Spirit Airlines has completed sale-leaseback transactions for 25 aircraft, raising approximately $419 million in cash and repaying $465 million in debt. In a sale-leaseback, a company sells an asset to raise cash and then leases it back. This allows a company to raise capital while still using the asset. The low-cost carrier had faced challenges in 2023, including a proposed merger with JetBlue that ended up in court and lower than expected Q3 results due to softer demand and increased expenses. Despite these challenges, the airline has successfully raised capital through the sale-leaseback transactions.
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“Unlock Capital with Sale-Leaseback Transactions”
The recent regulatory filing from US-based low-cost carrier Spirit Airlines reveals an innovative financial move: completing sale-leaseback transactions for 25 aircraft. This strategic maneuver allows Spirit Airlines to raise capital by selling the aircraft and then leasing them back, providing the company with both the cash and the assets needed to continue operations.
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On January 3, 2024, Spirit finalized these transactions, resulting in the repayment of approximately $465 million of aircraft debt and net cash proceeds of around $419 million for the company.
This news comes after a turbulent 2023 for the airline, which included a proposed merger with rival JetBlue that ended up in the antitrust court and disappointing Q3 results due to softer demand for services and an increase in wage expenses. Despite these challenges, Spirit Airlines is showcasing their ability to make strategic financial moves to ensure their continued success.
Fun Fact: Sale-leaseback transactions are a common financial strategy in the aviation industry, allowing airlines to free up capital for other business needs while still maintaining access to essential assets.
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