Spirit Airlines asked a U.S. bankruptcy court on Monday to approve $10.7 million in retention bonuses for employees who remain to assist with the company's wind-down following the cessation of flights on Saturday. The request comes as the discount carrier moves to orderly end operations after concluding it cannot continue as a going concern.
Under the proposal, the retention payments would be paid to staff who stay on during the shutdown, averaging roughly $76,000 per participating employee. The carrier is also seeking approval to provide additional, unspecified sums to its top three executives. Those executive payments are intended to replace compensation that would have been payable under annual incentive and pre-bankruptcy cash incentive plans.
Chief Financial Officer Fred Comer said in a court filing that Spirit no longer has viable avenues to either reorganize or resume operations. Comer wrote that the company had spent months attempting a reorganization and came close to success, but ultimately concluded that an orderly wind-down was the only remaining alternative.
Spirit told the court it does not have the funds necessary to run an organized auction for its aircraft, engines and other equipment. Because of that funding shortfall, the carrier is seeking permission to conduct expedited sales of those assets or, alternatively, to abandon assets so that secured lenders can take repossession.
The carrier had been negotiating with the Trump administration over a proposed $500 million government bailout that would have supported an exit from bankruptcy and provided the government with as much as 90% of Spirit’s equity. Those discussions fell apart after objections from certain creditors.
Spirit’s financial position had been under pressure even before the recent surge in fuel costs. The company disclosed an incremental $100 million in fuel expenses since March 1, which it attributed to higher jet fuel prices following U.S.-Israeli strikes on Iran that disrupted traffic through the Strait of Hormuz. Those elevated fuel costs were cited as an additional strain on an airline already struggling to return to profitability.
The company’s court filing frames the requested retention payments as necessary to staff the wind-down process and complete required tasks during the cessation of operations, while the asset-sale authority would provide mechanisms to monetize assets despite the lack of funds for a traditional auction.
Contextual note: The filing lays out both the financial constraints and the operational steps Spirit says are required to implement an orderly wind-down, including staffing incentive payments and alternatives for disposition of aircraft and other equipment.