Spirit Airlines announced that it has received $100 million of new financing led by Oaktree Capital Management…
Spirit Airlines announced that it has received $100 million of new financing led by Oaktree Capital Management, LLC and Goldman Sachs Credit Partners L.P. $70 million of the financing is being provided by existing investors including Oaktree and Spirit management, and $30 million from Goldman Sachs.
The new liquidity will be used to finance Spirit`s accelerated transition to an all Airbus fleet, which is expected to be complete by early 2007, to support the Company`s fuel hedging program, and to further strengthen Spirit`s position as the leading low cost carrier to the Caribbean and Latin America.
This new financing further solidifies our position within the industry, said Ben Baldanza, President of Spirit Airlines. We are delighted to have Goldman Sachs as an investor. Spirit`s low cost structure, which will be even lower upon the completion of our fleet transition, coupled with our fuel hedging program and network plan, strategically positions us for continued success and to be among the most profitable carriers. This financing will allow Spirit to complete its fleet transition and weather the current industry environment.
Oaktree has been very pleased with the progress Spirit has made towards executing its business plan, said Ronald N. Beck, Managing Director of Oaktree. Spirit`s strong management team, low cost business model, substantial cash on its balance sheet and new aircraft will allow the airline to assure its leadership position now and into the future. Oaktree is delighted to be an important element of this success.
Aircraft
In 2004, Spirit placed an order with Airbus to acquire 35 new aircraft valued at $2 billion with options for an additional 50 aircraft. Spirit plans to complete its fleet transition by early 2007. Spirit currently flies 23 MD-80s, 5 Airbus A321s, and 6 Airbus A319s. The airline will retire 4 MD-80s this fall and will introduce an additional 4 Airbus A319s and 1 Airbus A321 before the end of the year.
Fuel Hedges
In April, 2005, Spirit implemented a fuel price hedging strategy to mitigate the risk of rising oil prices. Over the course of the second quarter, Spirit invested in fuel hedge positions that essentially cap the price that Spirit will pay for 100% of its remaining 2005 jet fuel consumption at levels well below today`s market prices. The Company intends to maintain this strategy on a go-forward basis.
New Routes
Spirit is the leading low cost carrier in the Bahamas and the Caribbean. In 2005, Spirit began service to Nassau, Bahamas with non-stop flights from Fort Lauderdale. Spirit will expand this service in November when it adds non-stop flights to Nassau from both NY/LaGuardia and Orlando, Florida.
In April, 2005, Spirit enhanced its existing service to Cancun, Mexico by adding non-stop flights from Detroit, Michigan and will add non-stop service between Tampa and Cancun in November.
Spirit will add Kingston and Montego Bay, Jamaica to its network in November 2005 and effective the November schedule, 24% of Spirit`s flights will serve the Bahamas and the Caribbean. Spirit has a higher percentage of service to this region than any other U.S. Carrier.
Theodore is the Co-Founder and Managing Editor of TravelDailyNews Media Network; his responsibilities include business development and planning for TravelDailyNews long-term opportunities.
