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In a pivotal moment for its restructuring flight path, Spirit Airlines secured court approval Friday to borrow $200 million as part of a Chapter 11 financing package designed to keep the cash-strapped budget carrier airborne while trimming down its jet fleet.

U.S. Bankruptcy Judge Sean H. Lane, presiding in New York, granted interim approval for the loan—part of a larger $475 million debtor-in-possession (DIP) funding plan that could inject much-needed liquidity into Spirit’s reorganization efforts. The decision also greenlights a landmark settlement with AerCap, the airline’s largest aircraft lessor, allowing Spirit to shed 27 leases in a move expected to redefine its operational future.

“This is an important, encouraging, and positive sign,” said Marshall S. Huebner of Davis Polk & Wardwell LLP, Spirit’s lead counsel. “The uncontested nature of the request speaks volumes.”

Judge Lane agreed. “I’m happy to approve it,” he remarked, calling the consensus “a reflection of strong progress.”

AerCap Deal Reshapes Spirit’s Fleet Strategy

Under the approved deal, AerCap Ireland Ltd. will receive a $696 million unsecured claim, while Spirit will relinquish leases for 27 of 37 existing planes. The settlement also reshuffles future aircraft deliveries—Spirit will swap 36 upcoming leases for 30 near-term delivery slots—and includes $150 million in cash from AerCap to Spirit. Both parties will mutually release any outstanding claims.

Spirit hailed the AerCap agreement as a “tremendous leap forward” and a “cornerstone” of its restructuring, emphasizing its goal to build a “new, slimmer fleet.”

At Friday’s hearing, Huebner noted that Spirit is finalizing two more agreements with additional lessors, which could help the company retain select aircraft while saving tens of millions of dollars. “The slots in our go-forward fleet are filling up,” he told the court.

Inside the Spirit Airlines Funding Plan

The approved $200 million draw is part of an overall $1.33 billion funding framework, which includes both $475 million in fresh capital and a roll-up of existing debt. The loan is contingent on strict liquidity requirements and restructuring milestones, with the remaining funds to be released in three additional tranches.

Spirit’s latest bankruptcy—its second Chapter 11 filing in under a year—was initiated in August following mounting financial pressure from inflation, intense low-cost carrier competition, and sluggish recovery in business travel demand.

Its previous restructuring, completed in March 2025, erased $795 million in debt through a debt-for-equity swap but fell short of addressing operational inefficiencies. This time, the airline is determined to take full advantage of bankruptcy tools to reinvent itself into a leaner, more premium-focused carrier serving only its most profitable routes.