and development of internal-use software for new products, and enhancements to existing products, which have reached the application development stage and meet recoverability tests. Capitalized costs include external direct costs of materials and services utilized in developing or obtaining internal-use software, and labor costs for employees who are directly associated with, and devote time, to internal-use software projects. Capitalized computer software, included as a component of other property and equipment in the accompanying consolidated balance sheets, net of amortization, was $34.8 million and $48.8 million at December 31, 2025 and 2024, respectively.
The Company records amortization of capitalized software on a straight-line basis within depreciation and amortization expense in the accompanying consolidated statements of operations. The Company placed in service internal-use software of $13.4 million and $1.9 million in the Successor Period and the Current Predecessor Period, respectively and $29.2 million and $35.5 million, during the years 2024 and 2023, respectively.
Deferred Heavy Maintenance, net
The Company accounts for heavy maintenance and major overhaul under the deferral method whereby the cost of heavy maintenance is capitalized and amortized as a component of depreciation and amortization expense in the consolidated statements of operations until the earlier of the next heavy maintenance event or the end of the lease term. Deferred heavy maintenance, net was $90.7 million and $241.1 million at December 31, 2025 and 2024, respectively.
Operating Lease Right-of-Use Asset and Liabilities
Right-of-use assets represent the Company's right to use an underlying asset for the lease term and lease liabilities represent the Company's obligation to make lease payments arising from the lease. Right-of-use assets and lease liabilities are recognized at the lease commencement date based on the estimated present value of lease payments over the lease term. When available, the Company uses the rate implicit in the lease to discount lease payments to present value. However, the Company's leases generally do not provide a readily determinable implicit rate. Therefore, the Company estimates the incremental borrowing rate to discount lease payments based on information available at lease commencement. The Company uses publicly available data for instruments with similar characteristics when calculating its incremental borrowing rates. The Company has options to extend certain of its operating leases for an additional period of time and options to early terminate several of its operating leases. The lease term consists of the noncancellable period of the lease, periods covered by options to extend the lease if the Company is reasonably certain to exercise the option and periods covered by an option to terminate the lease if the Company is reasonably certain not to exercise the option. The Company's lease agreements do not contain any residual value guarantees. The Company elected to not separate non-lease components from the associated lease component for all underlying classes of assets with lease and non-lease components.
As part of the 2025 Chapter 11 Cases, aircraft and spare engine leases have been determined to be liabilities subject to compromise. Accordingly, as of December 31, 2025, operating lease liabilities related to lease contracts entered into prior to the Petition Date have been reclassified to liabilities subject to compromise on the Company’s consolidated balance sheets, as appropriate under the 2025 Bankruptcy proceedings. Refer to Note 3, 2025 Chapter 11 Bankruptcy Proceedings, for more information.
As of December 31, 2025, the Company had rejected the lease agreements related to 83 aircraft and 3 engines. In accordance with ASC 842, the rejection of a lease is accounted for as a lease termination. The Company determined the lease termination date based on the applicable rejection date and the contractual terms of each lease. As a result, the Company derecognized the related right-of-use assets and operating lease liabilities and recorded the resulting loss in reorganization
Notes to Consolidated Financial Statements—(Continued)
expense within its consolidated statement of operations. In addition, upon rejection, the lessors on the rejected leases became unsecured creditors with claims for contractual amounts due under the lease agreements. Accordingly, the Company recorded a liability of $2,189.8 million within liabilities subject to compromise, with a corresponding loss recognized in reorganization expense within its consolidated statement of operations, representing management’s best estimate of the allowed claim amounts related to the rejected lease agreements. The ultimate number and amount of allowed claims may differ significantly and is not determinable at this time.
The Company elected not to apply the recognition requirements in Topic 842 to short-term leases (i.e., leases of 12 months or less) but instead recognize these lease payments in income on a straight-line basis over the lease term. The Company elected this accounting policy for all classes of underlying assets. In addition, in accordance with Topic 842, variable lease payments are not included in the recognition of a lease liability or right-of-use asset.
Pre-Delivery Deposits on Flight Equipment
The Company is required to make pre-delivery deposit payments ("PDPs") towards the purchase price of each new aircraft and engine prior to the scheduled delivery date. These deposits are initially classified as pre-delivery deposits on flight equipment on the Company's consolidated balance sheets until the aircraft or engine is delivered, at which time the related PDPs are deducted from the final purchase price of the aircraft or engine and are reclassified to flight equipment on the Company's consolidated balance sheets. The Company may also be entitled to refunds of PDPs resulting from sale leaseback transactions for aircraft previously included in the Company’s order book, as well as any agreements that modify the timing of aircraft deliveries or involve the removal of aircraft from its order book. For additional information on transactions entered into by the Company during the Successor Period and Current Predecessor Period that provided PDP refunds, if any, refer to Note 18, Commitments, Contingencies and Other Contractual Arrangements.
In addition, the Company capitalizes the interest that is attributable to the outstanding PDP balances as a percentage of the related debt on which interest is incurred. Capitalized interest represents interest cost incurred during the acquisition period of a long-term asset and is the amount which theoretically could have been avoided had the Company not paid PDPs for the related aircraft or engines.
Related interest is capitalized and included within pre-delivery deposits on flight equipment through the acquisition period until delivery is taken of the aircraft or engine and the asset is ready for service. Once the aircraft or engine is delivered, the capitalized interest is also reclassified into flight equipment on the Company's consolidated balance sheets along with the related PDPs as they are included in the cost of the aircraft or engine. Capitalized interest for the Successor Period, the Current Predecessor Period, 2024 and 2023 was primarily related to the interest incurred on long-term debt. In addition, during 2024 and 2023, the Company capitalized interest related to the outstanding work in progress in connection with the building of its new headquarters.
Assets Held for Sale
During the fourth quarter of 2024, the Company concluded that Management’s plan to early retire and sell the 23 aircraft met the required criteria to be classified as held for sale. As a result, the Company recorded the estimated fair value, less cost to sell, of these aircraft within assets held for sale on its consolidated balance sheets.
During the third quarter of the Successor Period, the Company reassessed the classification of the remaining 20 A320ceo and A321ceo aircraft that were previously recorded as held for sale. The original sales agreement for these aircraft expired during the third quarter of the Successor Period, and as of December 31, 2025, the Company retained the assets for ongoing use in operations. As the criteria for held for sale classification under ASC 360 are no longer met, the Company reclassified the aircraft to property and equipment on its consolidated balance sheets as they will be held and used. In accordance with the accounting guidance, the assets were measured at the lower of (i) their carrying amount, adjusted for depreciation that would have been recognized had they remained classified as held and used, or (ii) their fair value as of the date the decision not to sell was made. In addition, net proceeds of any refinancing, sale or other disposition of these aircraft after satisfaction in full of any Aircraft Loans secured by such aircraft serves as collateral under the DIP loan agreement executed on October 14, 2025.
During the third quarter of the Successor Period, the Company recorded an adjustment to the carrying value of the related aircraft to their adjusted carrying amount of $429.5 million, and reclassified the assets to property and equipment on its consolidated balance sheets, which represents the amount at which the aircraft would have been recorded had they never been classified as held for sale. In addition, the Company recorded a $3.2 million gain, within loss (gain) on disposal of assets within its consolidated statement of operations for the Successor Period ended December 31, 2025, related to this reclassification, reflecting the difference between the adjusted carrying value and the prior held for sale balance.
Notes to Consolidated Financial Statements—(Continued)
As of December 31, 2025 and 2024, the Company had $3.0 million and $463.0 million, respectively, recorded within assets held for sale in its consolidated balance sheets.
Long-Lived Asset Impairment Analysis
The Company records impairment charges on long-lived assets used in operations when events and circumstances indicate that the assets may be impaired, the undiscounted future cash flows estimated to be generated by those assets are less than the carrying amount of those assets, and the net book value of the assets exceeds their estimated fair value. Factors which could be indicators of impairment include but are not limited to (1) a decision to permanently remove flight equipment or other long-lived assets from operations, (2) significant changes in the estimated useful life, (3) significant changes in projected cash flows, (4) permanent and significant declines in related fair values and (5) changes to the regulatory environment. If an impairment indicator is identified, the Company conducts a recoverability analysis. In performing the analysis, the Company uses certain assumptions, including, but not limited to: (i) estimated fair value of the assets; and (ii) estimated, undiscounted future cash flows expected to be generated by these assets, which are based on additional assumptions such as asset utilization, length of service the asset will be used in the Company’s operations, and estimated salvage values. Depending on the results of the recoverability analysis, an impairment loss is measured as the difference between the asset's carrying value and its fair value.
As of December 31, 2025, the Company identified indicators of potential impairment, including continued negative cash flows and the commencement of the 2025 Chapter 11 Bankruptcy Proceedings during the third quarter of 2025. These indicators prompted the Company to perform a recoverability analysis on its assets to assess whether any impairment losses should be recognized. In estimating the undiscounted future cash flows, the Company uses certain assumptions, including, but not limited to, the estimated, undiscounted future cash flows expected to be generated by these assets, estimates of length of service the asset will be used in the Company’s operations, estimated salvage values, and estimates related to the Company's plan of reorganization. The Company assessed whether any impairment of its long-lived assets existed as of December 31, 2025 and has determined that the assets are recoverable. The Company’s assumptions about future conditions are important to its assessment of potential impairment of its long-lived assets were subject to uncertainty, and the Company will continue to monitor these conditions in future periods as new information becomes available and will update its analyses accordingly.
During 2024 and 2023, the Company did not recognize impairment charges related to the recoverability of long-lived assets.
Indefinite-Lived Intangible Asset Impairment Analysis
With the adoption of fresh start accounting, the Company recorded $83.5 million of indefinite-lived intangible assets within intangible assets on the Company's consolidated balance sheet as of the Fresh Start Reporting Date. The Company's indefinite-lived intangible assets are related to landing and take-off rights and authorizations ("Slots") at LaGuardia Airport, a slot-controlled airport (the “LGA Slots”).
These indefinite-lived intangible assets are assessed for impairment annually on September 1 (the "Annual Test Date"), or more frequently if events or circumstances indicate that the fair values of indefinite-lived intangible assets may be lower than their carrying values. As of December 31, 2025, the Company had not identified any such events or circumstances that would indicate the fair value of the LGA Slots is below their carrying value. Indefinite-lived intangible assets are assessed for impairment by initially performing a qualitative assessment. The Company performed a qualitative test to evaluate whether the assets were impaired on the Annual Test Date in 2025. As part of the qualitative test, the Company also considered fair value estimates provided by an independent third-party specialist. The specialist applies a market approach to determine fair value, which relies on recent slot transaction data, market lease rates, and input from industry participants and regulatory agencies. Slot values are further adjusted based on factors such as time-of-day, peak demand, and qualitative considerations. These valuations reflect market participant assumptions and, in combination with other qualitative factors considered, are used to determine whether it is more likely than not that the fair value of the Slots is less than their carrying amount.
Passenger Revenues
Operating revenues are comprised of passenger revenues and other revenues. Passenger revenues are primarily comprised of fares and related ancillary items such as bags, seats and other travel-related fees. Other revenues primarily consist of the marketing component of the sale of loyalty points to the Company's credit card partner and commissions revenue from the sale of various items, such as hotels and rental cars.
Passenger revenues are generally recognized once the related flight departs. Accordingly, the value of tickets and ancillary products sold in advance of travel is included under the Company's current liabilities as “air traffic liability,” or “ATL”, until the related air travel is provided. As of December 31, 2025 and December 31, 2024, the Company had ATL
Notes to Consolidated Financial Statements—(Continued)
balances of $337.7 million and $436.8 million, respectively. Substantially all of the Company's ATL as of December 31, 2025 is expected to be recognized within 12 months of the respective balance sheet date.
Changes and cancellations. An unused ticket expires at the date of scheduled travel, at which time a service charge is assessed, and is recognized as revenue at the date of scheduled travel. However, customers may elect to change or cancel their itinerary prior to the date of departure. In 2024, the Company launched its no change or cancel fee policy for its bundled travel options. Guests are required to pay the difference in fare if the new trip is more expensive or receive a credit if the new trip is less expensive.
Any unused amount is placed in a credit shell which generally expires within 12 months or 5 years from the date the credit shell is created. Prior to May 2024, credit shells generally expired 90 days from the date the credit shell was created. Effective May 16, 2024, the FAA Reauthorization Act was signed into law. Under U.S. Department of Transportation regulations effective August 2024, credit shells issued in lieu of a refund for airline‑initiated cancellations, schedule changes, or irregular operations (IROP) must remain valid for a minimum of five (5) years from issuance. As of December 31, 2025, 5-year credit shells represented 9.3% of the outstanding Credit Shell liability. The remaining balance generally expires within 12 months of the date of issuance. Credit shells can be used towards the purchase of a new ticket and the Company’s other service offerings. Credit shell amounts are recorded as deferred revenue and amounts expected to expire unused are estimated based on historical experience.
Estimating the amount of credits that will go unused involves some level of subjectivity and judgment. Assumptions used to generate Breakage (as defined below) estimates can be impacted by several factors including, but not limited to, changes to the Company's ticketing policies, changes to the Company’s refund, exchange, and credit shell policies, and economic factors. The amount of credit shells issued varies, primarily due to the flight delays and cancellation events throughout the year. The Company generally experiences some variability in the amount of Breakage revenue recognized throughout the year and expects some variability in the amount of Breakage revenue recorded in future periods, as the estimates of the portion of those funds that will expire unused may differ from historical experience.
Loyalty Program
The Company operates the Spirit Saver$ Club®, which is a subscription-based loyalty program that allows members access to exclusive, extra-low fares, as well as discounted prices on bags and seats, shortcut boarding and security, and exclusive offers on hotels, rental cars and other travel necessities. The Company also operates the Free Spirit loyalty program (the "Free Spirit Program"), which attracts members and partners and builds customer loyalty for the Company by offering a variety of awards, benefits and services. Free Spirit loyalty program members earn and accrue points for dollars spent on Spirit for flights and other non-fare services, as well as services from non-air partners such as retail merchants, hotels or car rental companies. Customers can also earn points based on their spending with the Company's co-branded credit card company with which the Company has an agreement to sell points. The Company's co-branded credit card agreement provides for joint marketing pursuant to which cardholders earn points by making purchases using co-branded cards. Points earned and accrued by Free Spirit loyalty program members can be redeemed for travel awards such as free (other than taxes and government-imposed fees), discounted or upgraded travel. The Company's agreement with the administrator of the Free Spirit affinity credit card program expires on December 31, 2028.
The Company defers the amount of award travel obligations as part of loyalty deferred revenue within ATL on the Company's consolidated balance sheets and recognizes loyalty travel awards in passenger revenues as points are used for travel or expire unused.
To reflect the point credits earned, the program includes two types of transactions that are considered revenue arrangements with multiple performance obligations: (1) points earned with travel and (2) points sold to its co-branded credit card partner.
Passenger ticket sales earning points. Passenger ticket sales earning points provide customers with (1) points earned and (2) air transportation. The Company values each performance obligation on a stand-alone basis and allocates the consideration to each performance obligation based on their relative stand-alone selling price. To value the point credits earned, the Company considers the quantitative value a passenger receives by redeeming points for a ticket rather than paying cash, which is referred to as equivalent ticket value ("ETV").
The Company defers revenue for the points when earned and recognizes loyalty travel awards in passenger revenue as the points are redeemed and services are provided. The Company records the air transportation portion of the passenger ticket
Notes to Consolidated Financial Statements—(Continued)
sales in air traffic liability and recognizes passenger revenue when transportation is provided or if the ticket goes unused, at the date of scheduled travel.
Sale of points. Customers may earn points based on their spending with the Company's co-branded credit card company with which the Company has an agreement to sell points. The contract to sell points under this agreement has multiple performance obligations, as discussed below.
The Company's co-branded credit card agreement provides for joint marketing where cardholders earn points for making purchases using co-branded cards. During 2023, the Company extended its agreement with the administrator of the Free Spirit affinity credit card program through December 31, 2028. The Company accounts for this agreement consistently with the accounting method that allocates the consideration received to the individual products and services delivered. The value is allocated based on the relative stand-alone selling prices of those products and services, which generally consists of (i) points to be awarded, (ii) airline benefits, collectively referred to as the "Award Travel Components," (iii) licensing of brand and access to member lists and (iv) advertising and marketing efforts, collectively referred to as the "Marketing Components." Revenue allocated to the Award Travel Components are recorded in passenger revenues, while the revenue allocated to the Marketing Components are recorded in other revenues. The Company determined the estimate of the stand-alone selling prices by considering discounted cash flow analysis using multiple inputs and assumptions, including: (1) the expected number of points awarded and number of points redeemed, (2) the estimated stand-alone selling price of the award travel obligation and airline benefits, (3) licensing of brand access to member lists and (4) the cost of advertising and marketing efforts undertaken by the Company.
The Company defers the amount for award travel obligation as part of loyalty deferred revenue. The amounts that are expected to be redeemed during the following twelve months are recorded within ATL on the Company's consolidated balance sheet and the portion that is expected to be redeemed beyond the following twelve months is recorded within long-term liabilities on the consolidated balance sheet. In addition, the Company recognizes loyalty travel awards in passenger revenue as the points are used for travel. Revenue allocated to the Marketing Components are recorded in other revenue as all services are provided. Total unrecognized revenue from future Free Spirit Program was $96.4 million and $101.5 million at December 31, 2025 and 2024, respectively. The current portion of this balance is recorded within air traffic liability, and the long-term portion of this balance is recorded within deferred gains and other long-term liabilities in the accompanying consolidated balance sheets.
The following table illustrates total cash proceeds received from the sale of points and the portion of such proceeds recognized in other revenue immediately as marketing component:
| | | | | | | | | | | |
| Consideration received from credit card loyalty programs | | Portion of proceeds recognized immediately as marketing component |
| (in thousands) |
| Period from March 13, 2025 through December 31, 2025 | $ | 59,553 | | | $ | 35,496 | |
| | | |
| | | |
| Period from January 1, 2025 through March 12, 2025 | 15,240 | | | 9,089 | |
| Twelve Months Ended December 31, 2024 | 85,812 | | | 51,220 | |
| Twelve Months Ended December 31, 2023 | 93,147 | | | 48,071 | |
Points breakage. For points that the Company estimates are not likely to be redeemed ("Breakage"), the Company recognizes the associated value proportionally during the period in which the remaining points are redeemed. Management uses statistical models to estimate Breakage based on historical redemption patterns. A change in assumptions as to the period over which points are expected to be redeemed, the actual redemption activity for points or the estimated fair value of points expected to be redeemed could have an impact on revenues in the year in which the change occurs and in future years.
Current activity of loyalty program. Points are combined in one homogeneous pool and are not separately identifiable. As such, revenue is composed of points that were part of the loyalty deferred revenue balance at the beginning of the period as well as points that were issued during the period.
Other Revenues
Notes to Consolidated Financial Statements—(Continued)
Other revenues primarily consist of the marketing component of the sale of loyalty points to the Company's credit card partner and commissions revenue from the sale of various items such as hotels and rental cars.
Airframe and Engine Maintenance
The Company accounts for heavy maintenance and major overhaul under the deferral method whereby the cost of heavy maintenance and major overhaul is deferred and amortized until the earlier of the end of the useful life of the related asset, the end of the remaining lease term or the next scheduled heavy maintenance event.
Amortization of heavy maintenance and major overhaul costs charged to depreciation and amortization expense was $56.4 million and $21.1 million in the Successor Period and the Current Predecessor Period, respectively and $113.5 million and $79.8 million for the years ended 2024 and 2023, respectively. During the Successor Period and the Current Predecessor Period, the Company deferred $30.1 million and $26.7 million, respectively, of costs for heavy maintenance. During the years ended 2024 and 2023, the Company deferred $86.4 million and $202.9 million, respectively, of costs for heavy maintenance. As of December 31, 2025 and 2024, the Company had a deferred heavy maintenance balance of $287.2 million and $577.3 million, and accumulated heavy maintenance amortization of $77.9 million and $273.8 million, respectively.
The Company outsources certain routine, non-heavy maintenance functions under contracts that require payment on a utilization basis, primarily based on flight hours. Costs incurred for maintenance and repair under flight hour maintenance contracts, where labor and materials price risks have been transferred to the service provider, are expensed based on contractual payment terms. All other costs for routine maintenance of the airframes and engines are charged to expense as performed.
The table below summarizes the components of the Company’s maintenance cost (in thousands):
| | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | |
| Successor | | | Predecessor |
| Period from March 13, 2025 through December 31, 2025 | | | Period from January 1, 2025 through March 12, 2025 | | Twelve Months Ended December 31, 2024 | | Twelve Months Ended December 31, 2023 |
| | | | | | | | |
| | | | |
| Utilization-based maintenance expense | $ | 68,537 | | | | $ | 19,981 | | | $ | 103,232 | | | $ | 117,458 | |
| Non-utilization-based maintenance expense | 91,062 | | | | 27,517 | | | 114,506 | | | 105,881 | |
| Total maintenance, materials and repairs | $ | 159,599 | | | | $ | 47,498 | | | $ | 217,738 | | | $ | 223,339 | |
Leased Aircraft Return Costs
The Company's aircraft lease agreements often contain provisions that require the Company to return aircraft airframes, engines and other aircraft components to the lessor in a certain condition or pay an amount to the lessor based on the airframe and engine's actual return condition. Lease return costs include all costs that would be incurred at the return of the aircraft, including costs incurred to repair the airframe and engines to the required condition as stipulated by the lease. Lease return costs are recognized beginning when it is probable that such costs will be incurred and they can be estimated.
When determining the probability to accrue lease return costs, there are various estimated costs and factors which need to be considered such as the contractual terms of the lease agreement, current condition of the aircraft, the age of the aircraft at lease expiration, projected number of hours run on the engine at the time of return, and the number of projected cycles run on the airframe at the time of return, among others. Management assesses the need to accrue lease return costs periodically throughout the year or whenever facts and circumstances warrant an assessment. Lease return costs will generally be estimable closer to the end of the lease term but may be estimable earlier in the lease term depending on the contractual terms of the lease agreement and the timing of maintenance events for a particular aircraft.
As part of the Company’s 2025 Chapter 11 Cases, certain aircraft and spare engine leases were rejected. For these rejected leases, the Company is no longer obligated to return the related aircraft, airframes, engines or components in accordance with the original lease terms. Accordingly, the Company’s estimated lease return cost obligations associated with these rejected aircraft and engines as of December 31, 2025 are recorded within liabilities subject to compromise on the Company’s consolidated balance sheets, as appropriate under the 2025 Bankruptcy proceedings. Refer to Note 3, 2025 Chapter 11 Bankruptcy Proceedings, for more information.
Aircraft Fuel
Notes to Consolidated Financial Statements—(Continued)
Aircraft fuel expense includes jet fuel and associated into-plane costs, taxes, and oil, and realized and unrealized gains and losses associated with fuel derivative contracts, if any.
Advertising
The Company expenses advertising and the production costs of advertising as incurred. Marketing and advertising expenses were $24.3 million for the Successor Period and $11.9 million for the Current Predecessor Period. Marketing and advertising expenses were $26.8 million and $9.0 million for the years ended 2024 and 2023, respectively. These costs were recorded within distribution expense in the consolidated statements of operations.
Income Taxes
The Company accounts for income taxes using the asset and liability method. The Company records a valuation allowance to reduce the deferred tax assets reported if, based on the weight of the evidence, it is more likely than not that some portion or all of the deferred tax assets will be not realized. As of December 31, 2025 and 2024, the Company had a valuation allowance of $813.7 million and $226.4 million, respectively, recorded within deferred income taxes on the Company's consolidated balance sheets. For additional information, refer to Note 17, Income Taxes.
Pratt & Whitney AOG Credits
On July 25, 2023, RTX Corporation, the parent company of Pratt & Whitney, announced that it had determined that a rare condition in the powdered metal used to manufacture certain engine parts will require accelerated inspection of the PW 1100G-JM geared turbo fan (“GTF”) fleet, which powers the Company's A320neo family of aircraft. As a result, the Company removed GTF engines from service and grounded some of its A320neo aircraft for inspection requirements.
On June 4, 2025, the Company entered into an agreement (the "Agreement") with International Aero Engines, LLC ("IAE"), an affiliate of Pratt & Whitney, pursuant to which IAE provided the Company with a monthly credit, subject to certain conditions, as compensation for each of its aircraft unavailable for operational service due to GTF engine issues from January 1, 2025 through December 31, 2025. The credits are accounted for as vendor consideration in accordance with ASC 705-20 and are recognized as a reduction of the purchase price of the goods or services acquired from IAE during the period, which may include the purchase of maintenance, spare engines and short-term rentals of spare engines, based on an allocation that corresponds to the Company's progress towards earning the credits. Pratt & Whitney agreed to issue the Company $135.3 million in credits related to the aircraft on ground ("AOG") days through December 31, 2025, of which the entire amount was recognized in 2025.
Of the total credits recognized as of December 31, 2025, $103.7 million and $6.0 million was recorded in the Successor Period and the Current Predecessor Period, respectively, as a reduction in the cost basis of assets purchased from IAE within flight equipment and deferred heavy maintenance, net on the Company's consolidated balance sheets. In addition, during the Successor Period and the Current Predecessor Period, the Company recorded $21.0 million and $4.6 million, respectively, in credits on the Company's consolidated statements of operations within maintenance, materials and repairs and aircraft rent expenses. In addition, during the Successor Period and the Current Predecessor Period, the Company recognized lower depreciation and amortization expense of $24.3 million and $6.1 million, respectively, related to credits recognized, as a reduction of the cost basis of assets purchased from IAE recorded within the Company's consolidated statements of operations.
In connection with the Company's ongoing 2025 Chapter 11 Bankruptcy Proceedings, the lease agreements related to certain aircraft subject to these inspections were rejected as part of the bankruptcy process, and the Company did not receive any additional credits under this agreement related to these aircraft. In addition, in connection with the Chapter 11 Cases, the Company entered into a restructuring term sheet with IAE, dated December 3, 2025, and subsequently entered into a definitive agreement on February 4, 2026. For additional information refer to Note 3, 2025 Chapter 11 Bankruptcy Proceedings.
Concentrations of Risk
Aircraft Fuel. The Company’s business may be adversely affected by increases in the price of aircraft fuel, the volatility of the price of aircraft fuel or both. Aircraft fuel, one of the Company’s largest expenditures, represented approximately 22%, 21%, 25% and 31% of total operating expenses in the Successor Period, the Current Predecessor Period, 2024 and 2023, respectively.
The Company’s operations are largely concentrated in the southeast United States with Fort Lauderdale being the highest volume fueling point in the system. Gulf Coast Jet indexed fuel is the basis for a substantial majority of the Company’s fuel consumption. Any disruption to the oil production or refinery capacity in the Gulf Coast, as a result of weather or any other disaster, or disruptions in supply of jet fuel, dramatic escalations in the costs of jet fuel and/or the failure of fuel providers to
Notes to Consolidated Financial Statements—(Continued)
perform under fuel arrangements for other reasons could have a material adverse effect on the Company’s financial condition and results of operations.
Weather Conditions. The Company’s operations will continue to be vulnerable to weather conditions (including hurricane season or snow and severe winter weather), which could disrupt service or create air traffic control problems. These events may result in decreased revenue and/or increased costs.
Limited number of vendors. The Company relies on a limited number of vendors for the delivery of additional aircraft and engines - currently Airbus A320-family, single-aisle aircraft, powered by engines manufactured by IAE and Pratt & Whitney. Due to the relatively small size of the Company's fleet and high utilization rate, the unavailability of aircraft and engines, as well as the reduced capacity, resulting from delivery delays or performance issues from these vendors, could have a material adverse effect on the Company’s business, results of operations and financial condition.
Employees. As of December 31, 2025, the Company had six union-represented employee groups that together represented approximately 81% of all employees. A strike or other significant labor dispute with the Company’s unionized employees is likely to adversely affect the Company’s ability to conduct business. Additional disclosures are included in Note 18, Commitments, Contingencies and Other Contractual Arrangements.
2.Recent Accounting Developments
Recently Adopted Accounting Pronouncements
In December 2023, the Financial Accounting Standards Board (the "FASB") issued ASU No. 2023-09, Income Taxes (Topic 740): Improvement to Income Tax Disclosures, to enhance the transparency and decision usefulness of income tax disclosures. The Company adopted this standard effective January 1, 2025, primarily affecting the disclosure requirements. Refer to Note 17, Income Taxes for additional information.
Recently Issued Accounting Pronouncements Not Yet Adopted
In November 2024, the FASB issued ASU No. 2024-03 (“ASU 2024-03”), Income Statement – Reporting Comprehensive Income - Expense Disaggregation Disclosures (Subtopic 220-40). Subsequently, the FASB released ASU No. 2025-01, which revises the effective date. This standard requires disclosure of specific information about costs and expenses and is effective for the Company for annual reporting periods beginning after December 15, 2026, and interim periods within annual reporting periods beginning after December 15, 2027. Early adoption is permitted. The Company is currently evaluating the impact of this new standard.
In July 2025, the FASB issued ASU No. 2025-05 (“ASU 2025-05”), Financial Instruments – Credit Losses (Topic 326): Measurement of Credit Losses for Accounts Receivable and Contract Assets. The amendments allow all entities to apply a practical expedient and entities other than public business entities to make an accounting policy election to simplify the estimation of credit losses on these assets. The amendments in this ASU are effective for all entities for annual reporting periods beginning after December 15, 2025, and interim reporting periods within those annual reporting periods. Early adoption is permitted. The Company is currently evaluating the impact of this new standard.
In September 2025, the FASB issued ASU 2025-06 (“ASU 2025-06”), Intangibles – Goodwill and Other – Internal-Use Software (Subtopic 350-40): Targeted Improvements to the Accounting for Internal-Use Software. The amendments in this ASU increase the operability of the recognition guidance considering different methods of software development and are effective for all entities for annual reporting periods beginning after December 15, 2027, and interim reporting periods within those annual reporting periods. Early adoption is permitted. The Company is currently evaluating the impact of this new standard.
In December 2025, the FASB issued ASU 2025-11 (“ASU 2025-11”), Interim Reporting (Topic 270): Narrow-Scope Improvements. The amendments in ASU 2025-11 clarify interim disclosure requirements and the applicability of Topic 270. The amendments in ASU 2025-11 are effective for interim reporting periods within annual reporting periods beginning after December 15, 2027, for public business entities. Early adoption is permitted for all entities. The Company is currently evaluating the impact of this new standard.
In December 2025, the FASB issued ASU 2025-12 (“ASU 2025-12”), Codification Improvements. The amendments in this ASU address stakeholder suggestions on the Accounting Standards Codification and make other incremental improvements to generally accepted accounting principles (GAAP). The amendments make Codification updates to a broad
Notes to Consolidated Financial Statements—(Continued)
range of Topics arising from technical corrections, unintended application of the Codification, clarifications, and other minor improvements. The amendments in this ASU are effective for all entities for annual reporting periods beginning after December 15, 2026, and interim reporting periods within those annual reporting periods. Early adoption is permitted. The Company is currently evaluating the impact of this new standard.
3.2025 Chapter 11 Bankruptcy Proceedings
Voluntary Filing under Chapter 11
On August 29, 2025, Spirit and its Debtor affiliates filed voluntary petitions under Chapter 11 of the Bankruptcy Code in connection with the Chapter 11 Cases. Each of the Debtors in the Chapter 11 Cases (other than Spirit) filed a voluntary petition for relief under Chapter 11 of the Bankruptcy Code on November 18, 2024 related to the Prior Bankruptcy.
The Company has applied Accounting Standards Codification (“ASC”) 852 - Reorganizations in preparing the consolidated financial statements. ASC 852 requires the financial statements, for periods subsequent to the commencement of the Chapter 11 Cases, to distinguish transactions and events that are directly associated with the reorganization from the ongoing operations of the business. In addition, pre-petition Debtor obligations that may be impacted by the Chapter 11 Cases have been classified as liabilities subject to compromise on the Company's consolidated balance sheet as of December 31, 2025. These liabilities are reported at the amounts the Company anticipates will be allowed by the Bankruptcy Court, even if they may be settled for lesser amounts.
Debtor-In-Possession
The Debtors are currently operating as debtors-in-possession in accordance with the applicable provisions of the Bankruptcy Code. The Bankruptcy Court has approved motions filed by the Debtors that were designed primarily to mitigate the impact of the Chapter 11 Cases on the Company’s operations, customers and employees. In general, as debtors-in-possession under the Bankruptcy Code, the Debtors are authorized to continue to operate as an ongoing business but may not engage in transactions outside the ordinary course of business without the prior approval of the Bankruptcy Court. Pursuant to first day motions filed with the Bankruptcy Court, the Company received approval from the Bankruptcy Court for a variety of “first day” motions to continue its ordinary course operations during the Chapter 11 Cases.
Automatic Stay
Subject to certain exceptions under the Bankruptcy Code, pursuant to Section 362 of the Bankruptcy Code, the filing of Spirit’s Chapter 11 Cases automatically stayed the continuation of most legal proceedings or the filing of other actions against or on behalf of Spirit or Spirit's property to recover on, collect or secure a claim arising prior to the Petition Date or to exercise control over property of Spirit’s bankruptcy estate, unless and until the Bankruptcy Court modifies or lifts the automatic stay as to any such claim. Notwithstanding the general application of the automatic stay described above and other protections afforded by the Bankruptcy Code, governmental authorities may determine to continue actions brought under their police and regulatory powers.
Executory Contracts
Subject to certain exceptions, under the Bankruptcy Code, the Debtors may assume, amend or reject certain executory contracts and unexpired leases subject to the approval of the Bankruptcy Court and certain other conditions. Generally, the rejection of an executory contract or unexpired lease is treated as a pre-petition breach of such executory contract or unexpired lease and, subject to certain exceptions, relieves the Debtors from performing their future obligations under such executory contract or unexpired lease but entitles the contract counterparty or lessor to a prepetition general unsecured claim for damages caused by such deemed breach. Generally, the assumption of an executory contract or unexpired lease requires the Debtors to cure existing monetary defaults under such executory contract or unexpired lease and provide adequate assurance of future performance. Accordingly, any description of an executory contract or unexpired lease with the Debtors herein, including where applicable a quantification of the Company’s obligations under any such executory contract or unexpired lease of the Debtors, is qualified by any overriding rejection rights the Company has under the Bankruptcy Code.
On September 5, 2025, the Debtors filed a motion under Section 1110 of the Bankruptcy Code ("Section 1110") to preserve the Debtors' right to retain and operate certain aircraft, aircraft engines and other equipment (collectively "Aircraft
Notes to Consolidated Financial Statements—(Continued)
Counterparties") that are leased or subject to a security interest or conditional sale contract that is specifically governed by Section 1110. The motion sought authority for the Debtors to enter into Section 1110 agreements either to perform all of the obligations under the leases, security agreements or conditional sale contracts and cure all defaults thereunder (other than defaults constituting a breach of provisions relating to the filing of the Chapter 11 Cases, the Debtors' insolvency or other financial condition of the Debtors) or to extend the Section 1110(a)(1) deadline and enter into 1110(b) stipulations with the Aircraft Counterparties to, among other things, extend the 60-day period set forth in Section 1110(a) ("60-day period"). On October 7, 2025, the Bankruptcy Court entered an order approving the motion. On December 10, 2025, the Bankruptcy Court extended the time period for the Debtors to assume or reject unexpired leases to March 30, 2026.
After the 60-day period approval on October 27, 2025, with the majority approved on November 7, 2025, the Debtors have filed with the Bankruptcy Court multiple stipulation orders seeking approval under Section 1110(b) to extend the 60-day period set forth in Section 1110(a) of the Bankruptcy Code with respect to certain equipment and aircraft agreements.
On October 21, 2025, the Bankruptcy Court entered an order granting the Debtors’ First Omnibus Motion to reject certain equipment leases pursuant to Section 365 of the Bankruptcy Code, authorizing the rejection of these leases. On November 20, 2025 and December 23, 2025, the Bankruptcy Court approved the Debtors’ Second Omnibus Motion and the Debtors’ Third Omnibus Motion, respectively, to reject additional equipment lease agreements. Pursuant to these orders, as of December 31, 2025, the Company had rejected the lease agreements related to 83 aircraft and 3 engines.
In addition, on October 27, 2025, the Debtors notified the Aircraft Counterparties of the amounts required to bring certain related agreements current following the 60-day period and began making payments associated with certain executory contracts. In addition, the Debtors made adequate protection payments under the Revolving Credit Facility for continued use of the collateralized assets.
On December 5, 2025, the Bankruptcy Court approved a restructuring support agreement between the Debtors and Carlyle Aviation Management Limited, a lessor, to assume five amended leases as of the assumed effective date pursuant to Section 365 of the Bankruptcy Code.
On December 23, 2025, the Bankruptcy Court entered an order authorizing the Debtors to enter into a restructuring agreement with IAE to settle disputes over certain engines, provide up to $140.0 million of credits usable for future goods and services, ensure ongoing maintenance support and access to engines at competitive rates and resolve outstanding invoices through a mix of credits and cash payments. The order also authorized the Debtors to enter into short term engine leases for up to 100 PW1100G-JM engines removed from aircraft subject to previously rejected leases. On February 4, 2026, the parties entered into a definitive agreement.
Collective Bargaining Agreement (“CBA”)
On December 29, 2025, the Bankruptcy Court approved an order authorizing the Debtors to enter into new labor conditions CBAs with the Air Line Pilots Association (“ALPA”) and the Association of Flight Attendants (“AFA”). The ALPA shall be entitled to an allowed general, non-priority unsecured claim in the amount of $278.0 million. The Amended CBAs were ratified on December 11, 2025, and Spirit and the unions signed the Amended CBAs on December 11, 2025. For additional information, refer to Note 18, Commitments, Contingencies and Other Contractual Arrangements.
Potential Claims
The Debtors have filed with the Bankruptcy Court schedules and statements setting forth, among other things, the assets and liabilities of each of the Debtors, subject to the assumptions filed in connection therewith. These schedules and statements may be subject to further amendment or modification after filing. Certain holders of pre-petition claims that are not governmental units were required to file proofs of claim by the deadline for general claims, which was on January 27, 2026 (the “Bar Date”).
These claims will be reconciled to amounts recorded in the Company's accounting records. Differences in amounts recorded and claims filed by creditors will be investigated and resolved, including through the filing of objections with the Bankruptcy Court, where appropriate.
In addition, as a result of this process, the Debtors may identify additional liabilities that will need to be recorded or reclassified to liabilities subject to compromise in the consolidated balance sheets. In light of the substantial number of claims that may be filed, the claims resolution process may take considerable time to complete and may continue for the duration of the Debtors’ bankruptcy cases.
Notes to Consolidated Financial Statements—(Continued)
Liabilities Subject to Compromise
The accompanying consolidated balance sheet as of December 31, 2025 includes amounts classified as liabilities subject to compromise, which represent pre-petition liabilities the Company anticipates will be allowed as claims in the Chapter 11 Cases. These amounts represent the Debtors’ current estimate of known or potential obligations to be resolved in connection with the Chapter 11 Cases and may differ from actual future settlement amounts paid. Differences between liabilities estimated and claims filed, or to be filed, will be investigated and resolved in connection with the claims resolution process. The Company will continue to evaluate these liabilities throughout the Chapter 11 process and adjust amounts as necessary. Such adjustments may be material. Refer to Note 14, Debt and Other Obligations for additional information.
Liabilities subject to compromise include unsecured or under-secured liabilities incurred prior to the Petition Date. Such liabilities are reported at the expected amount of the total allowed claims, even if they may ultimately be settled for lesser amounts. This requires management to apply judgment and make estimates based on available information, including the nature of the claims and the status of the bankruptcy proceedings. As the bankruptcy process evolves and additional information becomes available, the Company may revise its estimates of allowed claims.
These liabilities represent the amounts expected to be allowed on known or potential claims to be resolved through the Chapter 11 Cases and remain subject to future adjustments based on negotiated settlements with claimants, actions of the Bankruptcy Court, rejection of executory contracts, proofs of claims or other events. Additionally, liabilities subject to compromise also include certain items that may be assumed under a plan of reorganization, and as such, may be subsequently reclassified to liabilities not subject to compromise. Generally, actions to enforce or otherwise effect payment of prepetition liabilities are subject to the automatic stay. Refer to Note 1, Summary of Significant Accounting Policies for additional information.
| | | | | |
| Successor |
| December 31, 2025 |
| (in millions) |
| Lease liabilities | $ | 4,184.1 | |
| Long-term debt | 1,609.4 | |
| |
| Accounts payable | 124.4 | |
| Other current liabilities | 45.7 | |
| Deferred gains and other long-term liabilities | 19.4 | |
| Air traffic liability | 0.5 | |
| Liabilities subject to compromise | $ | 5,983.5 | |
Determination of the value at which liabilities will ultimately be settled cannot be made until the Bankruptcy Court approves a plan of reorganization. The Company will continue to evaluate the amount and classification of its pre-petition liabilities. Any additional liabilities that are subject to compromise will be recognized accordingly, and the aggregate amount of liabilities subject to compromise may change.
Reorganization Items, Net
The Debtors have incurred and will continue to incur significant costs associated with the reorganization, primarily the write-off of original issue discount and deferred long-term debt fees on debt subject to compromise, legal and professional fees. The amount of these costs, which since the Petition Date are being expensed as incurred, are expected to significantly affect the Company’s results of operations. In accordance with applicable guidance, costs associated with the bankruptcy proceedings have been recorded as reorganization (gain) expense within the Company's consolidated statements of operations for Successor Period ended December 31, 2025.
Reorganization items incurred as a result of the Chapter 11 Cases are presented separately in the Company's consolidated statements of operations. During the third and fourth quarters of the Successor Period, the Company recorded $2,190.7 million of reorganization expense which consisted of the following items:
Notes to Consolidated Financial Statements—(Continued)
| | | | | | | |
| | Successor | |
| | Period from March 13, 2025 through December 31, 2025 | |
| | (in millions) | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| Lease terminations | | $ | 2,148.7 | | |
Unamortized fair value adjustments (1) | | 75.5 | | |
| Legal, consulting and other fees | | 75.5 | | |
| DIP backstop fee | | 31.5 | | |
| Unamortized debt issuance costs | | 9.5 | | |
| AerCap Agreement | | (150.0) | | |
| | | |
| | | |
| Reorganization (gain) expense, net | | $ | 2,190.7 | | |
(1) Unamortized fair value adjustments represent the adjustments recorded upon the adoption of fresh start accounting on the Emergence Date from the 2024 Bankruptcy, related to the Exit Secured Notes and unsecured term loans.
From the Petition Date through December 31, 2025, the Company paid $61.4 million in cash related to reorganization expenses and received $142.7 million in proceeds under the AerCap agreement, which resulted in a reorganization gain. These amounts are included in reorganization items related to the Company’s 2025 Bankruptcy.
During the Chapter 11 Cases, the Company expects its financial results to be volatile as restructuring activities and expenses, contract terminations and rejections, and claims assessments significantly impact its consolidated financial statements.
NYSE American Listing Status
In connection with the Company's emergence from the 2024 Bankruptcy and consistent with its contractual obligations, the Company applied to list the common stock, par value $0.0001, of the Company (the "Common Stock") on the NYSE American stock exchange. Trading began on April 29, 2025, under the symbol FLYY.
Subsequently, on September 2, 2025, Spirit received a notice from the staff of NYSE Regulation (“NYSE Regulation”) that it had commenced proceedings to delist the Common Stock from NYSE American LLC (“NYSE American”) and that trading in the Common Stock was immediately suspended on September 2, 2025. NYSE Regulation decided that the Company is no longer suitable for listing pursuant to Section 1003(c)(iii) of the NYSE American Company Guide after the Company disclosed in its August 29, 2025 Current Report on Form 8-K that the Company and its Debtor affiliates filed voluntary petitions under Chapter 11 of title 11 of Bankruptcy Code in the Bankruptcy Court on August 29, 2025.
NYSE American submitted an application to the U.S. Securities and Exchange Commission to delist the Common Stock upon completion of applicable procedures. The Company did not appeal the determination and, therefore, it was delisted from NYSE American. As a result of the suspension and delisting, the Common Stock is being traded in the OTC Pink Limited Market under the symbol "FLYYQ". The OTC Pink Limited Market is a significantly more limited market than NYSE American, and quotation on the OTC Pink Limited Market likely results in a less liquid market for existing and potential holders of the Common Stock to trade in the Common Stock and could further depress the trading price of the Common Stock. The Company can provide no assurance that its Common Stock will continue to trade on this market, whether broker-dealers will continue to provide public quotes of the Common Stock on this market, or whether the trading volume of the Common Stock will be sufficient to provide for an efficient trading market. The transition to over-the-counter markets will not affect the Company’s business operations.
2025 Debtor-in-Possession Credit Agreement and Facility
On October 31, 2025, the Bankruptcy Court approved a final order which authorized the Debtors to obtain post-petition financing with a multi-draw senior secured non-amortizing super-priority priming debtor-in-possession facility (the “DIP Facility”) fronted initially by Barclays Bank PLC and anchored by the holders of the senior secured notes. Spirit Airlines is Borrower, Spirit and its affiliated Debtors are guarantors and Wilmington Trust, National Association is administrative agent. The DIP Facility’s aggregate principal amount of up to $1.2 billion comprising:
Notes to Consolidated Financial Statements—(Continued)
•New money loans (the "New Money DIP Loans") in an aggregate principal of up to $475.0 million. On October 14, 2025, the Company drew $200.0 million, followed by additional draws on November 7, 2025 for $50.0 million and on December 15, 2025 for $100.0 million. The remaining availability will be available to be drawn in one separate draw. Each draw is subject to its own specific conditions.
•Roll-up of pre-petition secured notes that are validly tendered into the facility, subject to a maximum amount equal to the lesser of (i) the aggregate principal amount of such notes, together with accrued and unpaid interest through the Petition Date (and post-petition interest to the extent permitted under Section 506(b) of the Bankruptcy Code), and (ii) $750.0 million (the "Roll-Up DIP Loans").
Borrowings under the DIP Facility new money draws bear interest at a rate of secured overnight financing rate plus 8.0% paid-in-kind interest rate and 2% default rate on overdue amounts. In addition to paying interest on the new money draws, the Company is required to pay an original interest discount of 3% on the funded amount. The roll-up portion of the DIP Facility only accrues interest if the senior secured notes are determined over-secured under Section 506(b). This portion would bear the same rate as the new money loans. No interest is expected to be accrued for this portion as it is not deemed to be over-secured.
The borrowings under the DIP Facility will mature, and lending commitments thereunder will terminate, upon the earliest to occur of: (a) July 14, 2026 (the “Scheduled Maturity Date”), (b) the substantial consummation (as defined in Section 1101 of the Bankruptcy Code and which for purposes hereof shall be no later than the “effective date” hereof) of a plan of reorganization filed in the Chapter 11 Cases that is confirmed pursuant to an order entered by the Bankruptcy Court, (c) the acceleration of the obligations and the termination of the unfunded term loan commitments (if any) hereunder in accordance with the terms hereof, (d) the consummation of a sale of all or substantially all of the assets of the Debtors pursuant to Section 363 of the Bankruptcy Code and (e) dismissal of the Chapter 11 Cases or conversion of any of the Chapter 11 Cases to one or more cases under chapter 7 of the Bankruptcy Code or appointment of a trustee in any of the Chapter 11 Cases; provided that if any such day is not a Business Day, the Maturity Date shall be the Business Day immediately succeeding such day.
Spirit may voluntarily repay, without premium or penalty, outstanding amounts under the DIP Facility, in whole, or in part, prior to the Scheduled Maturity Date. Mandatory prepayments are only required if asset sales, casualty events or extraordinary receipts occur.
The initial draw of $200.0 million was for general liquidity uses and the later draws were contingent and largely earmarked for aircraft-debt mechanics and transaction execution. The second draw also required post-draw minimum liquidity of $160.0 million.
In connection with the Chapter 11 Cases, on October 31, 2025, the Bankruptcy Court entered a final order (as amended, supplemented, or otherwise modified from time to time, the “Final DIP Order”) approving Spirit Airlines, LLC, as borrower (the “DIP Borrower”), and certain subsidiaries of the Company from time to time party thereto as guarantors, entering into that certain Superpriority Priming Debtor-in-Possession Credit Agreement (the “DIP Credit Agreement”), dated October 14, 2025, with the lenders from time to time party thereto (the “DIP Lenders”) and Wilmington Trust, National Association, as administrative agent and collateral agent (the “Agent”).
Amendment to 2025 DIP Credit Agreement
On December 15, 2025, the Company, the Required DIP Lenders (as defined in the DIP Credit Agreement) and the Agent entered into Amendment No. 1 to the DIP Credit Agreement (the “DIP Credit Agreement Amendment”). The DIP Credit Agreement Amendment amended the DIP Credit Agreement to, among other things, (i) remove certain conditions to borrowing the $100.0 million of new money term loans which were available to be drawn on December 13, 2025 (the “Third Draw New Money Term Loans”); (ii) require that the DIP Borrower and the guarantors maintain $50.0 million of the proceeds from the Third Draw New Money Term Loans in certain encumbered accounts at all times prior to the date on which the DIP Borrower (x) delivers to the DIP Lenders at least one indication of interest with respect to a strategic transaction that is acceptable to the Required DIP Lenders in their sole discretion, (y) agrees upon the principal terms of an Acceptable Plan of Reorganization (as defined in the DIP Credit Agreement) or (z) delivers to the DIP Lenders at least one indication of interest with respect to exit financing that is acceptable to the Required DIP Lenders in their sole discretion; and (iii) require the DIP Borrower to deliver to the restricted DIP Lenders and their counsel daily reports showing cash and cash equivalents of the Debtors; (iv) require the DIP Borrower to deliver to the DIP Lenders and their counsel weekly accounts receivable aging reports; and (y) reflects and incorporates modifications to be made to the Final DIP Order, including as described below. On December 15, 2025, the DIP Borrower delivered to the Agent a notice to borrow the full $100.0 million principal amount of the Third Draw New Money Term Loans. The incremental $100.0 million draw comprised of $50.0 million, net of original issuance discount, that was made
Notes to Consolidated Financial Statements—(Continued)
available for immediate use and access to $50.0 million which was to remain encumbered until satisfaction of conditions tied to further progress on either a standalone plan of reorganization or strategic transaction.
On December 29, 2025, the Bankruptcy Court entered an order amending the Final DIP Order to, among other things, (i) clarify the categories of claims that constitute “Administrative Claim Carve Out Claims” (as defined in the Final DIP Order); (ii) provide for a cap for certain Administrative Claim Carve Out Claims of $80.0 million; and (iii) incorporate funding mechanics with respect to certain Administrative Claim Carve Out Claims upon receipt of a Carve Out Trigger Notice (as defined in the Final DIP Order).
The DIP Credit Agreement was further amended by the Debtors’ entry into the Restructuring Support Agreement with
the Consenting DIP Lenders, as described below.
Restructuring Support Agreement
On March 13, 2026, the Debtors entered into a Restructuring Support Agreement (“RSA”) with certain holders representing approximately (i) 74.6% of the aggregate principal amount of the new money term loans issued under the Company’s debtor-in-possession credit agreement, (ii) 71.8% of the roll-up DIP loans issued thereunder, and (iii) 60.0% of the Company’s non-rolled up PIK Toggle Senior Secured Notes due 2030. The RSA contemplates implementation of a restructuring through the Proposed Plan. The Debtors filed the Restructuring Support Agreement and the Plan with the Bankruptcy Court on March 13, 2026.
Pursuant to the RSA, the Company will, among other things, (i) use $150.0 million of encumbered cash to prepay a portion of the DIP term loans and related accrued interest, (ii) maintain minimum levels of encumbered cash while receiving lender consent to access certain restricted accounts, and (iii) make a $100.0 million payment to holders of allowed DIP loan superpriority claims on the effective date of the Proposed Plan. The RSA also contemplates that, on the Proposed Plan effective date, the reorganized Company will issue new equity interests primarily to holders of roll-up DIP loans, subject to dilution for a management incentive plan and certain settlement distributions, and approximately 2% of new equity interests to holders of prepetition secured notes, which may be issued in the form of warrants.
In addition, the Proposed Plan contemplates the issuance of new senior secured exit financing, including exit secured loans and either (i) a $275.0 million senior secured revolving credit facility or (ii) a $75.0 million term loan facility and a $200.0 million reinstated revolving credit facility. The RSA also provides that distributable proceeds from specified asset sales will be distributed to holders of certain DIP claims in accordance with the Proposed Plan.
The RSA includes certain milestones for the Chapter 11 proceedings and the Proposed Plan process, and may be terminated under specified circumstances, including failure to satisfy such milestones or if the Company’s board determines that continued performance would be inconsistent with its fiduciary duties. The Proposed Plan remains subject to amendment, and to Bankruptcy Court approval and the satisfaction of various conditions precedent, and therefore there can be no assurance that the transactions contemplated by the RSA or the Proposed Plan will be consummated.
AerCap Transactions
On October 10, 2025, the Bankruptcy Court approved a global restructuring term sheet between the Company and AerCap, a key aircraft lessor. The agreement provides for a comprehensive restructuring of aircraft lease and purchase arrangements, subject to definitive documentation and certain conditions, including execution of amendments with Airbus. Key terms include:
•certain arrangements in respect of specific aircraft and engines, including the assumption of 10 existing lease agreements, the rejection of 27 existing lease agreements and the rejection of the existing agreement to lease 36 aircraft to be delivered in future years;
•the agreement to enter into 30 new aircraft lease agreements with deliveries in future periods;
•the settlement of certain claims against and by AerCap with respect to undelivered leases, rejected leases and assumed leases;
•the amendment of the Company's purchase agreement with Airbus to remove 52 aircraft and purchase options for up to 10 aircraft. As a result, the Company received $11.4 million in refunds of previously paid pre-delivery payments (“PDPs”) from Airbus. In addition, the Company wrote off $10.3 million of certain amounts previously paid in
Notes to Consolidated Financial Statements—(Continued)
connection with these aircraft, as well as $54.8 million of previously deferred Airbus credits. These amounts were recorded within reorganization expense (gain) in the Company’s consolidated statements of operations; and
•a $150.0 million liquidity payment by AerCap, which the Company received on October 27, 2025 and recorded within reorganization (gain) expense in the Company’s consolidated statements of operations. Furthermore, the related cash inflow is included within operating activities in the Company's consolidated statements of cash flows.
Sale of Aircraft
On February 11, 2026, the Debtors filed a motion with Bankruptcy Court seeking approval of bidding procedures in connection with the proposed sale of 20 Airbus A320 and A321 aircraft. The Debtors selected CSDS Asset Management LLC as the stalking horse bidder. The stalking horse bid provides for aggregate cash consideration of $533.5 million, including a $53.4 million deposit, and includes a $16.0 million break-up fee and a $2.5 million expense reimbursement, which together establish the minimum bid for the auction process. The stalking horse bid is subject to higher or otherwise better offers from competing bidders.
A hearing on the bidding procedures motion was held on March 11, 2026. The Court approved the bidding procedures motion at that hearing. The bidding procedures contemplate an April 1, 2026 bid deadline, an April 20, 2026 auction, and an April 23, 2026 sale hearing.
4. Emergence from Voluntary Reorganization under the 2024 Chapter 11 Bankruptcy
Voluntary Filing under 2024 Chapter 11 Bankruptcy
On November 18, 2024, Spirit Airlines commenced a voluntary case under Chapter 11 of Title 11 of the United States Code in the United States Bankruptcy Court for the Southern District of New York, and, on November 25, 2024, certain of Spirit Airlines' subsidiaries (together with Spirit Airlines, the “Company Parties”) also filed voluntary petitions seeking relief under Chapter 11 of the Bankruptcy Code and joined the 2024 Bankruptcy Case. On February 20, 2025, the Bankruptcy Court entered an order confirming the 2024 Bankruptcy's First Amended Joint Chapter 11 Plan of Reorganization of Spirit Airlines, Inc. and Its Debtor Affiliates (the “Plan of Reorganization” or the “Plan”). On March 12, 2025 (the “Emergence Date” or "Effective Date"), the Company Parties emerged from the 2024 Bankruptcy in accordance with the confirmed Plan of Reorganization.
Plan of Reorganization
On the Emergence Date, all conditions precedent to the effectiveness of the Plan were either satisfied or waived, and the Company Parties emerged from the Prior Bankruptcy. In accordance with the Plan and effective as of the Emergence Date:
•Cancellation of Senior Secured Notes and Convertible Notes. The then-outstanding senior secured notes (Class 4 Claims) and Convertible Notes (Class 5 Claims) were canceled and terminated. Refer to Note 14, Debt and Other Obligations, for additional information.
•Exit Secured Notes. Certain subsidiaries of Spirit issued $840.0 million of senior secured notes due 2030 (the “Exit Secured Notes”), at an interest rate of (x) 12.00% per annum, of which 8.00% per annum shall be payable in cash and 4.00% per annum shall be payable in-kind or, (y) if elected by the Company in advance of each quarterly interest period, at 11.00% per annum payable in cash, to certain creditors in the 2024 Bankruptcy. Refer to Note 14, Debt and Other Obligations, for additional information.
•Exit Revolving Credit Facility. Spirit and certain of its subsidiaries entered into Amended and Restated Credit and Guaranty Agreement with the lenders of the revolving credit facility due in 2026 (“Exit RCF” or "Exit Revolving Credit Facility") that provides revolving credit loans and letters of credit in an aggregated amount equal to $275.0 million and an uncommitted incremental revolving credit facility up to $25.0 million. The commitment of $275.0 million will be reduced to $250.0 million on September 30, 2026. Concurrently, Spirit Airlines paid the then-outstanding Revolving Credit Facility of $300.0 million (Class 3 Claims) in full. Refer to Note 14, Debt and Other Obligations, for additional information.
Notes to Consolidated Financial Statements—(Continued)
•Termination of the Debtor-in-Possession Financing. The $300.0 million senior secured superpriority debtor-in-possession facility (the “DIP Facility”) that the Company Parties previously entered into was fully repaid and subsequently terminated. Refer to Note 14, Debt and Other Obligations, for additional information.
•Common Stock and Warrants. Spirit issued 16,067,305 shares of a single class of Common Stock and 24,255,256 warrants to purchase shares of Common Stock (the “Warrants”) to certain creditors in the 2024 Bankruptcy, as further described in Note 12, Equity, and certain adjustments set forth in the Plan.
•Cancellation of Prior Equity Securities. All Old Common Stock, unvested equity awards, any outstanding PSP loan warrants and all other equity interests in Spirit Airlines that were outstanding immediately prior to the Emergence Date were terminated and canceled. Refer to Note 12, Equity, for additional information.
•Settlement of Claims and Fees. General Administrative Claims, Professional Fee Claims and fees payable to U.S. Trustee were or will be paid in full.
•Unimpaired Claims. Other Secured Claims and Other Priority Claims were paid or will be paid in full in the ordinary course, were reinstated, or otherwise rendered unimpaired. General Unsecured Claims were reinstated or otherwise rendered unimpaired.
•Election of Directors. Spirit appointed new members to its board of directors, and the directors of Spirit Airlines stepped down.
•Charter and Bylaws. Pursuant to the Plan, Spirit amended and restated its certificate of incorporation (the “Charter”) and bylaws (the “Bylaws”), each of which became effective on the Effective Date.
•Holding Company Reorganization. The Company completed a corporate reorganization (the “Corporate Reorganization”) pursuant to which Spirit became the new parent company, with Spirit Airlines becoming a wholly owned subsidiary of Spirit and converting from a Delaware corporation to a Delaware limited liability company. Spirit became the successor issuer to Spirit Airlines for SEC reporting purposes pursuant to Rule 15d-5 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”).
The costs of efforts to restructure the Company’s capital, prior to and during the 2024 Bankruptcy, along with all other costs incurred in connection with the Prior Bankruptcy, have been material.
Reorganization Items
Any expenses and losses incurred or realized as of or subsequent to November 18, 2024 through March 12, 2025 and as a direct result of the 2024 Bankruptcy, are recorded within reorganization (gain) expense on the Company's consolidated statements of operations. For the Current Predecessor Period, the Company recorded $421.5 million of reorganization gain which consisted of the following items (in millions):
| | | | | | |
| | |
| | Predecessor |
| | |
| Reorganization (Gain) Expense | | Period from 1/1/25 through 3/12/25 |
| Loss on Equity Rights Offering ("ERO") distribution and backstop issuance | | $ | 115.8 | |
| Retained Professional fees | | 29.7 | |
| Reclass of ERO related expense and Exit RCF financing costs | | 19.8 | |
| Extinguishment of unvested stock compensation awards | | 7.6 | |
| Write off of prior RCF prepaid loan fees | | 3.0 | |
| Miscellaneous fees | | 0.6 | |
| Recognition of Exit Secured Notes and Exit RCF financing costs | | (13.9) | |
| Fresh start valuation adjustment | | (22.5) | |
| (Gain) on Class 4 settlement | | (232.3) | |
Notes to Consolidated Financial Statements—(Continued)
| | | | | | |
| (Gain) on Class 5 settlement | | (329.3) | |
| Reorganization (Gain) Expense, net | | $ | (421.5) | |
Special Charges, Non-Operating
Expenses incurred prior to November 18, 2024 or after March 12, 2025 in relation to the 2024 Bankruptcy are recorded within special charges, non-operating on the Company's consolidated statements of operations. Refer to Note 6, Special Charges (Credits) for additional information.
Fresh Start Accounting
On the Emergence Date from the 2024 Bankruptcy, the Company qualified for and adopted fresh start accounting in accordance with Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Topic No. 852 – Reorganizations (ASC 852), which specifies the accounting and financial reporting requirements for entities reorganizing through Chapter 11 bankruptcy proceedings. The application of fresh start accounting resulted in a new basis of accounting and the Company becoming a new entity for financial reporting purposes. As a result of the implementation of the Plan and the application of fresh start accounting, these consolidated financial statements after the Emergence Date are not comparable to the financial statements before that date and the historical financial statements on or before the Emergence Date are not a reliable indicator of its financial condition and results of operations for any period after the Company’s adoption of fresh start accounting. Refer to Note 5, Fresh Start Accounting- 2024 Bankruptcy for additional information.
5.Fresh Start Accounting - 2024 Bankruptcy
Adoption of Fresh Start Accounting
In connection with the emergence from the 2024 Bankruptcy and in accordance with ASC 852, the Company qualified for and adopted fresh start accounting on the Emergence Date because (1) the holders of the then-existing common shares of the Predecessor received less than 50% of the Common Stock shares of the Successor outstanding upon emergence and (2) the reorganization value of the Predecessor’s assets immediately prior to confirmation of the Plan of $8,720 million was less than the total of all post-petition liabilities and allowed claims of $9,819 million.
In accordance with ASC 852, upon adoption of fresh start accounting, the reorganization value derived from the enterprise value as disclosed in the Plan was allocated to the Company’s assets and liabilities based on their fair values in accordance with FASB ASC Topic No. 805 - Business Combinations (ASC 805) and FASB ASC Topic No. 820 - Fair Value Measurements (ASC 820), with limited exceptions (such as deferred taxes). The amount of deferred income taxes recorded due to the fair value adjustments to assets and liabilities was determined in accordance with FASB ASC Topic No. 740 - Income Taxes.
With the application of fresh start accounting, the Company allocated its reorganization value to its individual assets and liabilities based on their estimated fair value. Accordingly, the consolidated financial statements after March 12, 2025 are not comparable with the consolidated financial statements as of or prior to that date. The Effective Date fair values of the Successor’s assets and liabilities differ materially from their recorded values as reflected on the historical balance sheet of the Predecessor.
Reorganization Value
The reorganization value represents the fair value of the Successor’s total assets before considering certain liabilities and is intended to approximate the amount a willing buyer would pay for the Successor’s assets immediately after restructuring. The Plan confirmed by the Bankruptcy Court estimated a range of enterprise values between $6.1 billion and $6.8 billion.
The following table reconciles the enterprise value to the reorganization value of Successor’s assets that has been allocated to the Company’s individual assets as of the Fresh Start Reporting Date (in millions):
Notes to Consolidated Financial Statements—(Continued)
| | | | | |
| Fresh Start Reporting Date |
| Enterprise Value | $ | 6,450 | |
| Plus: Excess cash and cash equivalents | 508 | |
| Plus: Non-operating assets | 447 | |
| Plus: Current and other liabilities (excluding debt) | 1,315 | |
| Reorganization Value | $ | 8,720 | |
Analyses
Management's advisors determined the enterprise and corresponding equity value of the Successor using various valuation methods, including (i) discounted cash flow analysis (“DCF”), (ii) public comparable analysis and (iii) precedent transaction analysis. The use of each approach provides corroboration for the other approaches.
DCF Analysis. The DCF analysis is an enterprise valuation methodology that estimates the value of an asset or business by calculating the present value of expected future cash flows to be generated by that asset or business plus a present value of the estimated terminal value of that asset or business. Management's advisors' DCF analysis used estimated debt-free, after-tax free cash flows through 2028. These cash flows were then discounted at a range of estimated weighted average costs of capital (“Discount Rate”) for Spirit. The Discount Rate reflects the estimated blended rate of return that would be expected by debt and equity investors to invest in Spirit's businesses based on a target capital structure. The enterprise value was determined by calculating the present value of Spirit’s unlevered after-tax free cash flows plus an estimate for the value of Spirit beyond the period covered by the projections reviewed known as the terminal value.
Selected Publicly Traded Companies Analysis. The selected publicly traded companies analysis is based on the enterprise values of selected publicly traded companies that have operating and financial characteristics comparable in certain respects to Spirit. For example, such characteristics may include similar industry, size, and scale of operations, operating margins, growth rates, and geographical exposure. Under this methodology, certain financial multiples that measure financial performance and value are calculated for each selected company and then applied to Spirit’s financials to imply an enterprise value for Spirit. Management advisor used, among other measures, enterprise value (defined as market value of equity, plus book value of debt and book value of preferred stock and minority interests, less cash, subject to adjustments for underfunded obligations and other items where appropriate) for each selected company as a multiple of such company’s publicly available consensus projected EBITDAR for fiscal years 2025 and 2026. Although the selected companies were used for comparison purposes, no selected publicly traded company is either identical or directly comparable to Spirit or its businesses. Accordingly, management advisor’s comparison of selected publicly traded companies to Spirit and its businesses, and its analysis of the results of such comparisons, was not purely mathematical, but instead involved considerations and judgments concerning differences in operating and financial characteristics and other factors that could affect the relative values of the selected publicly traded companies and Spirit. The selection of appropriate companies for this analysis is a matter of judgment and subject to limitations due to sample size and the public availability of meaningful market-based information.
Selected Transaction Analysis. The selected transactions analysis is based on the implied enterprise values of companies and assets involved in publicly disclosed merger and acquisition transactions for which the targets had operating and financial characteristics comparable in certain respects to Spirit. Under this methodology, the enterprise value of each such target is determined by an analysis of the consideration paid and the net debt assumed in the merger or acquisition transaction. The enterprise value is then compared to a selected financial metric, in this case, EBITDAR for Spirit, respectively, for fiscal years 2025 and 2026, to determine an enterprise value multiple. In this analysis, the EBITDAR enterprise value multiples were utilized to determine a range of implied enterprise value for Spirit.
The enterprise value and corresponding equity value are dependent upon achieving the future financial results set forth in the Company's valuations, as well as the realization of certain other assumptions. All estimates, assumptions, valuations and financial projections, including the fair value adjustments, the enterprise value and equity value projections, are inherently subject to significant uncertainties and the resolution of contingencies beyond the Company's control. Accordingly, the Company cannot provide assurances that the estimates, assumptions, valuations or financial projections will be realized, and actual results could vary materially.
Valuation Process
Notes to Consolidated Financial Statements—(Continued)
The reorganization value was allocated to the Successor's single reporting segment using the discounted cash flow approach. The reorganization value was then allocated to the Successor’s identifiable assets and liabilities using the fair value principle as contemplated in ASC 820. The specific approach, or approaches, used to allocate reorganization value by asset class are noted below.
To determine fair value adjustments as of the Effective Date, the Company engaged third-party valuation specialists to conduct an analysis of the consolidated balance sheets to determine the fair values of each balance. The most significant fair value adjustments were made to property and equipment, operating lease right-of-use assets and operating lease liabilities, assets held-for-sale, Slots and debt as discussed below.
Property and Equipment
The depreciable lives of the Company's assets were not changed as a result of the adoption of fresh start accounting.
Aircraft and Engines. The aircraft and engines were valued as of the emergence date, using a market approach. Multiple third-party valuation resources (including appraisals of specific aircraft/engines) were consulted and relied upon for estimates of recent half-life and maintenance adjusted ranges for all of the aircraft and engines.
Real Property. The fair values of real property locations were estimated using the sales comparison (market) approach and cost approach. As part of the valuation process, information was obtained on the Successor’s current usage, building type, year built, and cost history for properties. In determining the fair value for real property assets, functional and economic obsolescence was considered and taken as an adjustment at the asset level.
Personal Property. The fair values of the Company’s other personal property (non-aircraft/engines) were estimated using either the cost or market approach. For most personal property categories, a cost approach was utilized relying on purchase year, historic costs, and industry/equipment-based inflation factors to determine replacement cost new of the assets. Readily available market transaction data was used and adjusted for current market conditions for asset categories with active secondary markets such as heavy trucks and computer equipment. In both approaches, consideration was made for the effects of physical deterioration as well as functional and economic obsolescence in determining estimates of fair value.
Operating Right-of-Use Assets and Operating Lease Liabilities
The fair value of operating lease liabilities and the related right-of-use assets was evaluated using the income approach, which is measured as the present value of the remaining lease payments, as if the lease were a new lease as of the Fresh Start Reporting Date. When available, the Company uses the rate implicit in the lease to discount lease payments to present value. However, the Company's leases generally do not provide a readily determinable implicit rate. Therefore, the Company estimates the incremental borrowing rate to discount lease payments based on information available at lease commencement. The Successor used publicly available data for instruments with similar characteristics when calculating its incremental borrowing rates. Additionally, each lease was evaluated for off-market terms as of the Fresh Start Accounting Reporting Date, and the related adjustments were recorded to the right of use asset on the Company's consolidated balance sheets.
Airport Take-Off and Landing Rights or Slots
The fair value of the Company’s 22 LGA Slots was estimated using a market approach or sales-comparison approach. Specifically, the LGA Slots were valued using observable transaction data for historical sales of other airport take-off and landing rights at LGA. The data was reviewed to estimate a fair value price per Slot, which was applied to the Company’s LGA Slots.
Asset Held-for-Sale
As of Emergence Date, assets held for sale within the Company's consolidated balance sheets, included 21 aircraft planned for future sales. As of December 31, 2025, the Company reassessed the classification of the remaining 20 A320ceo and A321ceo aircraft that were previously recorded as held for sale as the original sales agreement for these aircraft expired during the third quarter of the Successor Period, and as of December 31, 2025, the Company retained the assets for ongoing use in its operations. As the criteria for held for sale classification under ASC 360 are no longer met, the Company reclassified the
Notes to Consolidated Financial Statements—(Continued)
aircraft to property and equipment on its consolidated balance sheets as they will be held and used. Refer to Note 19, Fair Value Measurements for additional information.
Debt
As of the Emergence Date, Spirit had 35 individual debt instruments comprised of Exit Secured Notes, 4 publicly-traded Enhanced Equipment Trust Certificates ("EETCs"), 22 Fixed Aircraft loans, and 3 Payroll Support Program Agreements. The Company used an income approach, where future cash flows are discounted to present value using a discount rate selected by considering benchmark credit spreads and yield to maturities, to arrive at the estimated fair value for each debt instrument mentioned.
Exit Secured Notes. Upon Emergence, the Company issued $840.0 million of Exit Secured Notes, which began trading on March 18, 2025 at 92.50% of par. The Company used a discounted cash flow approach to determine the fair value of the Exit Secured Notes on the Emergence Date.
Enhanced Equipment Trust Certificates (EETC). The Company used publicly available trading prices as of the Emergence Date, ranging from 87.32% to 92.85% to determine the fair value of the EETCs.
Fixed-rate Aircraft Loans. Spirit has 22 individual Aircraft Loans issued to finance the purchase of specific aircraft. The Company used a discounted cash flow approach to determine the fair value of the Aircraft Loans. Since each of these loans is fully collateralized with first liens on the related aircraft, the Company applied a notching method to its current credit rating and utilized a credit rating of BB in the valuation of these debt instruments. The Company concluded that the fair value of the Aircraft Loans ranged from 95.61% to 99.84% of par, depending on the loan, as of the Fresh Start accounting Reporting Date.
Payroll Support Program. The Payroll Support Program ("PSP"), under the Coronavirus Aid, Relief, and Economic Security (CARES) Act provided payroll support to passenger and cargo air carriers and certain contractors for the continuation of payment of employee wages, salaries, and benefits. The PSP loans were valued using a discounted cash flow approach based on a CCC- rating based on an estimated yield leveraging federal reserve economic data ("FRED") and other observable yields as of the Emergence Date.
Condensed Consolidated Successor Balance Sheet
The adjustments included in the following fresh start condensed consolidated balance sheet as of March 12, 2025 reflect the effects of the transactions contemplated by the Plan and executed by the Successor on the Fresh Start Reporting Date (reflected in the column Reorganization Adjustments), and fair value and other required accounting adjustments resulting from the adoption of fresh start accounting (reflected in the column Fresh Start Adjustments). The explanatory notes provide additional information with regard to the adjustments recorded, the methods used to determine the fair values and significant assumptions.
The condensed consolidated balance sheet as of the Fresh Start Reporting Date was as follows (in thousands):
| | | | | | | | | | | | | | | | | | | | | | | |
| Predecessor | | Reorganization Items | | Fresh Start Adjustment | | Successor |
| Assets | | | | | | | |
| Current assets: | | | | | | | |
| Cash and cash equivalents | $ | 678,382 | | | $ | (289,775) | | (1) | $ | — | | | $ | 388,607 | |
| Restricted cash | 171,325 | | | 5,293 | | (2) | — | | | 176,618 | |
| Short-term investment securities | 119,315 | | | — | | | — | | | 119,315 | |
| Accounts receivable, net | 201,681 | | | — | | | — | | | 201,681 | |
| | | | | | | |
| Prepaid expenses and other current assets | 259,522 | | | (2,229) | | (3) | — | | | 257,294 | |
| Assets held for sale | 447,271 | | | — | | | — | | | 447,271 | |
| Total current assets | $ | 1,877,498 | | | $ | (286,711) | | | $ | — | | | $ | 1,590,787 | |
| | | | | | | |
| Property and equipment: | | | | | | | |
Notes to Consolidated Financial Statements—(Continued)
| | | | | | | | | | | | | | | | | | | | | | | |
| Flight equipment | $ | 2,739,143 | | | $ | — | | | $ | (850,445) | | (12) | $ | 1,888,698 | |
| Ground property and equipment | 787,057 | | | — | | | (345,190) | | (13) | 441,866 | |
| Less accumulated depreciation | (1,062,116) | | | — | | | 1,062,116 | | (14) | — | |
| $ | 2,464,084 | | | $ | — | | | $ | (133,520) | | | $ | 2,330,564 | |
| Operating lease right-of-use assets | 4,631,428 | | | — | | | (194,510) | | (15) | 4,436,918 | |
| Intangible assets | 550 | | | — | | | 82,932 | | (16) | 83,482 | |
| Pre-delivery deposits on flight equipment | 85,495 | | | — | | | — | | | 85,495 | |
| Deferred heavy maintenance, net | 246,576 | | | — | | | (120,871) | | (17) | 125,705 | |
| Other long-term assets | 67,043 | | | — | | | — | | | 67,043 | |
| Total assets | $ | 9,372,673 | | | $ | (286,711) | | | $ | (365,969) | | | $ | 8,719,994 | |
| | | | | | | |
| Liabilities and Shareholders' Equity (Deficit) | | | | | | |
| Current liabilities: | | | | | | | |
| Accounts payable | $ | 52,242 | | | $ | (5,566) | | (4) | $ | — | | | $ | 46,676 | |
| Air traffic liability | 518,668 | | | — | | | — | | | 518,668 | |
| Current maturities of long-term debt, net, and finance leases | 471,698 | | | (309,000) | | (5) | 2,991 | | (18) | 165,689 | |
| Current maturities of operating leases | 259,713 | | | — | | | (17,483) | | (15) | 242,230 | |
| Other current liabilities | 623,035 | | | (39,250) | | (6) | (1,536) | | (19) | 582,249 | |
| Total current liabilities | $ | 1,925,357 | | | $ | (353,816) | | | $ | (16,029) | | | $ | 1,555,512 | |
| | | | | | | |
| Long-term debt and finance leases, less current maturities | $ | 1,704,517 | | | $ | 526,841 | | (7) | $ | (177,234) | | (18) | $ | 2,054,124 | |
| Operating leases, less current maturities | 4,380,845 | | | — | | | (172,065) | | (15) | 4,208,781 | |
| Deferred income taxes | 52,556 | | | — | | | 16,852 | | (20) | 69,408 | |
| Deferred gains and other long-term liabilities | 120,795 | | | — | | | (22,996) | | (19) | 97,799 | |
| Total liabilities not subject to compromise | $ | 8,184,070 | | | $ | 173,025 | | | $ | (371,472) | | | $ | 7,985,623 | |
| | | | | | | |
| Liabilities subject to compromise | $ | 1,635,104 | | | $ | (1,635,104) | | (8) | $ | — | | | $ | — | |
| | | | | | | |
| Shareholders’ equity (deficit): | | | | | | | |
| Predecessor common stock | $ | 11 | | | $ | (11) | | (9) | $ | — | | | $ | — | |
| Predecessor Additional paid-in capital | 1,174,925 | | | (1,174,925) | | (9) | — | | | — | |
| Predecessor Treasury stock at cost | (81,285) | | | 81,285 | | (9) | — | | | — | |
Successor common stock $0.0001 par value | — | | | 2 | | (10) | — | | | 2 | |
| Successor Additional paid-in capital | — | | | 734,368 | | (10) | — | | | 734,368 | |
| Retained earnings | (1,540,278) | | | 1,534,648 | | (11) | 5,630 | | (21) | — | |
| Accumulated other comprehensive income (loss) | 127 | | | — | | | (127) | | (22) | — | |
| Total shareholders’ equity (deficit) | $ | (446,501) | | | $ | 1,175,368 | | | $ | 5,503 | | | $ | 734,370 | |
| Total liabilities and shareholders’ equity (deficit) | $ | 9,372,673 | | | $ | (286,711) | | | $ | (365,969) | | | $ | 8,719,994 | |
Balance Sheet Reorganization Adjustments (in thousands)
(1) Changes in cash and cash equivalents included the following:
| | | | | |
| Funds received from the Equity Rights Offering | $ | 350,000 | |
| Repayment of Debtor in Possession financing principal and accrued interest | (310,555) | |
| Repayment of prepetition Revolving Credit Facility | (300,856) | |
Notes to Consolidated Financial Statements—(Continued)
| | | | | |
| Funding to the professional fee escrow account | (5,293) | |
| Payment of professional fees at Emergence | (8,191) | |
| Payment of accrued interest on prepetition senior secured notes | (12,826) | |
| Payment of accrued interest on prepetition Convertible Senior Notes | (2,013) | |
| Payment of Exit RCF Administrative Agent Fees | (41) | |
| Net change in cash and cash equivalents | $ | (289,775) | |
(2) Changes in restricted cash include the following:
| | | | | |
| Funding to the professional fee escrow account | $ | 5,293 | |
| |
| Net change in restricted cash | $ | 5,293 | |
(3) Changes in prepaid expenses and other current assets are related to certain debt issuance costs related to the Exit Revolving Credit Facility.
(4) Changes in accounts payable were due to the payment of $8.2 million in professional fees and recognition of $2.6 million of success fees earned at Emergence.
(5) The change in current maturities of long-term debt was due to the repayment of the $309.0 million principal balance of the Debtor in Possession facility at Emergence.
(6) Changes to other liabilities included the following:
| | | | | |
| |
| Accrual of professional fees earned at Emergence | $ | 13,000 | |
| Settlement of the Backstop Commitment Premium in Successor shares | (35,000) | |
| Payment of accrued interest on prepetition senior secured notes | (12,826) | |
| Payment of accrued interest on prepetition Convertible Senior Notes | (2,013) | |
| Payment of accrued interest on the Debtor in Possession facility | (1,555) | |
| Payment of accrued interest on prepetition Revolving Credit Facility | (856) | |
| Net change in other liabilities | $ | (39,250) | |
(7) Changes in long-term debt include the following:
| | | | | |
| |
| Issuance of Exit Secured Notes | $ | 840,000 | |
| Recognition of deferred financing costs related to the Exit Secured Notes | (13,159) | |
| Repayment of the prepetition Revolving Credit Facility principal | (300,000) | |
| Net change in long-term debt | $ | 526,841 | |
(8) Liabilities subject to compromise settled in accordance with the Plan:
| | | | | |
| |
| Class 4 senior secured notes claims settled via issuance of Successor shares | $ | (1,110,000) | |
| Class 5 Convertible Senior Notes claims settled via issuance of Successor shares | (525,104) | |
| Total liabilities subject to compromise settled in accordance with the Plan | $ | (1,635,104) | |
The resulting gain on liabilities subject to compromise was determined as follows:
| | | | | |
| |
| Prepetition debt obligations settled at Emergence | $ | 1,635,104 | |
| Issuance of Exit Secured Notes to settle Class 4 and Class 5 claims | (840,000) | |
| Issuance of Successor shares to settle Class 4 claims | (177,694) | |
Notes to Consolidated Financial Statements—(Continued)
| | | | | |
| Issuance of Successor shares to settle Class 5 claims | (55,836) | |
| Gain on liabilities subject to compromise | $ | 561,574 | |
(9) Changes to Predecessor common stock, additional paid-in-capital and treasury stock are due to the extinguishment of Predecessor equity per the Plan.
(10) Reflects the Successor equity including the issuance of 16,067,305 shares of Common Stock and 24,255,256 Warrants, consisting of 3,617,385 Tranche 1 Warrants and 20,637,871 Tranche 2 Warrants pursuant to the Plan.
| | | | | |
| Issuance of Successor equity contemplated in Class 4 and Class 5 settlements | $ | 138,754 | |
| Issuance of Successor equity associated with the Rights Offering, Backstop Commitment and Backstop Premium | 153,870 |
| Fair value of Tranche 2 Warrants contemplated in Class 4 and Class 5 settlements | 94,775 |
| Fair value of Tranche 2 Warrants associated with the Rights Offering, Backstop Commitment and Backstop Premium | 281,089 |
| |
| Fair value of Tranche 1 Warrants associated with Rights Offering, Backstop Commitment and Backstop premium | 65,881 |
| Total change in Successor common stock and additional paid-in capital | $ | 734,370 | |
| Less: par value of Successor common stock | (2) | |
| Change in Successor additional paid-in capital | $ | 734,368 | |
The value of Successor equity issued per the Plan and ERO was derived from the Selected Enterprise Value as shown in the table below (in millions):
| | | | | |
| Fresh Start Reporting Date |
Enterprise Value | $ | 6,450 | |
Minus: Debt and operating leases | (6,671) | |
Plus: Excess cash and cash equivalents | 508 | |
Plus: Non-operating assets | 447 | |
Successor Equity Value | $ | 734 | |
(11) Changes to retained earnings included the following:
| | | | | |
| |
| Extinguishment of Predecessor equity | $ | 1,093,651 | |
| Gain on settlement of liabilities subject to compromise | 561,574 | |
| Gain on issuance of Successor shares via the Equity Rights Offering | (115,840) | |
| Recognition of deferred financing costs related to the Exit Secured Notes | 13,159 | |
| Recognition of deferred financing costs related to the Exit Revolving Credit Facility | 775 | |
| Professional fees earned at Emergence | (15,625) | |
| Write off of remaining old RCF prepaid loan fees | (3,003) | |
| Recognition of Exit RCF Administrative Agent Fees | (41) | |
| Net change to retained earnings | $ | 1,534,648 | |
Balance Sheet Fresh Start Adjustments (in thousands)
(12) The change in flight equipment represents the fair value adjustments to the Company's fixed assets due to the adoption of fresh start accounting. The following table summarizes the fair value of flight equipment by asset class:
Notes to Consolidated Financial Statements—(Continued)
| | | | | |
| Airframes | $ | 1,382,116 | |
| Engines | 301,906 | |
| Spare rotables and repairables | 204,676 |
| Total flight equipment | $ | 1,888,698 | |
(13) The change in ground property and equipment represents the fair value adjustment to the Company's fixed assets due to the adoption of fresh start accounting. The following table summarizes the fair value of ground property and equipment by asset class:
| | | | | |
| Other equipment and vehicles | $ | 108,598 | |
| Internal use software | 50,587 | |
| Buildings | 230,003 | |
| Leasehold improvements | 19,485 | |
| Land | 33,193 | |
| Total ground property and equipment | $ | 441,866 | |
(14) The Company's accumulated depreciation incurred in the Predecessor periods has been eliminated with the adoption of fresh start accounting.
(15) The change in operating lease right of use assets is due to the change in the Company's incremental borrowing rate used in the calculation of operating lease right of use assets and operating lease liabilities, as well as adjustment for off-market terms.
(16) The change in intangible assets represents the fair value adjustment to the Company's air carrier slots due to the adoption of fresh start accounting. The air carrier slots were valued at $83.5 million as of the Emergence Date.
(17) Changes to deferred heavy maintenance, net are due to the write-off of $120.9 million of capitalized deferred heavy maintenance costs related to the Company's owned aircraft with the adoption of fresh start accounting. The aircraft and spare engines values as of the emergence date, were determined using a market approach, and included recent half-life and maintenance adjusted values.
(18) Changes to long-term debt include adjustments to the carrying values of the Company's debt instruments to their fair value as of the Fresh Start Reporting Date. The fair value adjustments to the carrying value for each type of debt instrument are noted below:
| | | | | |
| Successor Exit Secured Notes | $ | (24,488) | |
| EETC Notes, all tranches | (54,118) | |
| Fixed Rate and Senior Term Loans | (5,540) | |
| Unsecured Term Loans | (45,007) | |
| Finance lease liabilities due to Failed Sale Leasebacks | (45,090) | |
| Net change to long-term debt and finance leases | $ | (174,243) | |
(19) The change in other current liabilities and deferred gains and other long-term liabilities is due to the elimination of $24.5 million in the financial liability originally recorded to account for off-market terms on sale leaseback transactions completed in prior periods, commensurate with the adjustment of operating lease liabilities due to the change in the Company's incremental borrowing rate.
(20) The change to deferred income taxes is due to the increase of the net deferred tax liability of $16.9 million resulting from the changes in fair value of assets and liabilities due to the adoption of fresh start accounting.
(21) Change to retained earnings included the following:
Notes to Consolidated Financial Statements—(Continued)
| | | | | |
| Valuation adjustment to the Company's assets due to the adoption of fresh start accounting | $ | (171,459) | |
| Valuation adjustment to the Company's debt and financing lease obligations due to the adoption of fresh start accounting | 174,243 | |
| Impact of IBR change to right of use assets | (194,510) | |
| Impact of IBR change to operating lease liabilities | 189,549 | |
| Impact of deferred gain on sale leaseback write off | 24,532 | |
| Impact to deferred tax balances | (16,852) | |
| Elimination of accumulated other comprehensive income | 127 | |
| Net change to retained earnings | $ | 5,630 | |
(22) Changes to accumulated other comprehensive income (loss) represent the write-off of Predecessor balance due to the adoption of fresh start accounting.
6.Special Charges and Credits
Special Charges (Credits)
During the Successor Period, the Company recorded a credit of $30.0 million within special charges (credits) on the Company's consolidated statements of operations. The credit incurred during the fourth quarter of the Successor Period related to a one-time assignment fee remitted to the Company, resulting from the assignment agreement for airline use and lease agreement at ORD for two gates to American Airlines, Inc. (the "AA Assignee"). Furthermore, the related cash inflow is included within operating activities in the Company's consolidated statements of cash flows. No special charges (credits) were recorded during the Current Predecessor Period.
During the twelve months ended December 31, 2024, the Company recorded $28.1 million in net charges within special charges (credits) on the Company's consolidated statements of operations, in legal, advisory and other fees related to the former Merger Agreement with JetBlue entered into on July 28, 2022 and terminated on March 1, 2024. In addition, as part of the Merger Agreement with JetBlue, the Company implemented an employee retention award program (the "JetBlue Retention Award Program") during the third quarter of 2022. The first installment was paid in July 2023, and the second installment was paid in March 2024 upon termination of the former JetBlue Merger Agreement. During the twelve months ended December 31, 2024, the Company recorded $8.0 million within special charges (credits) on the Company's consolidated statements of operations, related to the JetBlue Retention Award Program.
During the twelve months ended December 31, 2023, the Company recorded $50.0 million within special charges (credits) on the Company's consolidated statements of operations in legal, advisory and other fees related to the former Merger Agreement with JetBlue entered into on July 28, 2022 and terminated on March 1, 2024. During the twelve months ended December 31, 2023, the Company recorded $19.5 million within special charges (credits) on the Company's consolidated statements of operations, related to the JetBlue Retention Award Program.
Notes to Financial Statements—(Continued)
Special Charges (Credits), Non-Operating
During the Successor Period and Current Predecessor Period, the Company recorded $29.0 million and $5.5 million, respectively, in special charges (credits), non-operating within other (income) expense in the consolidated statement of operations.
Charges incurred during the Successor Period primarily related to post-emergence restructuring expenses related to the 2024 Bankruptcy, including professional fees and other related costs, as well amounts related to the pilot furloughs. In addition, these charges include legal, advisory and other fees related to the Company's voluntary bankruptcy filing in 2025, prior to the petition date of August 29, 2025. Refer to Note 3, 2025 Chapter 11 Bankruptcy Proceedings for additional information on the Company's 2025 Bankruptcy proceedings. Charges incurred during the Current Predecessor Period primarily consisted of legal, advisory and other fees.
During the twelve months ended December 31, 2024, the Company recorded $15.5 million in special charges, non-operating within other (income) expense in the consolidated statement of operations in legal, advisory and other fees related to the Company's voluntary bankruptcy filing, incurred prior to the petition filing date of November 18, 2024. Refer to Note 3, 2025 Chapter 11 Bankruptcy Proceedings for additional information on the Company's bankruptcy proceedings.
During the twelve months ended December 31, 2023, the Company had no special charges, non-operating within other (income) expense in the consolidated statements of operations.
7. Loss (Gain) on Disposal of Assets
During the Successor Period, the Company recorded a net gain of $109.1 million, within loss (gain) on disposal of assets in the consolidated statements of operations. This net gain included a $117.7 million gain recorded as a result of 14 sale leaseback transactions entered into during the third quarter of 2025, related to previously owned engines, which resulted in operating leases. Refer to Note 15, Leases for additional information on the sale leaseback transactions. In addition, these net gains included a $3.2 million gain related to the reclassification of aircraft previously classified as held for sale, which were reclassified to property and equipment during the third quarter of 2025. Refer to Note 19, Fair Value Measurements, for additional information regarding this reclassification. Furthermore, during the Successor Period, the Company recorded a $1.8 million gain as a result of one aircraft sale leaseback transaction related to a new aircraft delivery completed during the second quarter of 2025.
These gains were partially offset by $8.7 million losses during the Successor Period. These losses resulted from adjustments to previously recorded impairment charges recognized in the fourth quarter of 2024, reflecting a change in estimated costs to sell associated with the Company’s aircraft sale and purchase agreement with GA Telesis, LLC ("GAT"), entered into on October 29, 2024, prior to the reclassification of these aircraft to fixed assets during the latter part of the third quarter of 2025. In addition, during the Successor Period, the Company recognized a $2.0 million loss related to the sale of one aircraft to GAT in July 2025 and a $2.9 million in net loss, related to the write-off of obsolete assets and other adjustments.
During the Current Predecessor Period, the Company recorded a loss of $11.7 million within loss (gain) on disposal of assets in the consolidated statements of operations. This loss included an $18.5 million adjustment to previously recorded impairment charges in the fourth quarter of 2024, reflecting a change in estimated costs to sell associated with the Company’s aircraft sale and purchase agreement with GAT entered into on October 29, 2024, as well as $0.4 million in losses related to the write-off of obsolete assets and other adjustments. These losses were partially offset by a $6.4 million gain recorded as a result of two aircraft sale leaseback transactions related to new aircraft deliveries completed during the Current Predecessor Period and a $0.9 million net gain true-up recorded related to the sale of A319 airframes and engines sold in 2024.
During the twelve months ended December 31, 2024, the Company recorded a loss of $273.9 million in loss (gain) on disposal of assets in the consolidated statement of operations.
Loss (gain) on disposal of assets for the twelve months ended December 31, 2024 included $282.5 million in impairment charges recorded during the fourth quarter 2024. These charges are associated with the Company's plan to early retire and sell 23 A320ceo and A321ceo aircraft, in accordance with the aircraft sale and purchase agreement with GAT entered into on October 29, 2024. For additional information, refer to Note 1, Summary of Significant Accounting Policies.
During the first quarter of 2024, the Company completed five sale leaseback transactions (on aircraft previously owned by the Company) of which two resulted in operating leases and three would have been deemed finance leases resulting in failed sale leaseback transactions. As a result of the two sale leaseback transactions that resulted in operating leases, the Company recorded a related loss of $1.7 million within loss (gain) on disposal of assets during the twelve months ended December 31, 2024. Refer to Note 15, Leases for additional information on the five sale leaseback transactions.
In addition, loss (gain) on disposal of assets for the twelve months ended December 31, 2024, included a $25.1 million gain recorded as a result of eight aircraft sale leaseback transactions related to new aircraft deliveries completed during 2024, a $0.4 million loss recorded as a result of the sale of two aircraft to GAT, an $11.9 million loss recorded as a result of the sale of 17 A319 airframes and 38 A319 engines during 2024, and $2.5 million in losses during the twelve months ended December 31, 2024, related to the write-off of obsolete assets and other adjustments.
During twelve months ended December 31, 2023, the Company recorded a loss of $34.0 million in loss (gain) on disposal of assets in the consolidated statement of operations.
During December 2023, the Company completed 20 sale leaseback transactions (on aircraft previously owned by the Company) of which, 6 resulted in operating leases and 14 would have been deemed finance leases resulting in failed sale leaseback transactions. As a result of the 6 sale leaseback transactions that resulted in operating leases, the Company recorded a related loss of $32.1 million within loss (gain) on disposal of assets. Loss (gain) on disposal of assets for the twelve months ended December 31, 2023 also included a $3.0 million net gain recorded as a result of 10 aircraft sale leaseback transactions related to new aircraft deliveries completed during the twelve months ended December 31, 2023.
During the twelve months ended December 31, 2023, the Company completed the sale of 12 A319 airframes and 20 A319 engines and recorded a related net loss of $1.6 million. In addition, the Company recorded a $3.3 million loss primarily related to the disposal of obsolete assets.
8.Letters of Credit
As of December 31, 2025, the Company had $36.7 million in standby letters of credit secured by $38.5 million of restricted cash, of which $35.6 million were issued letters of credit. As of December 31, 2024, the Company had $68.0 million in standby letters of credit secured by $68.0 million restricted cash, of which $58.8 million were issued letters of credit.
9.Credit Card Processing Arrangements
The Company has agreements with organizations that process credit card transactions arising from the purchase of air travel, baggage charges and other ancillary services by customers. As is standard in the airline industry, the Company's contractual arrangements with credit card processors permit them, under certain circumstances, to retain a holdback or other collateral, when future air travel and other future services are purchased via credit card transactions. The required holdback is the portion of the Company's overall credit card sales that its credit card processors hold to cover refunds to customers if the Company fails to fulfill its flight obligations.
On July 2, 2024, the Company entered into a letter agreement that modified its existing primary credit card processing agreement. Based on the terms of the agreement, in July 2024, the Company deposited $200.0 million into a deposit account, included in cash and cash equivalents within the Company's consolidated balance sheets, as it was considered a compensating balance arrangement that does not legally restrict the Company's use of this cash, and deposited $50.0 million into a restricted account included in restricted cash within the Company's consolidated balance sheets.
Notes to Financial Statements—(Continued)
Subsequently, effective August 15, 2025 and August 20, 2025, the Company entered into two amendments (together, the “Amendments”) that further modified the terms of this agreement. The first amendment required an additional $50.0 million transfer to the restricted account, resulting in a total restricted cash balance of $100.0 million, included in restricted cash within the Company’s consolidated balance sheets as of December 31, 2025.
The second amendment authorized the Company's primary credit card processor to hold back up to $3.0 million per day until its exposure is fully collateralized and to maintain full collateralization as such exposure fluctuates over time. Accordingly, increases in the collateralized holdback balance reduce the amount required in the deposit account on a dollar-for-dollar basis. As of December 31, 2025, the processor had a holdback of $158.1 million, recorded in other long-term assets on the Company’s consolidated balance sheets and there was no amount required in the deposit account.
In addition, the second amendment extended the term of the Card Processing Agreement from the current December 31, 2025 expiration date to December 31, 2027, with two automatic one-year extensions unless either party provides a notice of non-renewal not less than 90 days prior to the end of the then-effective term, and (ii) to remove the existing minimum liquidity trigger for holdbacks under the previous Card Processing Agreement.
Pursuant to the Amendments, the filing of the Chapter 11 Cases on August 29, 2025 constitutes a breach of contract, subject to the automatic stay resulting from the Chapter 11 Cases. For additional information on the Company's bankruptcy proceedings and its related automatic stay and other protections, refer to Note 3, 2025 Chapter 11 Bankruptcy Proceedings.
Additionally, the Company provided a $25.0 million deposit to a credit card processor recorded within deposits and other current assets in its consolidated balance sheets.
10.Short-term Investment Securities
The Company's short-term investment securities, if any, are normally classified as available-for-sale and generally consist of U.S. Treasury and U.S. government agency securities with contractual maturities of twelve months or less. These securities are generally stated at fair value within current assets on the Company's consolidated balance sheet. Realized gains and losses on sales of investments, if any, are reflected in non-operating other (income) expense in the consolidated statements of operations. Unrealized gains and losses on investment securities are reflected as a component of accumulated other comprehensive income, ("AOCI").
In June 2025, the Company settled $120.5 million in short-term available-for-sale investment securities. Upon settlement, the proceeds were recorded within cash and cash equivalents on the Company's consolidated balance sheets. The settlement resulted in $0.1 million of realized losses, which were recognized in interest expense within the Company's consolidated statements of operations. As of December 31, 2025, the Company had no short-term available-for-sale investment securities outstanding.
As of December 31, 2024, the Company had $118.3 million in short-term available-for-sale investment securities. During the twelve months ended December 31, 2024, these investments earned interest income at a weighted-average fixed rate of approximately 4.9%. For the twelve months ended December 31, 2024, an unrealized gain of $169 thousand, net of deferred taxes, were recorded within AOCI related to these investment securities. For the twelve months ended December 31, 2024, the Company did not recognize any realized gains or losses related to these securities, as the Company did not transact any sales of these securities during this period. As of December 31, 2024, $201 thousand, net of tax remained in AOCI, related to these instruments.
Notes to Financial Statements—(Continued)
11.Other Current Liabilities
Other current liabilities as of December 31, 2025 and 2024 consisted of the following (in thousands):
| | | | | | | | | | | | | | |
| Successor | | | Predecessor |
| December 31, 2025 | | | December 31, 2024 |
| |
| | | | |
| |
| Salaries, wages and benefits | $ | 151,353 | | | | $ | 187,626 | |
| Federal excise and other passenger taxes and fees payable | 89,278 | | | | 110,141 | |
| Airport obligations | 52,153 | | | | 66,518 | |
| Aircraft maintenance | 45,623 | | | | 103,133 | |
| Interest payable | 12,584 | | | | 26,780 | |
| Aircraft and facility lease obligations | 12,497 | | | | 23,926 | |
| Fuel | 3,419 | | | | 5,202 | |
| Backstop premium obligation | — | | | | 35,000 | |
| Other | 60,232 | | | | 47,513 | |
| Other current liabilities | $ | 427,139 | | | | $ | 605,839 | |
12.Equity
Cancellation of Prior Equity Securities
In accordance with the 2024 Bankruptcy's Plan of Reorganization, all equity securities in Spirit Airlines outstanding prior to the Effective Date, including Spirit Airlines' common stock, par value $0.0001 per share (the “Old Common Stock”), were canceled, released and extinguished, and of no further force or effect and without any need for a holder of Old Common Stock to take further action with respect thereto. Furthermore, all of Spirit Airlines' equity award agreements under any incentive plan, and the awards granted pursuant thereto, were extinguished, canceled, and discharged and have no further force or effects.
Issuance of Spirit Equity Securities
On the Effective Date, in connection with 2024 Bankruptcy and in reliance on the exemption from the registration requirements of the Securities Act provided by Section 1145 of the Bankruptcy Code, Spirit issued 7,618,664 shares of Common Stock and 5,203,899 Warrants to equitize the $410.0 million of then-outstanding senior secured notes and $385.0 million of then-outstanding Convertible Notes.
In addition, on the Effective Date, in connection with the Company’s emergence from the 2024 Bankruptcy and in reliance on the exemption from registration requirements of the Securities Act provided by Section 4(a)(2) of the Securities Act or Regulation S under the Securities Act, based in part on representations made by these certain parties to the November 18, 2024 Backstop Commitment Agreement (the "Backstop Commitment Agreement"), Spirit issued 678,587 shares of Common Stock and 5,670,853 Warrants to specified parties to the Backstop Commitment Agreement. An aggregate of 3,849,442 of such shares of Common Stock and such Warrants were issued for aggregate consideration of $53,892,188.
On December 30, 2024, the Company launched an equity rights offering (the “ERO”) of equity securities of the reorganized Company in an aggregate amount of $350.0 million at a purchase price of $14.00 per share. The final expiration date for the Equity Rights Offering occurred on February 20, 2025. On the emergence of the 2024 Bankruptcy and in reliance on the exemption from the registration requirements of the Securities Act provided by Section 1145 of the Bankruptcy Code, Spirit closed the ERO, issuing 7,770,054 shares of Common Stock and 13,380,504 Warrants to ERO participants, for aggregate consideration of $296,107,812. Refer to Note 4, Emergence from Voluntary Reorganization under the 2024 Chapter 11 Bankruptcy, for additional information.
The Common Stock and the Warrants are described further below under “—Common Stock” and “—Warrants,” respectively.
Registration Rights Agreement
Notes to Financial Statements—(Continued)
In connection with the Company's emergence from the 2024 Bankruptcy, on the Effective Date, holders of the Common Stock who were party to its Backstop Commitment Agreement became party to the Company's March 12, 2025 Registration Rights Agreement and are entitled to rights with respect to the registration of certain of their shares of Common Stock under the Securities Act.
Warrants
In connection with the Company's emergence from the 2024 Bankruptcy, on the Effective Date, Spirit entered into two warrant agreements with Equiniti Trust Company, LLC as warrant agent (the “Warrant Agreements”) pursuant to which Spirit issued an aggregate of 24,255,256 Warrants for the Common Stock to certain specified investors, consisting of 3,617,385 Warrants issued under a Tranche 1 Warrant Agreement ("the Tranche 1 Warrants") and 20,637,871 Warrants issued under a Tranche 2 Warrant Agreement (the "Tranche 2 Warrants") pursuant to the Plan. Each Warrant entitles the holder to purchase one share of Common Stock for a nominal exercise price of $0.0001 per Warrant. During the Successor Period, 12.3 million Warrants were exercised and converted into shares of the Company's Common Stock.
Duration and Exercise Price. Each Warrant has an initial exercise price equal to $0.0001 per share of Common Stock. The Tranche 1 Warrants were immediately exercisable, and the Tranche 2 Warrants are exercisable at any time after the date on which the Common Stock is first listed on a securities exchange, which occurred on April 29, 2025. All Warrants may be exercised at any time until such Warrants are exercised in full. The exercise price and number of shares issuable upon exercise are subject to appropriate proportional adjustment in the event of certain dividends, subdivisions or combinations of the Company's Common Stock, or similar events affecting the Company's Common Stock and the exercise price.
Exercisability. A holder may not exercise any portion of its Warrants to the extent that the holder, together with its affiliates and any other persons acting as a group together with any such persons, would own more than 9.9% of the number of shares of Common Stock outstanding immediately after exercise (the “Beneficial Ownership Limitation”), calculated in accordance with Section 13(d) of the Exchange Act. Upon not less than sixty-one (61) days advance written notice to the Company at any time or from time to time, a holder in its sole discretion, may exempt itself from the Beneficial Ownership Limitation. However, under any circumstance, a holder may not exercise the Warrant if such exercise would cause such holder’s beneficial ownership (as defined by Section 13(d) of the Exchange Act) of the Common Stock to exceed 19.9% of its total issued and outstanding Common Stock.
Cashless Exercise. The Warrants may also be exercised, in whole or in part, at such time by means of a “cashless exercise” in which the holder shall be entitled to receive upon such exercise (either in whole or in part) the net number of shares of Common Stock determined according to a formula set forth in the Warrant Agreements.
Fractional Shares. No fractional shares of Common Stock will be issued upon the exercise of the Warrants, and no cash will be distributed in lieu of the issuance of such fractional shares. If more than one Warrant is presented for exercise in full at the same time by the same holder, the full number of shares of Common Stock that will be issuable upon the exercise thereof shall be computed on the basis of the aggregate number of shares of Common Stock purchasable on exercise of the Warrants so presented. If any fraction of a share of Common Stock or other security deliverable upon proper exercise of the Warrant (a "Warrant Share") would, except pursuant to the Warrant, be issuable on the exercise of any Warrants (or specified portion thereof), as applicable, such Warrant Share shall be rounded up to the next highest whole number.
Transferability. Subject to applicable laws, a Warrant may be transferred at the option of the holder upon surrender of the Warrant to Spirit together with the appropriate instruments of transfer and funds sufficient to pay any transfer taxes payable upon such transfer.
Trading Market. There is no trading market available for the Warrants on any securities exchange or nationally recognized trading system. Spirit does not intend to list the Warrants on any securities exchange or nationally recognized trading system.
Rights as a Stockholder. Except as otherwise provided in the Warrants or by virtue of such holder’s ownership of shares of Common Stock, the holders of the Warrants do not have the rights or privileges of holders of the Company's Common Stock, including any voting rights, until they exercise their Warrants.
Fundamental Transaction. In the event of a fundamental transaction, as described in the Warrants and generally including any reorganization, recapitalization or reclassification of the shares of Common Stock, the sale, transfer or other disposition of all or substantially all of its properties or assets, the Spirit's consolidation or merger with or into another person, the holders of
Notes to Financial Statements—(Continued)
the Warrants will be entitled to receive upon exercise of the Warrants the kind and amount of securities, cash or other property that the holders would have received had they exercised the Warrants immediately prior to such fundamental transaction.
Rights to Dividends and Distributions on Common Stock. Holders of the Tranche 1 Warrants are entitled to dividends and other distributions on Common Stock that such holder would have received had the Warrants been exercised. Such distributions to holders of Tranche 1 Warrants will be made simultaneously with the distribution to holders of Common Stock. Tranche 2 Warrants are not entitled to dividends and other distributions on Common Stock.
In addition, the Tranche 2 Warrant Agreement provides that the shares of Common Stock issuable upon exercise of Tranche 2 Warrants shall be subject to the limitations on ownership by non-U.S. citizens as set forth in the Charter.
Exchange Rights of Holders of Tranche 2 Warrants. Holders of Tranche 2 Warrants may exchange such Tranche 2 Warrants for Tranche 1 Warrants in accordance with the Warrant Agreements.
Accounting Policy. The Company accounts for warrants as either equity-classified or liability-classified instruments based on an assessment of the warrant’s specific terms and applicable authoritative guidance in ASC 480 Distinguishing Liabilities from Equity (ASC 480) and ASC 815, Derivatives and Hedging (ASC 815). The assessment considers whether the warrants (i) are freestanding financial instruments pursuant to ASC 480, (ii) meet the definition of a liability pursuant to ASC 480, and (iii) meet all of the requirements for equity classification under ASC 815, including whether the warrants are indexed to the Company's own stock and whether the warrant holders could potentially require “net cash settlement” in a circumstance outside of the Company’s control, among other conditions for equity classification. This assessment, which requires the use of professional judgment, is conducted at the time of warrant issuance and as of each subsequent quarterly period end date while the warrants are outstanding. For warrants that meet all criteria for equity classification, the warrants are required to be recorded as a component of additional paid-in capital, on the consolidated statements of stockholders’ deficit at the time of issuance.
The Company concluded that the Warrant Agreements are classified as equity, recorded at fair value upon issuance within the Company’s consolidated balance sheets. On the Emergence Date, the Warrants were valued based on the derived Successor Equity Value detailed in Note 5, Fresh Start Accounting - 2024 Bankruptcy, at issuance. Equity-classified contracts are initially measured and recorded at fair value; subsequent changes in fair value are not recognized as long as the contract continues to be classified as equity. The Company recorded $441.7 million, net of issuance costs, in additional paid-in-capital ("APIC"), related to the fair value of the warrants issued.
Common Stock
Pursuant to the 2024 Bankruptcy's Plan of Reorganization, Spirit amended and restated its Charter and Bylaws, each of which became effective on the Effective Date.
The Charter authorizes Spirit to issue up to 400,000,000 shares of Common Stock and up to 10,000,000 shares of preferred stock, par value $0.0001 per share. As of December 31, 2025 and 2024, there were no shares of preferred stock outstanding and as of December 31, 2024 there were no shares of non-voting common stock outstanding.
Dividend Rights. Subject to the rights of holders of any series of then outstanding preferred stock and the limitations under the Delaware General Corporation Law ("DGCL"), each holder of Common Stock has equal rights of participation in the dividends in cash, stock, or property of Spirit, when, as and if Spirit's Board of Directors (the Board) declare such dividends from time to time out of assets or funds legally available.
Voting Rights. Each holder of the Company's Common Stock is entitled to one vote for each share on all matters submitted to a vote of the stockholders, including the election of directors. The holders of Common Stock exclusively possess all voting power; provided, however, that as except as otherwise required by law, holders of Common Stock are not entitled to vote on any amendment to the Charter (or on any amendment to a certificate of designations of any series of preferred stock) that alters or changes the powers, preferences, rights or other terms of one or more outstanding series of preferred stock if the holders of such affected series of preferred stock are entitled to vote, either separately or together with the holders of one or more other such series, on such amendment pursuant to the Charter (or pursuant to a certificate of designations of any series of preferred stock) or pursuant to the DGCL. Spirit's stockholders are not entitled to cumulative voting.
Liquidation. Subject to the rights of holders of any series of then outstanding preferred stock, each holder of Common Stock has equal rights to receive the assets and funds of Spirit available for distribution to stockholders in the event of any liquidation, dissolution or winding up of the affairs of Spirit, whether voluntary or involuntary.
Notes to Financial Statements—(Continued)
Rights and Preferences. Holders of Common Stock have no preemptive, conversion, subscription or other rights, and there are no redemption or sinking fund provisions applicable to Common Stock. The rights, preferences and privileges of the holders of Common Stock are subject to, and may be adversely affected by, the rights of the holders of shares of any series of Spirit's preferred stock that Spirit may designate in the future.
Limited Voting by Foreign Owners. To comply with restrictions imposed by federal law on foreign ownership of U.S. airlines, the Charter restricts voting of shares of its capital stock by non-U.S. citizens. The restrictions imposed by federal law currently require that no more than 25% of Spirit's voting stock be voted, directly or indirectly, by persons who are not U.S. citizens, and that its president and at least two-thirds of the members of the Board and senior management be U.S. citizens. The Charter provides that no shares of its capital stock may be voted by or at the direction of non-U.S. citizens unless such shares are registered on a separate stock record, which it refers to as the foreign stock record. The Charter further provides that no shares of its capital stock will be registered on the foreign stock record if the amount so registered would exceed the foreign ownership restrictions imposed by federal law.
Registration Rights Agreement Consent and Waiver
On March 5, 2026, the Company and certain beneficial and record holders (the “Holders”) of the Common Stock and the warrants of the Company entered into a consent and waiver (the “Consent and Waiver”) to that certain Registration Rights Agreement, dated as of March 12, 2025 (the “Registration Rights Agreement”).
Pursuant to the Consent and Waiver, the Holders agreed to waive any rights under Sections 2.1, 2.2 and 2.3 of the Registration Rights Agreement and consented to the Company filing a post-effective amendment to the registration statement on Form S-1 to terminate the registration of all shares of Common Stock registered under the Securities Act pursuant to such registration statement.
13.Earnings (Loss) per Share
The following table sets forth the computation of basic and diluted earnings (loss) per common share (in thousands, except per-share amounts):
| | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Successor | | | Predecessor |
| Period from March 13, 2025 through December 31, 2025 | | | Period from January 1, 2025 through March 12, 2025 | | Twelve Months Ended December 31, 2024 | | Twelve Months Ended December 31, 2023 |
| | | | | | | |
| | | |
| Numerator: | | | | | | | | |
| Net income (loss) | $ | (2,832,669) | | | | $ | 72,216 | | | $ | (1,229,495) | | | $ | (447,464) | |
| Denominator: | | | | | | | | |
Weighted-average shares outstanding, basic (1) | 37,023 | | | | 109,525 | | | 109,495 | | | 109,152 | |
| Effect of dilutive stock awards | — | | | | — | | | — | | | — | |
| Adjusted weighted-average shares outstanding, diluted | 37,023 | | | | 109,525 | | | 109,495 | | | 109,152 | |
| Earnings (loss) per share: | | | | | | | | |
| Basic earnings (loss) per common share | $ | (76.51) | | | | $ | 0.66 | | | $ | (11.23) | | | $ | (4.10) | |
| Diluted earnings (loss) per common share | $ | (76.51) | | | | $ | 0.66 | | | $ | (11.23) | | | $ | (4.10) | |
| | | | | | | | |
| | | | | | | | |
(1) Weighted-average shares outstanding, basic during the Successor Period includes exercisable warrants, as they meet the criteria under ASC 260 to be considered outstanding common shares.
During the Current Predecessor Period, warrants in connection with the Payroll Support Program to purchase 913,383 shares of Common Stock were excluded from the computation of diluted EPS because the exercise price was greater than the average market price, making them antidilutive. Anti-dilutive Common Stock equivalents related to outstanding equity awards were also excluded from the diluted earnings (loss) per share calculation for any of the periods presented and are not material.
Notes to Financial Statements—(Continued)
14. Debt and Other Obligations
2025 DIP Credit Agreement and Facility
On October 31, 2025, the Bankruptcy Court approved a final order which authorized the Debtors to obtain the DIP Facility fronted initially by Barclays Bank PLC and anchored by the holders of the senior secured notes. Spirit Airlines is Borrower, Spirit and its affiliated Debtors are guarantors and Wilmington Trust, National Association is administrative agent (the “2025 Bankruptcy DIP Credit Agreement”). The DIP Facility’s aggregate principal amount of up to $1.2 billion comprising:
•New Money DIP Loans in an aggregate principal of up to $475.0 million. On October 14, 2025, the Company drew $200.0 million, followed by additional draws on November 7, 2025 for $50.0 million and on December 15, 2025 for $100.0 million. The remaining availability will be available to be drawn in one separate draw. Each draw is subject to its own specific conditions.
•Roll-up of pre-petition secured notes that are validly tendered into the facility, subject to a maximum amount equal to the lesser of (i) the aggregate principal amount of such notes, together with accrued and unpaid interest through the Petition Date (and post-petition interest to the extent permitted under Section 506(b) of the Bankruptcy Code), and (ii) the Roll-Up DIP Loans of $750.0 million.
Borrowings under the DIP Facility new money draws bear interest at a rate of secured overnight financing rate plus 8.0% paid-in-kind interest rate and 2% default rate on overdue amounts. In addition to paying interest on the new money draws, the Company is required to pay an original interest discount of 3% on the funded amount. The roll-up portion of the DIP Facility only accrues interest if the senior secured notes are determined over-secured under Section 506(b). This portion would bear the same rate as the new money loans. No interest is expected to be accrued for this portion as it is not deemed to be over-secured.
The borrowings under the DIP Facility will mature, and lending commitments thereunder will terminate, upon the earliest to occur of: (a) the Scheduled Maturity Date, (b) the substantial consummation (as defined in Section 1101 of the Bankruptcy Code and which for purposes hereof shall be no later than the “effective date” hereof) of a plan of reorganization filed in the Chapter 11 Cases that is confirmed pursuant to an order entered by the Bankruptcy Court, (c) the acceleration of the obligations and the termination of the unfunded term loan commitments (if any) hereunder in accordance with the terms hereof, (d) the consummation of a sale of all or substantially all of the assets of the Debtors pursuant to Section 363 of the Bankruptcy Code and (e) dismissal of the Chapter 11 Cases or conversion of any of the Chapter 11 Cases to one or more cases under chapter 7 of the Bankruptcy Code or appointment of a trustee in any of the Chapter 11 Cases; provided that if any such day is not a Business Day, the Maturity Date shall be the Business Day immediately succeeding such day.
Spirit may voluntarily repay, without premium or penalty, outstanding amounts under the DIP Facility, in whole, or in part, prior to the Scheduled Maturity Date. Mandatory prepayments are only required if asset sales, casualty events or extraordinary receipts occur.
The initial draw of $200.0 million was for general liquidity uses and the later draws were contingent and largely earmarked for aircraft-debt mechanics and transaction execution. The second draw also required post-draw minimum liquidity of $160.0 million.
In connection with the Chapter 11 Cases, on October 31, 2025, the Bankruptcy Court entered the Final DIP Order approving the DIP Borrower, and certain subsidiaries of the Company from time to time party thereto as guarantors, entering into the DIP Credit Agreement, dated October 14, 2025, with the DIP Lenders and the Agent.
As of December 31, 2025, the Bankruptcy Court allowed an amendment to the final DIP Facility order to allow the Company access to the previously agreed third funding draw of $100.0 million. The incremental $100.0 million draw comprised $50.0 million, net of original issuance discount, that was made available for immediate use and access to $50.0 million which was to remain encumbered until the satisfaction of conditions tied to further progress on either a standalone plan of reorganization or strategic transaction. Refer to Note 3, 2025 Chapter 11 Bankruptcy Proceedings, for additional information.
As of December 31, 2025, the outstanding 2025 Bankruptcy DIP term loan was included in current maturities of long-term debt, net, and finance leases on the Company’s consolidated balance sheets.
Exit Revolving Credit Facility
Notes to Financial Statements—(Continued)
On the Emergence Date, the Company entered into an Amended and Restated Credit and Guaranty Agreement with the lenders under its former revolving credit facility due in 2026. This agreement modified certain terms and conditions of the existing facility, resulting in a new revolving credit facility of up to $300.0 million (the “Exit Revolving Credit Facility”). Concurrently, Spirit Airlines repaid in full the outstanding balance of $300.0 million under the former revolving credit facility due in 2026.
The Exit Revolving Credit Facility is comprised of (i) commitments by the Exit RCF Lenders to provide revolving credit loans and letters of credit in an aggregate amount equal to $275.0 million (the “Exit RCF Commitments”) and (ii) an uncommitted incremental revolving credit facility in an aggregate amount up to $25.0 million. The Exit Revolving Credit Facility constitutes Spirit Airlines' senior secured obligations and is guaranteed by each of Spirit Airlines' direct and indirect subsidiaries. In addition, in connection with the Corporate Reorganization, Spirit became a guarantor under the Exit Revolving Credit Agreement. On August 21, 2025, Spirit borrowed the entire available amount of $275.0 million under the Revolving Credit Facility. Borrowings under the Revolving Credit Facility will mature on March 12, 2028.
The Exit Revolving Credit Facility is secured by first-priority and second-priority security interests and liens on certain of Spirit Airlines' and its subsidiaries’ assets, including, among other things, (i) the LGA Slots, (ii) certain eligible aircraft spare parts and ground support equipment and (iii) certain aircraft, spare engines and flight simulators. The revolving loans borrowed under the Exit Revolving Credit Facility will bear interest at a variable rate per annum equal to the Company's choice of (i) Adjusted Term SOFR plus 3.25% per annum or (ii) Alternate Base Rate plus 2.25% per annum. The commitment amount of $275.0 million will be reduced to $250.0 million on September 30, 2026.
The Exit Revolving Credit Facility contains customary covenants that, among other things, restrict Spirit Airlines' ability and the ability of its subsidiaries to, among other things, make restricted payments, incur additional indebtedness, create certain liens on the collateral, sell or otherwise dispose of the collateral, engage in certain transactions with affiliates and consolidate, merge, sell or otherwise dispose of all or substantially all of Spirit Airlines' and its subsidiaries’ assets. The Exit Revolving Credit Facility also requires the Company to, among other things, maintain (i) so long as any loans or letters of credit are outstanding under the Exit Revolving Credit Facility, unrestricted cash, cash equivalents, short-term investment securities and unused commitments available under all revolving credit facilities (including the Exit Revolving Credit Facility) aggregating not less than $500.0 million, of which no more than $300.0 million may be derived from unused commitments under the Exit Revolving Credit Facility, (ii) a minimum ratio of the borrowing base of the collateral under the Exit Revolving Credit Facility to outstanding obligations under the Exit Revolving Credit Facility of not less than 1.0 to 1.0 (if the Company does not meet the minimum collateral coverage ratio, it must either provide additional collateral to secure its obligations under the Exit Revolving Credit Facility or repay the loans thereunder by an amount necessary to maintain compliance with the collateral coverage ratio), and (iii) the pledged LGA Slots, a specified number of spare engines and the Company's spare parts (subject to certain exceptions) in the collateral under the Exit Revolving Credit Facility so long as any loans or letters of credit are outstanding under the Existing Revolving Credit Facility.
In connection with the Company's 2025 Chapter 11 Cases, the Exit Revolving Credit Facility has been reclassified to liabilities subject to compromise in the Company's consolidated balance sheet as of December 31, 2025. As of the Petition Date, the Company ceased making principal and interest payments and ceased accruing interest expense in relation to long-term debt reclassified as liabilities subject to compromise. Subsequently, on October 27, 2025 and through December 31, 2025, the Debtors made adequate protection payments under the Revolving Credit Facility for continued use of the collateralized assets. Refer to Note 3, 2025 Chapter 11 Bankruptcy Proceedings, for additional information.
Exit Secured Notes
On the Effective Date, certain subsidiaries of Spirit Airlines (the “Co-Issuers”) issued $840.0 million in aggregate principal amount of PIK toggle senior secured notes due 2030 (the “2030 Notes" or the “Exit Secured Notes”). The 2030 Notes were issued in a private offering to “qualified institutional buyers” (as defined in Rule 144A under the Securities Act) and to institutional “accredited investors” (as defined in Regulation D under the Securities Act) and outside the United States to non-U.S. persons pursuant to Regulation S. The 2030 Notes are the Co-Issuers’ senior secured obligations and are guaranteed on a senior secured basis by Spirit Airlines and each of its direct and indirect subsidiaries existing on the Effective Date or subsequently acquired and/or formed subsidiaries. In addition, in connection with the Corporate Reorganization, Spirit became a guarantor of the 2030 Notes. The 2030 Notes are secured by second-priority liens on certain Exit Revolving Credit Facility priority collateral (including the collateral under the Exit Revolving Credit Facility described in Note 14, Debt and Other Obligations), and a first-priority lien on all other collateral. The 2030 Notes will mature on March 12, 2030, subject to earlier repurchase or redemption in accordance with the terms of the Indenture (as defined below). The 2030 Notes bear interest, at the option of Spirit Airlines, (i) at 12.00% per annum, of which 8.00% per annum shall be payable in cash and 4.00% per annum
Notes to Financial Statements—(Continued)
shall be payable in-kind or (ii) at 11.00% per annum payable in cash, in each case, in arrears on a quarterly basis. Interest is calculated on the basis of a 360-day year composed of twelve 30-day months.
On or before March 12, 2027, the 2030 Notes are redeemable by the Co-Issuers, in whole or in part, at a redemption price equal to 100.00% of the aggregate principal amount of the 2030 Notes redeemed, plus a “make-whole” premium, plus accrued and unpaid interest, if any, to the date of redemption.
At any time after March 12, 2027 but on or prior to March 12, 2028, Spirit Airlines may redeem the 2030 Notes, in whole or in part, at a redemption price equal to 100% of the principal amount of the 2030 Notes redeemed, plus accrued and unpaid interest to the redemption date, plus a 6.0% premium. Thereafter, Spirit Airlines may redeem the 2030 Notes in whole or in part, at par, plus accrued and unpaid interest to the redemption date.
Notwithstanding the foregoing, (x) at any time on or prior to the date that is ninety days after the Effective Date, the Co-Issuers may redeem the 2030 Notes, at their option, in whole, at a redemption price equal to 100% of the aggregate principal amount of the 2030 Notes redeemed, plus accrued and unpaid interest to the redemption date, plus an 8.0% premium and (y) upon or after the consummation of certain transactions involving acquisitions by a publicly traded airline, the Co-Issuers may redeem the 2030 Notes at their option, in whole, at a redemption price equal to 100% of the aggregate principal amount of the 2030 Notes redeemed, plus accrued and unpaid interest to the redemption date, plus an amount equal to the lesser of (A) a 4.0% premium and (B) the then-applicable redemption premium.
The 2030 Notes and guarantees were issued pursuant to an indenture (the "Indenture") by and among Spirit Airlines, the Co-Issuers, the subsidiary guarantors and Wilmington Trust, National Association, as trustee (the “Trustee”) and collateral custodian. The Indenture contains customary covenants that, among other things, restrict Spirit Airlines' ability and the ability of its subsidiaries to, among other things, make restricted payments, incur additional indebtedness, create certain liens on the collateral, sell or otherwise dispose of the collateral, engage in certain transactions with affiliates and consolidate, merge, sell or otherwise dispose of all or substantially all of Spirit Airlines' and its subsidiaries’ assets. In addition, the Indenture requires that Spirit Airlines maintain unrestricted cash, cash equivalents, short-term investment securities and unused commitments available under all revolving credit facilities (including the Exit Revolving Credit Facility) aggregating not less than $450.0 million, of which no more than $300.0 million may be derived from unused commitments under the Exit Revolving Credit Facility.
In connection with the Corporate Reorganization, Spirit entered into a supplemental indenture, by and among the Co-Issuers, Spirit and the Trustee, to the Indenture pursuant to which Spirit guaranteed the 2030 Notes.
In connection with the Company's Chapter 11 Cases, the Exit Secured Notes have been reclassified to liabilities subject to compromise in the Company's consolidated balance sheet as of December 31, 2025. As of the Petition Date, the Company ceased making principal and interest payments and ceased accruing interest expense in relation to long-term debt reclassified as liabilities subject to compromise. However, had interest continued to accrue on this obligation under its original terms, the additional interest expense for the post-petition period ended December 31, 2025 would have been $82.6 million for the exit secured notes.
EETC
On March 31, 2025, the Company completed a private offering of Class B(R) Pass Through Certificates, Series 2025-1B(R) (the “Class B(R) Certificates”), in the aggregate face amount of $215 million, the proceeds of which were used to acquire new equipment notes to be issued by the Company. During the second quarter of 2025, the Company used the proceeds from the issuance to repay $43.0 million outstanding related to its existing “Series B” equipment notes issued under the 2017-1 pass through certificates, pay transaction fees, and for general corporate purposes.
The Class B(R) Certificates represent an interest in the assets of a pass through trust (the “Class B(R) Trust”), which hold certain newly issued equipment notes, designated as “Series B(R)” issued by the Company (the “Series B(R) Equipment Notes”). The Series B(R) Equipment Notes are secured by 27 Airbus A320 family aircraft originally delivered new to the Company between October 2015 and October 2018.
The Series B(R) Equipment Notes have an interest rate of 11.00% per annum. The interest on the issued and outstanding Series B(R) Equipment Notes is payable semi-annually, and principal payments on the issued and outstanding Series B(R) Equipment Notes are scheduled for payment in certain years, and interest and principal payments on the Series B(R) Equipment Notes will be distributed to holders of the Class B(R) Certificates on each April 1 and October 1, commencing October 1, 2025, and the final distribution of the outstanding principal amount of the Series B(R) Equipment Notes to holders of the Class B(R) Certificates is expected on February 15, 2030. The Class B(R) Certificates rank junior to the outstanding pass-through
Notes to Financial Statements—(Continued)
certificates that were previously issued under each of the Spirit Airlines Series 2015-1 (Class A) and Series 2017-1 (Class AA and Class A) pass through certificates.
2024 Bankruptcy DIP Credit Agreement and Facility
On December 23, 2024, in connection with the 2024 Bankruptcy, the Company entered into a Superpriority Secured Debtor-In-Possession Term Loan Credit and Note Purchase Agreement, (the “2024 Bankruptcy DIP Credit Agreement”), with Wilmington Savings Fund Society, FSB, as administrative agent and collateral agent (the “Agent”) and the creditors from time to time party thereto (collectively, the “2024 Bankruptcy DIP Creditors”).
Under the 2024 Bankruptcy DIP Credit Agreement, the 2024 Bankruptcy DIP Creditors provided an aggregate principal amount of $300.0 million (excluding fees of $9.0 million, which were paid in kind in the form of additional principal) in financing in the form of a senior secured debtor-in-possession facility (the “2024 Bankruptcy DIP Facility”).
As of December 31, 2025, the 2024 Bankruptcy DIP Facility was fully repaid and terminated in connection with the Company’s emergence from the 2024 Bankruptcy. As of December 31, 2024, the outstanding 2024 Bankruptcy DIP term loan was included in current maturities of long-term debt, net of unamortized discounts, and finance leases on the Company’s consolidated balance sheets.
Long-term debt is comprised of the following:
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Successor | | | Predecessor | | Successor | | | Predecessor |
| | As of | | As of |
| December 31, 2025 | | | December 31, 2024 | | December 31, 2025 | | | December 31, 2024 |
| | (in millions) | | (weighted-average interest rates) |
| DIP term loan due in 2026 | | $ | 358.6 | | | | $ | — | | | 11.75 | % | | | N/A |
| DIP term loan due in 2025 | | — | | | | 309.0 | | | N/A | | | 11.82 | % |
Fixed-rate loans due through 2039 (1) | | 274.8 | | | | 972.2 | | | 3.63 | % | | | 6.44 | % |
Unsecured term loans due in 2031 (3) | | — | | | | 136.3 | | | N/A | | | 1.00 | % |
| Fixed-rate class A 2015-1 EETC due through 2028 | | 212.6 | | | | 234.6 | | | 4.10 | % | | | 4.10 | % |
| | | | | | | | | | |
| | | | | | | | | | |
Fixed-rate class AA 2017-1 EETC due through 2030
| | 148.3 | | | | 160.3 | | | 3.38 | % | | | 3.38 | % |
Fixed-rate class A 2017-1 EETC due through 2030
| | 49.4 | | | | 53.4 | | | 3.65 | % | | | 3.65 | % |
Fixed-rate class B 2017-1 EETC due through 2026
| | — | | | | 44.7 | | | N/A | | | 3.80 | % |
| | | | | | | | | | |
| Fixed-rate class B(R) 2025 EETC due through 2030 | | 215.0 | | | | — | | | 11.00 | % | | | N/A |
| | | | | | | | | | |
| | | | | | | | | | |
| | | | | | | | | | |
| | | | | | | | | | |
Revolving credit facility due in 2028 (3) | | — | | | | 300.0 | | | 7.27 | % | | | 6.67 | % |
| Long-term debt | | $ | 1,258.7 | | | | $ | 2,210.5 | | | | | | |
Less current maturities, net (2) | | 474.8 | | | | 436.3 | | | | | | |
Less unamortized discounts, net (2) | | 65.0 | | | | 13.2 | | | | | | |
| Total | | $ | 718.9 | | | | $ | 1,761.0 | | | | | | |
(1) As of December 31, 2025, the Company's fixed-rate loans are comprised of bank debt and 13 aircraft recorded as failed sale leaseback transactions, of which only the 13 aircraft recorded as failed sale leaseback transactions are recorded as liabilities subject to compromise. Refer to Note 3, 2025 Chapter 11 Bankruptcy Proceedings, for additional information. As of December 31 2024, includes obligations related to 18 aircraft recorded as failed sale leaseback transactions. Refer to Note 15, Leases for additional information.
(2) Includes deferred financing costs associated with the Company’s long-term debt, as well as the original issue discount resulting from fair value adjustments under fresh start accounting.
(3) As of December 31, 2025, these debt instruments are recorded within liabilities subject to compromise on the Company's consolidated balance sheets.
During the Successor Period and the Current Predecessor Period, the Company made scheduled principal payments of $136.0 million and $25.5 million, respectively, on its outstanding debt obligations. In addition, during the Successor Period, the Company made a $30.0 million principal payment under the 2025 Bankruptcy DIP Credit Agreement. During the Current
Notes to Financial Statements—(Continued)
Predecessor Period, the Company fully repaid the 2024 Bankruptcy DIP Facility and Revolving Credit Facility in the amounts of $309.0 million and $300.0 million, respectively.
During the year ended December 31, 2024, the Company made principal payments of $185.4 million on its outstanding debt obligations.
As of December 31, 2025, the successor's long-term debt principal payments for the next five years and thereafter were as follows (in millions):
| | | | | | | | |
| | Successor |
| | December 31, 2025 |
| | |
| 2026 | | $ | 502.1 | |
| 2027 | | 167.9 | |
| 2028 | | 348.4 | |
| 2029 | | 58.0 | |
| 2030 | | 177.3 | |
| 2031 and beyond | | 5.0 | |
Total debt principal payments (1) | | $ | 1,258.7 | |
(1) Excludes principal payments related to debt instruments recorded within liabilities subject to compromise on the Company's consolidated balance sheets as of December 31, 2025.
Interest Expense
The Successor's interest expense related to long-term debt and finance leases consists of the following (in thousands):
| | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | |
| Successor | | | Predecessor | | Predecessor | | Predecessor |
| Period from March 13, 2025 through December 31, 2025 | | | Period from January 1, 2025 through March 12, 2025 | | Twelve Months Ended December 31, 2024 | | Twelve Months Ended December 31, 2023 |
| | | | |
8.00% senior secured notes (1) | $ | — | | | | $ | 17,753 | | | $ | 92,621 | | | $ | 93,010 | |
Fixed-rate term loans (4) | 34,609 | | | | 13,175 | | | 69,635 | | | 37,213 | |
Unsecured term loans (4) | 2,178 | | | | 265 | | | 1,365 | | | 1,363 | |
| Class A 2015-1 EETC | 7,293 | | | | 1,879 | | | 10,078 | | | 10,962 | |
| Class B 2015-1 EETC | — | | | | — | | | 446 | | | 1,954 | |
| Class C 2015-1 EETC | — | | | | — | | | — | | | 777 | |
| Class AA 2017-1 EETC | 4,122 | | | | 1,036 | | | 5,561 | | | 5,990 | |
| Class A 2017-1 EETC | 1,486 | | | | 373 | | | 2,005 | | | 2,159 | |
| Class B 2017-1 EETC | 227 | | | | 325 | | | 1,748 | | | 1,881 | |
| Class C 2017-1 EETC | — | | | | — | | | — | | | 522 | |
Class B(R) 2025-1 EETC (2) | 18,813 | | | | — | | | — | | | — | |
Convertible notes (3) | — | | | | 1,246 | | | 15,849 | | | (3,778) | |
Exit secured notes (4) | 48,333 | | | | — | | | — | | | — | |
Revolving credit facility (4) | 7,818 | | | | 3,732 | | | 4,501 | | | — | |
| DIP term loans | 7,102 | | | | 6,869 | | | 812 | | | — | |
| Finance leases | 18 | | | | 5 | | | 33 | | | 30 | |
| Commitment and other fees | 792 | | | | 20 | | | 1,340 | | | 1,655 | |
| Amortization of deferred financing costs and fair value adjustments | 28,056 | | | | 1,004 | | | 13,100 | | | 15,453 | |
| Total | $ | 160,847 | | | | $ | 47,682 | | | $ | 219,094 | | | $ | 169,191 | |
(1) Includes interest expense for the Current Predecessor Period. Includes $3.8 million and $4.2 million of accretion and $88.8 million and $88.8 million of interest expense for the twelve months ended December 31, 2024, and 2023, respectively.
Notes to Financial Statements—(Continued)
(2) Includes $0.3 million of amortization of the discount, as well as interest expense, for the Successor Period from March 13, 2025 through December 31, 2025.
(3) Includes interest expense for the convertible notes due 2025 and 2026, for the 2025 Current Predecessor Period. Includes $16.4 million and $14.3 million of amortization of the discount for the convertible notes due 2026, as well as interest expense for the convertible notes due 2025 and 2026, offset by $0.5 million and $18.1 million of favorable mark to market adjustments for the convertible notes due 2026 for the twelve months ended, December 31, 2024, and 2023, respectively.
(4) As of December 31, 2025, these debt instruments are recorded within liabilities subject to compromise on the Company's consolidated balance sheets and therefore ceased accruing interest due to the 2025 Bankruptcy. If not for the 2025 Bankruptcy, the interest expenses for the Successor Period would have been $3.4 million for the unsecured term loans and $82.6 million for the exit secured notes. The Company's fixed-rate loans are comprised of bank debt and 13 aircraft recorded as failed sale leaseback transactions, of which only the 13 aircraft recorded as failed sale leaseback transactions are recorded as liabilities subject to compromise. Refer to Note 3, 2025 Chapter 11 Bankruptcy Proceedings, for additional information.
As of December 31, 2025 and 2024, the Company had a line of credit for $6.1 million and $6.0 million, respectively, related to corporate credit cards. Respectively, the Company had drawn $0.6 million and $0.9 million as of December 31, 2025 and 2024, which is included in accounts payable.
Notes to Financial Statements—(Continued)
15.Leases
The Company leases aircraft, engines, airport terminals, maintenance and training facilities, aircraft hangars, commercial real estate and office and computer equipment, among other items. Certain of these leases include provisions for variable lease payments which are based on several factors, including, but not limited to, relative leases square footage, enplaned passengers and airports' annual operating budgets. Due to the variable nature of the rates, these leases are not recorded on the Company's consolidated balance sheets as a right-of-use asset and lease liability. Lease terms are generally 4 to 18 years for aircraft and spare engines and up to 99 years for other leased equipment and property.
The filing of the Chapter 11 Cases on August 29, 2025 may have triggered an event of default under certain lease agreements of the Company, subject to the automatic stay resulting from the Chapter 11 Cases and other applicable provisions of the Bankruptcy Code. For additional information on the Company's 2025 Bankruptcy proceedings and its related automatic stay and other protections, refer to Note 3, 2025 Chapter 11 Bankruptcy Proceedings.
During the Successor Period, the Company took delivery of one aircraft under sale leaseback transaction and one under direct operating lease. During the Current Predecessor Period, the Company took delivery of two aircraft under sale leaseback transaction. In addition, earlier in the third quarter of 2025, the Company completed sale leaseback transactions involving 14 previously owned spare engines, which resulted in operating leases.
As of December 31, 2025, the Company had a fleet consisting of 131 A320 family aircraft. As of December 31, 2025, the Company had 70 aircraft financed under operating leases with lease term expirations between 2026 and 2043. In addition, the Company owned 48 aircraft, of which none were unencumbered, as of December 31, 2025. The Company also had 13 aircraft that would have been deemed finance leases resulting in failed sale leaseback transactions. The related finance obligation is recorded within liabilities subject to compromise in the Company's consolidated balance sheets. Refer to Note 14, Debt and Other Obligations for additional information. The related asset is recorded within flight equipment in the Company's consolidated balance sheets. As of December 31, 2025, the Company also had 16 spare engines financed under operating leases with lease term expiration dates ranging from 2031 to 2037 and owned 18 spare engines, all of which are encumbered, as of December 31, 2025.
As of December 31, 2025, as part of the 2025 Chapter 11 Cases, the Company had rejected the lease agreements related to 83 aircraft and 3 engines. Refer to Note 1, Summary of Significant Accounting Policies for additional information on the aircraft lease agreements rejected during the Successor Period.
As of December 31, 2025, as part of the 2025 Chapter 11 Cases, all aircraft and spare engine leases arising from lease contracts entered into prior to the Petition Date have been classified as liabilities subject to compromise, regardless of whether such leases have been assumed, or are subject to agreements under Section 1110(a) or 1110(b) of the Bankruptcy Code. Accordingly, as of December 31, 2025, the related operating lease liabilities have been reclassified to liabilities subject to compromise on the Company’s consolidated balance sheets, as appropriate under the 2025 Bankruptcy proceedings. Refer to Note 1, Summary of Significant Accounting Policies and Note 3, 2025 Chapter 11 Bankruptcy Proceedings, for additional information.
Total rent expense for the Successor Period and Current Predecessor Period was $652.6 million and $180.4 million, respectively. Total rent expense for the years ended 2024 and 2023 was $855.5 million and $673.2 million, respectively.
Total rent expense for aircraft and engine operating leases for the Successor Period and Current Predecessor Period was $428.3 million and $120.2 million, respectively. Total rent expense for aircraft and engine operating leases for the years ended December 31, 2024 and 2023 was $541.9 million and $381.2 million, respectively.
Under the terms of the lease agreements, the Company will continue to operate and maintain the aircraft. Payments under the majority of the lease agreements are fixed for the term of the lease. The lease agreements contain standard termination events, including termination upon a breach of the Company's obligations to make rental payments and upon any other material breach of the Company's obligations under the leases, and standard maintenance and return condition provisions. These return provisions are evaluated at inception of the lease and throughout the lease terms and are accounted for as either fixed or variable lease payments (depending on the nature of the lease return condition) when it is probable that such amounts will be incurred. When determining probability and estimated cost of lease return obligations, there are various other factors that need to be considered, such as the contractual terms of the lease, the ability to swap engines or other aircraft components, current condition of the aircraft, the age of the aircraft at lease expiration, utilization of engines and other components, the extent of repairs needed at return, return locations, current configuration of the aircraft and cost of repairs and materials at the time of return. Management assesses the factors listed above and the need to accrue lease return costs throughout the lease as facts and circumstances warrant an assessment. The Company expects lease return costs will increase as individual aircraft lease
Notes to Financial Statements—(Continued)
agreements approach their respective termination dates and the Company begins to accrue the estimated cost of return conditions for the corresponding aircraft. Upon a termination of the lease due to a breach by the Company, the Company would be liable for standard contractual damages, possibly including damages suffered by the lessor in connection with remarketing the aircraft or while the aircraft is not leased to another party.
Aircraft rent expense consists of monthly lease rents for aircraft and spare engines under the terms of the Company's aircraft and spare engine lease agreements recognized on a straight-line basis. Supplemental rent, recorded within aircraft rent expense, is primarily made up of probable and estimable return condition obligations, lease return costs adjustments for aircraft and engines purchased off lease or lease extensions or amendments. The Company expensed $17.2 million, $7.7 million, $36.2 million and $14.0 million of supplemental rent recorded within aircraft rent during the Successor Period, the Current Predecessor Period, 2024 and 2023, respectively.
Under Topic 842, gains and losses on sale leaseback transactions, subject to adjustment for off-market terms, are recognized immediately and recorded within loss (gain) on disposal of assets on the Company's consolidated statements of operations. Refer to Note 7, Loss (Gain) on Disposal of Assets for additional information on the losses (gains) recorded related to the sale leaseback transactions entered into during the Successor Period, the Current Predecessor Period, 2024 and 2023.
As of December 31, 2025, the Company's finance lease obligations primarily related to the lease of office equipment. Payments under these finance lease agreements are generally fixed for terms of five years. Finance lease assets are recorded within property and equipment and the related liabilities within liabilities subject to compromise in the Company's consolidated balance sheets. Lease liabilities and operating lease liabilities related to pre-petition obligations which may be an allowed claim are recorded within liabilities subject to compromise.
The Company has a 99-year lease agreement for the lease of a 2.6-acre parcel of land, in Dania Beach, Florida, where the Company built its new headquarters campus and a 200-unit residential building. This operating lease is recorded within right-of-use assets and the related liability within liabilities subject to compromise on the Company's consolidated balance sheets. Operating lease commitments related to this lease are included in the table below within property facility leases.
The following table provides details of the Company's future minimum lease payments under finance lease liabilities and operating lease liabilities recorded on the Company's consolidated balance sheets as of December 31, 2025. The table does not include commitments that are contingent on events or other factors that are currently uncertain and unknown.
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Finance Leases | | Operating Leases | | Total Operating and Finance Lease Obligations |
| | | Aircraft and Spare Engine Leases | | Property Facility Leases | | | |
| | (in thousands) |
| 2026 | | $ | 141 | | | $ | 266,608 | | | $ | 4,894 | | | | | $ | 271,643 | |
| 2027 | | 93 | | | 250,552 | | | 4,140 | | | | | 254,785 | |
| 2028 | | 67 | | | 231,639 | | | 2,757 | | | | | 234,463 | |
| 2029 | | 5 | | | 226,356 | | | 2,132 | | | | | 228,493 | |
| 2030 | | — | | | 214,366 | | | 1,513 | | | | | 215,879 | |
| 2031 and thereafter | | — | | | 2,168,914 | | | 140,124 | | | | | 2,309,038 | |
| Total minimum lease payments | | $ | 306 | | | $ | 3,358,435 | | | $ | 155,560 | | | | | $ | 3,514,301 | |
| Less amount representing interest | | 26 | | | 1,385,410 | | | 133,651 | | | | | 1,519,087 | |
| Present value of minimum lease payments | | $ | 280 | | | $ | 1,973,025 | | | $ | 21,909 | | | | | $ | 1,995,214 | |
Less current portion (1) | | 127 | | | 118,273 | | | 4,282 | | | | | 122,682 | |
Long-term portion (1) | | $ | 153 | | | $ | 1,854,752 | | | $ | 17,627 | | | | | $ | 1,872,532 | |
(1) Certain of the Company's lease obligations are included within liabilities subject to compromise on the Company's consolidated balance sheets and may be settled at an amount lower than the contractually future minimum lease payments; therefore, operating lease liability balances included within this table will differ from the operating lease liability balances included within the Company's consolidated balance sheets.
Commitments related to the Company's noncancellable short-term operating leases not recorded on the Company's consolidated balance sheets are expected to be $2.5 million for 2026 and none for 2027 and beyond.
The table below presents information for lease costs related to the Company's finance and operating leases:
Notes to Financial Statements—(Continued)
| | | | | | | | | | | | | | | | | | | | |
| Successor | | | Predecessor |
| Period from March 13, 2025 through December 31, 2025 | | | Period from January 1, 2025 through March 12, 2025 | | Twelve Months Ended December 31, 2024 |
| (in thousands) |
| Finance lease cost | | | | | | |
| Amortization of leased assets | $ | 183 | | | | $ | 38 | | | $ | 277 | |
| Interest of lease liabilities | 19 | | | | 5 | | | 33 | |
| Operating lease cost | | | | | | |
Operating lease cost (1) | 423,031 | | | | 114,508 | | | 517,016 | |
Short-term lease cost (1) | 22,789 | | | | 5,574 | | | 37,294 | |
Variable lease cost (1) | 189,232 | | | | 55,750 | | | 272,087 | |
| Total lease cost | $ | 635,254 | | | | $ | 175,875 | | | $ | 826,707 | |
(1) Expenses are classified within aircraft rent and landing fees and other rents on the Company's consolidated statements of operations.
The table below presents lease-related terms and discount rates as of December 31, 2025:
| | | | | | | | | | | | | | | | | |
| Successor | | | Predecessor | |
| December 31, 2025 | | | December 31, 2024 | |
| Weighted-average remaining lease term | | | | | |
| Operating leases | 21.0 years | | | 15.1 years | |
| Finance leases | 2.4 years | | | 2.9 years | |
| Weighted-average discount rate | | | | | |
| Operating leases | 7.81 | % | | | 7.11 | % | |
| Finance leases | 6.64 | % | | | 5.91 | % | |
16. Defined Contribution 401(k) Plan
The Company sponsors three defined contribution 401(k) plans, Spirit Aviation Holdings, Inc. Employee Retirement Savings Plan (first plan), Spirit Aviation Holdings, Inc. Pilots’ Retirement Savings Plan (second plan) and Spirit Aviation Holdings, Inc. Puerto Rico Retirement Savings Plan (third plan). The first plan is for all employees that are not covered by the pilots’ collective bargaining agreement, who have at least 60 days of service and have attained the age of 21.
The second plan applies to the Company’s pilots and follows the same service requirements as the first plan. Beginning on March 1, 2018, the Company contributed 11% of each pilot's annual compensation, regardless of the pilot's own contributions. This contribution increased by 1% each March through 2022, reaching 15%. Effective January 1, 2024, the Company's contribution increased to 16%. In December 2025, the Pilot contract was amended, and effective January 1, 2026, the Company's contribution was adjusted to 8%. Refer to Note 18, Commitments, Contingencies and Other Contractual Arrangements, for additional information.
Employer contributions made to all plans were $86.6 million and $23.6 million in the Successor Period and the Current Predecessor Period, respectively, and $128.5 million and $112.4 million in 2024 and 2023, respectively. These contributions were recorded within salaries, wages and benefits in the accompanying consolidated statements of operations.
17. Income Taxes
Significant components of the provision for income taxes from continuing operations are as follows:
Notes to Financial Statements—(Continued)
| | | | | | | | | | | | | | | | | | | | | | | | | | |
| |
| Successor | | | Predecessor |
| Period from March 13, 2025 through December 31, 2025 | | | Period from January 1, 2025 through March 12, 2025 | | Twelve Months Ended December 31, 2024 | | Twelve Months Ended December 31, 2023 |
| (in thousands) |
| Current: | | | | | | | | |
| Federal | $ | (90) | | | | $ | — | | | $ | (5,438) | | | $ | 5,449 | |
| State and local | 85 | | | | — | | | (40) | | | 1,309 | |
| Foreign | 1,734 | | | | 389 | | | 3,485 | | | 1,350 | |
| Total current expense (benefit) | 1,729 | | | | 389 | | | (1,993) | | | 8,108 | |
| Deferred: | | | | | | | | |
| Federal | (6,467) | | | | 16,527 | | | (54,922) | | | (115,905) | |
| State and local | (3,503) | | | | 954 | | | (3,293) | | | (3,334) | |
| Total deferred expense (benefit) | (9,970) | | | | 17,481 | | | (58,215) | | | (119,239) | |
| Total income tax expense (benefit) | $ | (8,241) | | | | $ | 17,870 | | | $ | (60,208) | | | $ | (111,131) | |
The income tax provision differs from that computed at the federal statutory corporate tax rate as follows:
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Successor | | | Predecessor | | |
| Period from March 13, 2025 through December 31, 2025 | | | Period from January 1, 2025 through March 12, 2025 | | |
| (in thousands) | | Percentage (%) | | | (in thousands) | | Percentage (%) | | |
| U.S. federal statutory tax rate | $ | (596,591) | | | 21.0 | % | | | $ | 18,918 | | | 21.0 | % | | |
State and local income taxes, net of federal benefit (1) | (2,700) | | | 0.1 | % | | | 864 | | | 1.0 | % | | |
| Nontaxable and nondeductible items | 23,480 | | | (0.8) | % | | | (81,300) | | | (90.2) | % | | |
| Foreign tax effects | 1,575 | | | (0.1) | % | | | 389 | | | 0.4 | % | | |
| Changes in valuation allowance | 565,671 | | | (19.9) | % | | | 78,977 | | | 87.6 | % | | |
| Other | 324 | | | — | % | | | 22 | | | — | % | | |
| Total income tax expense (benefit) | $ | (8,241) | | | 0.3 | % | | | $ | 17,870 | | | 19.8 | % | | |
(1) For the Successor Period and Current Predecessor Period, respectively, state and local income taxes in California, Florida and New York City comprised greater than 50% of the tax effect in this category.
The Company had net income tax payments of $1.8 million for the Successor Period and $0.2 million for the Current Predecessor Period.
| | | | | | | | | | | | | | | | | | | | | | | |
| Predecessor |
| Year Ended December 31, |
| 2024 | | 2023 |
| (in thousands) | | Percentage (%) | | (in thousands) | | Percentage (%) |
| U.S. federal statutory tax rate | $ | (270,838) | | | 21.0 | % | | $ | (117,305) | | | 21.0 | % |
State and local income taxes, net of federal benefit (1) | (16,243) | | | 1.3 | % | | (8,460) | | | 1.5 | % |
| Nontaxable and nondeductible items | 20,751 | | | (1.6) | % | | 7,215 | | | (1.3) | % |
| Foreign tax effects | 3,485 | | | (0.3) | % | | 1,882 | | | (0.3) | % |
| Changes in valuation allowance | 208,035 | | | (16.1) | % | | 6,787 | | | (1.2) | % |
| Other | (5,398) | | | 0.4 | % | | (1,250) | | | (0.1) | % |
| Total income tax expense (benefit) | $ | (60,208) | | | 4.7 | % | | $ | (111,131) | | | 19.6 | % |
Notes to Financial Statements—(Continued)
(1) For the twelve months ended December 31, 2024 and 2023, respectively, state and local income taxes in California, Florida and New York City comprised greater than 50% of the tax effect in this category.
The Company had net income tax payments of $3.5 million for the twelve months ended December 31, 2024 and net income tax refunds of $32.9 million for the twelve months ended December 31, 2023.
The Company accounts for income taxes using the asset and liability method. Deferred taxes are recorded based on differences between the consolidated financial statement basis and tax basis of assets and liabilities and available tax loss and credit carryforwards. At December 31, 2025 and 2024, the significant components of the Company's deferred taxes consisted of the following:
| | | | | | | | | | | | | | |
| | Successor | | | Predecessor |
| December 31, 2025 | | | December 31, 2024 |
| (in thousands) |
| Deferred tax assets: | | | | |
| Income tax credits | $ | 1,354 | | | | $ | 2,441 | |
| | | | |
| | | | |
| Net operating losses | 452,884 | | | | 437,400 | |
| Deferred revenue | 22,378 | | | | 22,641 | |
| | | | |
| Nondeductible accruals | 21,772 | | | | 29,936 | |
| Deferred manufacturing credits | — | | | | 13,415 | |
| Reorganization expenses | 29,388 | | | | 5,054 | |
| Accrued lease return conditions | 107,138 | | | | 9,461 | |
| | | | |
| | | | |
| | | | |
| Loan liability | 77,663 | | | | 140,313 | |
| Operating lease liability | 830,455 | | | | 1,053,684 | |
| | | | |
| Interest expense | 103,207 | | | | 70,011 | |
| Other | 6,817 | | | | 2,981 | |
| Valuation allowance | (813,726) | | | | (226,389) | |
| Deferred tax assets | $ | 839,330 | | | | $ | 1,560,948 | |
| Deferred tax liabilities: | | | | |
| | | | |
| | | | |
| | | | |
| | | | |
| | | | |
| Property, plant and equipment | 412,801 | | | | 513,028 | |
| | | | |
| | | | |
| Accrued aircraft and engine maintenance | 20,225 | | | | 54,574 | |
| Right-of-use asset | 452,327 | | | | 1,042,099 | |
| Other | 13,415 | | | | 3,174 | |
| Deferred tax liabilities | 898,768 | | | | 1,612,875 | |
| Net deferred tax assets (liabilities) | $ | (59,438) | | | | $ | (51,927) | |
| | | | |
| | | | |
| | | | |
| | | | |
| | | | |
| | | | |
In assessing the realizability of the deferred tax assets, management considered whether it is more likely than not that some or all of the deferred tax assets would be realized. In evaluating the Company’s ability to utilize its deferred tax assets, it considered all available evidence, both positive and negative, in determining future taxable income on a jurisdiction-by- jurisdiction basis. As of December 31, 2025 and 2024, the Company had a valuation allowance of $813.7 million and $226.4 million, respectively, primarily against deferred tax assets related to operating lease liabilities and federal and state net operating loss carryforwards.
Notes to Financial Statements—(Continued)
As of December 31, 2025, the Company had $1.4 million of general business tax credits, $1.9 billion of federal net operating loss and $923.4 million of state net operating loss available, that may be applied against future tax liabilities. The state net operating losses will begin to expire in 2027; the general business credits will begin to expire in 2038 and there is no expiration of federal net operating losses.
For tax years ended December 31, 2025, 2024 and 2023, the Company did not recognize any liabilities for uncertain tax positions nor any interest and penalties on unrecognized tax benefits.
For tax years 2025, 2024 and 2023, all income for the Company is subject to domestic income taxes.
The Company files its tax returns as prescribed by the tax laws of the jurisdictions in which it operates. The Company's federal income tax returns for 2022 through 2024 tax years are still subject to examination in the United States. Various state and foreign jurisdiction tax years also remain open to examination. The Company believes that any potential assessment would be immaterial to its consolidated financial statements.
18.Commitments, Contingencies and Other Contractual Arrangements
2025 Chapter 11 Cases
As further discussed in Note 1, Summary of Significant Accounting Policies, on the Petition Date, the Debtors filed voluntary petitions for relief under Chapter 11 of the Bankruptcy Code. Under the Bankruptcy Code, third-party actions to collect pre-petition indebtedness owed by the Debtors, as well as most litigation pending against the Debtors as of the Petition Date, are generally subject to an automatic stay. However, under the Bankruptcy Code, certain legal proceedings, such as those involving the assertion of a governmental entity’s police or regulatory powers, may not be subject to the automatic stay and may continue unless otherwise ordered by the Bankruptcy Court. As a result, some proceedings may continue (or certain parties may attempt to argue that such proceedings should continue) notwithstanding the automatic stay.
Aircraft-Related Commitments and Financing Arrangements
The Company’s contractual purchase commitments consist primarily of aircraft and engine acquisitions through manufacturers and aircraft leasing companies.
As of December 31, 2025, purchase commitments for the Company's engine orders, including estimated amounts for contractual price escalations and pre-delivery payments, were expected to be $3.4 million in 2026, $60.5 million in 2027, $52.5 million in 2028 and none in 2029 and beyond. These commitments primarily relate to the 10 PW1100G-JM spare engines with deliveries through 2028 from the Company's Engine Purchase Support Agreements.
The Company previously had agreements in place for 36 A320neos and A321neos to be financed through direct leases with a third-party lessor with deliveries scheduled in 2027 and 2028. However, on October 10, 2025, pursuant to the global restructuring term sheet with AerCap, these 36 direct leases were canceled, and the Company agreed to enter into 30 new post-petition leases, for which definitive agreements had not yet been executed as of December 31, 2025. Refer to Note 3, 2025 Chapter 11 Bankruptcy Proceedings for additional information. As of December 31, 2025, the Company had not executed any new lease agreements and therefore, did not have any aircraft rent commitments for future aircraft deliveries.
During the third quarter of 2021, the Company entered into an Engine Purchase Support Agreement that requires the Company to purchase a certain number of spare engines in order to maintain a contractual ratio of spare engines to aircraft in the fleet. As of December 31, 2025, the Company is committed to purchase 10 PW1100G-JM spare engines, with deliveries through 2028.
During the third quarter of 2019, the United States announced its decision to levy tariffs on certain imports from the European Union, including commercial aircraft and related parts. These tariffs include aircraft and other parts that the Company is already contractually obligated to purchase, including those reflected above. In June 2021, the United States Trade Representative announced that the United States and European Union had agreed to suspend reciprocal tariffs on large civilian aircraft for up to five years, pending discussions to resolve their trade dispute.
Separate from that dispute, the United States imposed reciprocal tariffs on imports from many trading partners, including the European Union, in April 2025, which would have withdrawn the June 2021 suspension and reimposed higher tariffs similar to other imports on aircraft and parts from the European Union.
Notes to Financial Statements—(Continued)
On August 21, 2025, the United States and the European Union agreed on the terms of a new tariff agreement, under which the United States committed, effective September 1, 2025, to apply the higher of either the United States Most Favored Nation (“MFN”) tariff rate or a tariff rate of 15%, comprised of the MFN tariff and a reciprocal tariff, on originating goods of the European Union. Under the MFN treatment, most aircraft and aircraft parts continued to be subject to a 0% tariff.
On February 20, 2026, the United States Supreme Court struck down broader tariffs previously imposed under the International Emergency Economic Powers Act (IEEPA). On the same day, the President terminated additional ad valorem duties previously imposed under Executive Order 14257, as amended, and imposed a temporary 10% import surcharge under section 122 of the Trade Act of 1974, effective February 24, 2026 through July 24, 2026. Certain qualifying civil aircraft and aircraft parts are exempt from that surcharge.
The current U.S. Administration continues to negotiate tariffs with various countries which may lead to expanding the scope of tariffs and significantly increasing the rates on goods imported into the United States. In response, foreign governments have imposed, and are expected to impose, retaliatory tariff measures against the United States. These or additional changes in U.S. or international trade policies, along with continued uncertainty surrounding such policies, could lead to further weakened business conditions for the transportation industry, which may adversely impact the Company's operations through increased supply chain challenges, commodity price volatility and a decline in discretionary spending and consumer confidence, among others. The Company continues to monitor the situation.
Interest commitments related to the secured debt financing of 48 aircraft as of December 31, 2025 were $45.9 million in 2026, $36.9 million in 2027, $18.7 million in 2028, $9.6 million in 2029, $3.4 million in 2030 and $0.4 million in 2031 and beyond. These amounts exclude any interest commitments related to debt instruments classified as liabilities subject to compromise on the Company's consolidated balance sheets as of the Petition Date. Refer to Note 3, 2025 Chapter 11 Bankruptcy Proceedings, for additional information on the debt instruments classified as liabilities subject to compromise. For principal commitments related to the Company's debt financing, refer to Note 14, Debt and Other Obligations.
Contractual Arrangements
On July 25, 2023, RTX Corporation, the parent company of Pratt & Whitney, announced that it had determined that a rare condition in the powdered metal used to manufacture certain engine parts will require accelerated inspection of the PW 1100G-JM geared turbo fan (“GTF”) fleet, which powers the Company's A320neo family of aircraft. As a result, the Company removed GTF engines from service and grounded some of its A320neo aircraft for inspection requirements.
On June 4, 2025, the Company entered into the Agreement with IAE, an affiliate of Pratt & Whitney, pursuant to which IAE provided the Company with a monthly credit, subject to certain conditions, as compensation for each of the Company's aircraft unavailable for operational service due to GTF engine issues from January 1, 2025 through December 31, 2025. The credits are accounted for as vendor consideration in accordance with ASC 705-20 and are recognized as a reduction of the purchase price of the goods or services acquired from IAE during the period, which may include the purchase of maintenance, spare engines and short-term rentals of spare engines, based on an allocation that corresponds to the Company’s progress towards earning the credits.
As of December 31, 2025, Pratt & Whitney issued the Company $135.3 million in credits related to the aircraft on ground ("AOG") days through December 31, 2025. Of the total credits recognized, as of December 31, 2025, $103.7 million and $6.0 million were recorded in the Successor Period and the Current Predecessor Period, respectively, as a reduction in the cost basis of assets purchased from IAE within flight equipment and deferred heavy maintenance, net on the Company's consolidated balance sheets. In addition, during the Successor Period and the Current Predecessor Period, the Company recorded $21.0 million and $4.6 million respectively, in credits on the Company's consolidated statements of operations within maintenance, materials and repairs and aircraft rent expenses. In addition, during the Successor Period and the Current Predecessor Period, the Company recognized lower depreciation and amortization expense of $24.3 million and $6.1 million, respectively, related to credits recognized, as a reduction of the cost basis of assets purchased from IAE recorded within the Company's consolidated statements of operations.
In connection with the Company's ongoing 2025 Chapter 11 Bankruptcy Proceedings, the lease agreements related to certain aircraft subject to these inspections were rejected as part of the bankruptcy process. As a result, the Company did not subsequently receive any additional credits under this agreement.
In addition, in connection with the Chapter 11 Cases, the Company entered into a restructuring term sheet with IAE, dated December 3, 2025, and subsequently entered into a definitive agreement on February 4, 2026. Refer to Note 3, 2025 Chapter 11 Bankruptcy Proceedings, for additional information.
Notes to Financial Statements—(Continued)
Other Commitments
The Company is contractually obligated to pay the following minimum guaranteed payments for its reservation system and other miscellaneous subscriptions and services as of December 31, 2025: $42.2 million in 2026, $33.3 million in 2027, $9.2 million in 2028, $4.1 million in 2029, $3.9 million in 2030 and $2.2 million in 2031 and beyond. The Company's reservation system contract expires in 2028.
Litigation and Assessments
The Company is subject to commercial litigation claims and to administrative and regulatory proceedings and reviews that may be asserted or maintained from time to time. The Company believes the ultimate outcome of such lawsuits, proceedings and reviews will not, individually or in the aggregate, have a material adverse effect on its financial position, liquidity or results of operations. In making a determination regarding accruals, using available information, the Company evaluates the likelihood of an unfavorable outcome in legal or regulatory proceedings and assessments to which the Company is a party and records a loss contingency when it is probable a liability has been incurred and the amount of the loss can be reasonably estimated. These subjective determinations are based on the status of such legal or regulatory proceedings, the merits of the Company's defenses and consultation with legal counsel. Actual outcomes of these legal and regulatory proceedings may materially differ from the Company's current estimates. It is possible that the resolution of one or more of the legal matters currently pending or threatened could result in losses material to the Company's consolidated results of operations, liquidity or financial condition.
Following an audit by the Internal Revenue Service ("IRS") related to the collection of federal excise taxes on optional passenger seat selection charges covering the period of the second quarter of 2018 through the fourth quarter of 2020, on March 31, 2022, the Company was assessed $34.9 million. On July 19, 2022, the assessment was reduced to $27.5 million. The Company believes it has defenses available and has informed the IRS that it is challenging the assessment. The Company believes a loss in this matter is not probable and has not recognized a loss contingency.
On February 24, 2026, the Company received a preliminary assessment from the Transportation Security Administration (“TSA”) related to the recording, refunding, remitting, and reporting of TSA security fees for the period from October 1, 2020 through November 30, 2023. The preliminary assessment is $23.9 million and relates primarily to expired credit shells for which TSA asserts that security fees should have been remitted. The Company disputes TSA’s interpretation of the applicable regulations and believes the assessment is without merit. The Company currently has a pending case before the U.S. Court of Appeals for the Eleventh Circuit regarding this matter, with oral argument scheduled for April 7, 2026. Based on the information currently available, including the status of the appeal and the Company’s evaluation of the underlying legal position, management does not believe that a loss is probable. Accordingly, no liability has been recorded as of the date of this filing. The Company will continue to monitor developments and update its assessment as additional information becomes available.
Employees
The Company has six union-represented employee groups that together represented approximately 81% of all employees as of December 31, 2025. The table below sets forth the Company's employee groups and status of the CBAs.
| | | | | | | | | | | | | | | | | | | | |
| Employee Groups | | Representative | | Amendable Date (1) | | Percentage of Workforce |
| Pilots | | Air Line Pilots Association, International ("ALPA") (2) | | January 2028 | | 26% |
| Flight Attendants | | Association of Flight Attendants ("AFA-CWA") | | January 2028 | | 41% |
| Dispatchers | | Professional Airline Flight Control Association ("PAFCA") | | August 2026 | | 1% |
| Ramp Service Agents | | International Association of Machinists and Aerospace Workers ("IAMAW") | | November 2026 | | 4% |
| Passenger Service Agents | | Transport Workers Union of America ("TWU") | | February 2027 | | 3% |
| Aircraft Maintenance Technicians | | Aircraft Mechanics Fraternal Association ("AMFA") (2) | | N/A (2) | | 6% |
(1) Subject to standard early opener provisions.
(2) CBA is currently under negotiation.
Notes to Financial Statements—(Continued)
In August 2022, the Company's aircraft maintenance technicians ("AMTs") voted to be represented by AMFA as their collective bargaining agent. In May 2024, the parties began negotiations with a National Mediation Board ("NMB"), and those discussions are ongoing. As of December 31, 2025, the Company had approximately 455 AMTs.
In March 2024, ALPA provided notice to the Company that it intends to amend its CBA with its pilots and in July 2024, the parties began negotiations.
As a result of the 2025 Chapter 11 Bankruptcy Proceedings, the Company engaged in concessionary negotiations with both ALPA and AFA-CWA. On November 6, 2025, the Company reached agreements in principle with each of the two unions. These agreements were ratified by union members in December 2025, approved by the Bankruptcy Court on December 29, 2025, and are amendable in January 2028. Under the pilot agreement, hourly pay will be reduced by 8% effective January 1, 2026, and employer 401(k) contributions will be reduced from 16% to 8% for 2026 and 2027. The flight attendant agreement includes a reduction in incentive overtime pay and elimination of ground holding pay in certain circumstances.
During the Current Predecessor Period, the Company furloughed approximately 200 pilots to align with its projected flight volume for 2025 and recorded $0.9 million in expenses related to these furloughs. These expenses were recorded within salaries, wages and benefits on the Company's consolidated statements of operations. In addition, as part of the Company's ongoing efforts to optimize and enhance efficiencies, it made the decision to eliminate approximately 200 positions from various departments. The Company recorded $1.8 million in expenses related to these efforts during the Current Predecessor Period. These expenses were recorded within salaries, wages and benefits on the Company’s consolidated statements of operations.
Furthermore, to continue its ongoing efforts to optimize and enhance efficiencies, in July 2025, the Company announced the downgrade of approximately 140 Captains to First Officers and the furlough of approximately 270 pilots, effective October 1, 2025 and November 1, 2025, respectively, to align with its projected flight volume for 2026. The Company recorded $7.2 million in expenses related to these actions during the Successor Period. These expenses were recorded within special charges, non-operating expense on the Company’s consolidated statements of operations. Additionally, in September 2025, the Company announced the furlough of approximately 1,800 flight attendants, effective November 1, 2025.
The Company is self-insured for health care claims, subject to a stop-loss policy, for eligible participating employees and qualified dependent medical claims, subject to deductibles and limitations. The Company’s liabilities for claims incurred but not reported are determined based on an estimate of the ultimate aggregate liability for claims incurred. The estimate is calculated from actual claim rates and adjusted periodically as necessary. The Company has accrued $13.4 million and $11.6 million, for health care claims as of December 31, 2025 and 2024, respectively, recorded within other current liabilities on the Company's consolidated balance sheet.
19.Fair Value Measurements
Under ASC 820, "Fair Value Measurements and Disclosures", disclosures relating to how fair value is determined for assets and liabilities are required, and a hierarchy for which these assets and liabilities must be grouped is established, based on significant levels of inputs, as follows:
Level 1—Quoted prices in active markets for identical assets or liabilities.
Level 2—Observable inputs other than Level 1 prices such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities.
Level 3—Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities.
Fair value is defined as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. The Company utilizes several valuation techniques in order to assess the fair value of the Company’s financial assets and liabilities.
Long-Lived Assets Impairment Analysis
Notes to Financial Statements—(Continued)
The Company records impairment charges on long-lived assets used in operations when events and circumstances indicate that the assets may be impaired, the undiscounted cash flows estimated to be generated by those assets are less than the carrying amount of those assets, and the net book value of the assets exceeds their estimated fair value.
As of December 31, 2025, the Company identified indicators of potential impairment, including continued negative cash flows and the commencement of the 2025 Chapter 11 Bankruptcy Proceedings during the third quarter of 2025. These indicators prompted the Company to perform a recoverability analysis on its assets to assess whether any impairment losses should be recognized. In estimating the undiscounted future cash flows, the Company uses certain assumptions, including, but not limited to, the estimated, undiscounted future cash flows expected to be generated by these assets, estimates of length of service the asset will be used in the Company’s operations, estimated salvage values, and estimates related to the Company's plan of reorganization. The Company assessed whether any impairment of its long-lived assets existed as of December 31, 2025 and has determined that the assets are recoverable.
The Company’s assumptions about future conditions that are important to its assessment of potential impairment of its long-lived assets are subject to uncertainty and may be subject to the Company's reorganization strategy. The Company will continue to monitor these conditions in future periods as new information becomes available and will update its analyses accordingly.
Indefinite-Lived Intangible Asset Impairment Analysis
With the adoption of fresh start accounting, the Company recorded $83.5 million of indefinite-lived intangible assets within intangible assets on the Company's consolidated balance sheet as of the Fresh Start Reporting Date. The Company's indefinite-lived intangible assets are related to the LGA Slots.
These indefinite-lived intangible assets are assessed for impairment annually on September 1 (the "Annual Test Date"), or more frequently if events or circumstances indicate that the fair values of indefinite-lived intangible assets may be lower than their carrying values. As of December 31, 2025, the Company had not identified any such events or circumstances that would indicate the fair value of the LGA Slots is below their carrying value. Indefinite-lived intangible assets are assessed for impairment by initially performing a qualitative assessment. The Company performed a qualitative test to evaluate whether the assets were impaired on the Annual Test Date in 2025. As part of the qualitative test, the Company also considered fair value estimates provided by an independent third-party specialist. The specialist applies a market approach to determine fair value, which relies on recent slot transaction data, market lease rates and input from industry participants and regulatory agencies. Slot values are further adjusted based on factors such as time-of-day, peak demand and qualitative considerations. These valuations reflect market participant assumptions and, in combination with other qualitative factors considered, are used to determine whether it is more likely than not that the fair value of the Slots is less than their carrying amount.
Long-term Debt
The estimated fair value of the Company's term loan debt agreements and revolving credit facility have been determined to be Level 3, as certain inputs used to determine the fair value of these agreements are unobservable. The Company utilizes a discounted cash flow method to estimate the fair value of the Level 3 long-term debt. The estimated fair value of the Company's publicly and non-publicly held EETC debt agreements has been determined to be Level 2, as the Company utilizes quoted market prices in markets with low trading volumes to estimate the fair value of its Level 2 long-term debt.
The carrying amounts and estimated fair values of the Company's long-term debt at December 31, 2025 and December 31, 2024, were as follows:
Notes to Financial Statements—(Continued)
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Successor | | | Predecessor | | |
| December 31, 2025 | | | December 31, 2024 | | |
| | Carrying Value | | Estimated Fair Value | | | Carrying Value | | Estimated Fair Value | | Fair value level hierarchy |
| (in millions) | | |
| DIP term loans | $ | 358.6 | | | $ | 358.6 | | | | $ | 309.0 | | | $ | 309.0 | | | Level 3 |
| | | | | | | | | | |
| Fixed-rate term loans | 274.8 | | | 325.9 | | | | 972.2 | | | 970.7 | | | Level 3 |
| Unsecured term loans | — | | | — | | | | 136.3 | | | 130.4 | | | Level 3 |
| 2015-1 EETC Class A | 212.6 | | | 200.4 | | | | 234.6 | | | 215.8 | | | Level 2 |
| | | | | | | | | | |
| | | | | | | | | | |
| 2017-1 EETC Class AA | 148.3 | | | 136.8 | | | | 160.3 | | | 140.4 | | | Level 2 |
| 2017-1 EETC Class A | 49.4 | | | 44.3 | | | | 53.4 | | | 45.8 | | | Level 2 |
| 2017-1 EETC Class B | — | | | — | | | | 44.7 | | | 40.5 | | | Level 2 |
| | | | | | | | | | |
| 2025 EETC Class B | 215.0 | | | 208.0 | | | | — | | | — | | | Level 2 |
| Revolving credit facility due 2028 | — | | | — | | | | 300.0 | | | 300.0 | | | Level 3 |
| Total long-term debt | $ | 1,258.7 | | | $ | 1,274.0 | | | | $ | 2,210.5 | | | $ | 2,152.6 | | | |
| | | | | | | | | | |
| | | | | | | | | | |
| | | | | | | | | | |
| | | | | | | | | | |
| | | | | | | | | | |
Cash and Cash Equivalents
Cash and cash equivalents at December 31, 2025 and December 31, 2024 are comprised of liquid money market funds and cash and are categorized as Level 1 instruments. The Company maintains cash with various high-quality financial institutions.
Restricted Cash
Restricted cash is comprised of cash held in accounts subject to restrictions imposed by the Bankruptcy court or otherwise pledged as collateral against the Company's letters of credit and is categorized as a Level 1 instrument. As of December 31, 2025, the Company had $36.7 million in standby letters of credit secured by $38.5 million of restricted cash, of which $35.6 million were issued letters of credit. The Company also had $341.8 million of restricted cash held as collateral for the Exit Secured Notes, $100.0 million of restricted cash held in an account subject to a control agreement under its credit card processing agreement, $61.7 million of restricted cash held in accounts subject to control agreements to be used for the payment of interest and fees on the Exit Secured Notes and $6.0 million in pledged cash pursuant to its corporate credit cards. Furthermore, the Company had $43.3 million allocated to fund required escrow accounts due to the Bankruptcy filing.
Short-term Investment Securities
As of December 31, 2025, the Company did not have short-term investment securities. As of December 31, 2024 the Company had short-term investment securities classified as available-for-sale and generally consisted of U.S. Treasury and U.S. government agency securities with contractual maturities of twelve months or less. The Company's short-term investment securities as of December 31, 2024 were categorized as Level 1 instruments, as the Company used quoted market prices in active markets when determining the fair value of these securities. For additional information, refer to Note 10, Short-term Investment Securities.
Assets Held for Sale
During the third quarter of the Successor Period, the Company reassessed the classification of the remaining 20 A320ceo and A321ceo aircraft that were previously recorded as held for sale. The original sales agreement for these aircraft expired during the third quarter of the Successor Period, and as of December 31, 2025, the Company retained the assets for ongoing use in operations. As the criteria for held for sale classification under ASC 360 are no longer met, the Company reclassified the aircraft to property and equipment on its consolidated balance sheets as they will be held and used. In accordance with the guidance, the assets were measured at the lower of (i) their carrying amount, adjusted for depreciation that would have been recognized had they remained classified as held and used, or (ii) their fair value as of the date the decision not to sell was made. In addition, net proceeds of any refinancing, sale or other disposition of these aircraft after satisfaction in full of any Aircraft Loans secured by such aircraft serve as collateral under the DIP loan agreement executed on October 14, 2025.
Notes to Financial Statements—(Continued)
During the third quarter of the Successor Period, the Company recorded the related aircraft to their adjusted carrying amount of $429.5 million, within property and equipment on its consolidated balance sheets, which represents the amount the aircraft would have been recorded had they never been classified as held for sale. In addition, the Company recorded a $3.2 million gain, within loss (gain) on disposal of assets within its consolidated statement of operations during the Successor Period, related to this reclassification, reflecting the difference between the adjusted carrying value and the prior held for sale balance.
The Company's assets held for sale as of December 31, 2024 primarily consisted of 21 A320ceo and A321ceos aircraft, which are now classified as property and equipment on the Company's consolidated balance sheets as they will be held and used. For additional information, refer to Note 1, Summary of Significant Accounting Policies.
Assets and liabilities measured at gross fair value on a recurring basis are summarized below:
| | | | | | | | | | | | | | | | | | | | | | | |
| | Successor Fair Value Measurements as of December 31, 2025 |
| | Total | | Level
1 | | Level
2 | | Level
3 |
| (in millions) |
| Cash and cash equivalents | $ | 273.0 | | | $ | 273.0 | | | $ | — | | | $ | — | |
| Restricted cash | 591.4 | | | 591.4 | | | — | | | — | |
| | | | | | | |
| | | | | | | |
| | | | | | | |
| Assets held for sale | 3.0 | | | — | | | — | | | 3.0 | |
| Total assets | $ | 867.4 | | | $ | 864.4 | | | $ | — | | | $ | 3.0 | |
| | | | | | | |
| | | | | | | |
| | | | | | | |
| | | | | | | |
| Total liabilities | $ | — | | | $ | — | | | $ | — | | | $ | — | |
| | | | | | | | | | | | | | | | | | | | | | | |
| | Predecessor Fair Value Measurements as of December 31, 2024 |
| | Total | | Level
1 | | Level
2 | | Level
3 |
| (in millions) |
| Cash and cash equivalents | $ | 902.1 | | | $ | 902.1 | | | $ | — | | | $ | — | |
| Restricted cash | 168.4 | | | 168.4 | | | — | | | — | |
| Short-term investment securities | 118.3 | | | 118.3 | | | — | | | — | |
| | | | | | | |
| | | | | | | |
| Assets held for sale | 463.0 | | | — | | | — | | | 463.0 | |
| Total assets | $ | 1,651.8 | | | $ | 1,188.8 | | | $ | — | | | $ | 463.0 | |
| | | | | | | |
| | | | | | | |
| | | | | | | |
| | | | | | | |
| Total liabilities | $ | — | | | $ | — | | | $ | — | | | $ | — | |
The Company had no transfers of assets or liabilities between any of the above levels during the years ended December 31, 2025 or December 31, 2024.
20.Operating Segments and Related Disclosures
The Company operates in a single reportable segment that provides air transportation to passengers. The Company’s Chief Operating Decision Maker (“CODM”) regularly evaluates the Company’s consolidated operating income (loss) to make decisions regarding resource allocation and performance assessment. Additionally, significant segment expenses provided to the CODM align with those shown in the consolidated statement of operations.
Notes to Financial Statements—(Continued)
During the first quarter of 2025, Ted Christie, then President and Chief Executive Officer, served as the Company’s CODM and was responsible for overseeing operating performance, allocating resources and regularly communicating with executive team on these matters. Subsequently, on April 6, 2025, Ted Christie stepped down from his role. On April 17, 2025, the Board appointed David Davis as President and Chief Executive Officer and as a member of the Board, in each case effective as of April 21, 2025. Beginning on the effective date, Mr. Davis assumed the role of CODM and became responsible for overseeing the Company’s operating performance, resource allocation and executive-level decision-making. For more information on the consolidated operating results of the Company’s single reportable segment, refer to the Company’s consolidated statements of operations.
The Company is managed as a single business unit that provides air transportation for passengers. Operating revenues by geographic region as defined by the Department of Transportation ("DOT") are summarized below (in thousands):
| | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | |
| Successor | | | Predecessor |
| Period from March 13, 2025 through December 31, 2025 | | | Period from January 1, 2025 through March 12, 2025 | | Twelve Months Ended December 31, 2024 | | Twelve Months Ended December 31, 2023 |
| | | |
| DOT—Domestic | $ | 2,673,384 | | | | $ | 663,201 | | | $ | 4,358,205 | | | $ | 4,676,143 | |
| DOT—Latin America | 368,009 | | | | 92,153 | | | 555,216 | | | 686,406 | |
| Total | $ | 3,041,393 | | | | $ | 755,354 | | | $ | 4,913,421 | | | $ | 5,362,549 | |
During the Successor Period and the Current Predecessor Period as well as during 2024 and 2023, no revenue from any one foreign country represented greater than 4% of the Company’s total passenger revenue. The Company attributes operating revenues by geographic region based upon the origin and destination of each passenger flight segment. The Company’s tangible assets consist primarily of flight equipment, which are mobile across geographic markets and, therefore, have not been allocated.
Notes to Financial Statements—(Continued)