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Topic: Spirit Airlines To Go Public With IPO
Username: LAXintl
Posted 2010-09-17 19:28:35 and read 6524 times.

As had been rumored the last year, Spirit will go public with an IPO offering.

Quote:
Spirit Airlines files for $300 mln IPO

Spirit Airlines Inc. filed plans to hold an initial public offering of up to $300 million, with the Florida-based airline retaining about half of the net proceeds.

According to the company's regulatory filing, it expects to retain $150 million from the offering. The remaining proceeds will be used to pay a $1.6 million termination fee with Indigo Partners LLC, which acquired a majority stake in Spirit in 2006. Other proceeds will be used to repay outstanding notes.

Although many carriers suffered from volatility in fuel costs and the severe economic recession, Spirit maintained relatively stable unit revenue while reducing costs, allowing it to remain profitable in the past three full years.
Source

[Edited 2010-09-18 01:51:29 by ManuCH]

Topic: RE: Spirit Airlines To Go Public With IPO
Username: SurfandSnow
Posted 2010-09-17 19:34:02 and read 6497 times.

Interesting. So this will leave VX as the only "private" U.S. airline?

Topic: RE: Spirit Airlines To Go Public With IPO
Username: LAXintl
Posted 2010-09-17 19:41:21 and read 6464 times.

No there are many private US airlines - World Airways, Southern Air, Miami Air, Omni Air, North American, etc..


The link to the Spirit prospectus can be viewed at:
http://www.sec.gov/Archives/edgar/da...1498710/000119312510212371/ds1.htm
Lots of past financial details and management discussion.

Topic: RE: Spirit Airlines To Go Public With IPO
Username: flyingcat
Posted 2010-09-17 22:01:55 and read 6247 times.

Why now, certainly the economy is slightly better than a year ago but nowhere near where it should be for an airline IPO to really perform.

Referenced in the report was the strike, perhaps it hurt more than they let on that they have to get their hands on IPO cash even it it falls short.

Either way the IPO will give them the cash to either stay the course and have a healthy buffer for slow and steady growth or they are kickstarting a new wave of expansion to solidify their FLL focus.

If they are doing OK they should wait another year but it seems their hand has been forced.

Topic: RE: Spirit Airlines To Go Public With IPO
Username: Mainland
Posted 2010-09-18 08:09:53 and read 5953 times.

Quoting flyingcat (Reply 3):
Why now, certainly the economy is slightly better than a year ago but nowhere near where it should be for an airline IPO to really perform.

If they are doing OK they should wait another year but it seems their hand has been forced.

They've got a ton of debt coming due soon, which is likely a large driving force to go public now.

Basically, they have $258.6 million in notes (at 17%) coming due and the end of next year that a portion of this offering will go to pay down. They also have two classes of preferred stock that Spirit will have to redeem in July 2012 valued at $77.4 million that proceeds will pay down.

The $150 million expected to be used to pay down this debt clearly won't cover everything, but Spirit has a solution:

Quote:

Also in connection with the closing of this offering:


all Notes that remain outstanding after the application of net proceeds of this offering will be exchanged for a number of shares of common stock equal to the principal amount and accrued and unpaid interest thereon divided by a price per share equal to the initial public offering price set forth on the cover page of this prospectus;



all shares of Class A Preferred Stock and Class B Preferred Stock that remain outstanding after the application of net proceeds of this offering will be exchanged for a number of shares of common stock equal to the Liquidation Preference of such shares divided by a price per share equal to the initial public offering price set forth on the cover page of this prospectus; and



each share of Class B Common Stock shall be exchanged for one share of common stock, provided that investment funds managed by Indigo may retain all or a portion of the shares of Class B Common Stock owned by them and cause such shares to be exchanged for the same number of shares of a newly-established class of non-voting common stock, which will have the same rights as the common stock, except it will be non-voting and will have the right to convert on a share-for-share basis into common stock at the election of the holder.

As a result of this recapitalization, which we refer to as the 2010 Recapitalization, upon the closing of this offering there will be no Notes and no shares of Preferred Stock outstanding.

In short, any of the notes or preferred stock left outstanding after the money from the IPO is gone will be exchanged into the new common stock, removing a lot of financial obligations from Spirit's books.

So, were their hands forced? It seems likely. They won't be able to tackle all of the debt with funds from operations/cash flow, so a large equity raise via IPO makes sense. It makes all the more sense given they could use stock to satisfy a significant portion of debt and keep the rest of the cash raised for whatever they see fit. The registration doesn't contain any share price offering information, but for Spirit's sake they should be hoping the market receives them fairly well and doesn't cause them to lower their initial offering price. If this $300 million offering turns into $200 million they're just going to end up issuing A LOT more shares satisfy the debt.

Topic: RE: Spirit Airlines To Go Public With IPO
Username: oswegobag
Posted 2010-09-18 12:40:49 and read 5755 times.

Wow! I guess Spirit is in much worse shape than I ever imagined! I can not see spectacular demand for an airline stock IPO right now with the market and oil prices so fragile. Good luck to them, but it looks like this will be a stock I will stay away from.

Topic: RE: Spirit Airlines To Go Public With IPO
Username: ca2ohHP
Posted 2010-09-19 12:27:39 and read 5090 times.

Quoting Mainland (Reply 4):
They've got a ton of debt coming due soon, which is likely a large driving force to go public now.

Basically, they have $258.6 million in notes (at 17%) coming due and the end of next year that a portion of this offering will go to pay down. They also have two classes of preferred stock that Spirit will have to redeem in July 2012 valued at $77.4 million that proceeds will pay down.

The $150 million expected to be used to pay down this debt clearly won't cover everything, but Spirit has a solution:

Exactly - I've heard from unconfirmed sources NK needs to come up with around $50mil within the next 30 days. I've also heard that their pilots negotiated around $200k/yr for senior captains. I wouldn't be surprised to see ramp and or customer service functions outsourced in the very near future. Their hand was definitely forced in offering an IPO.

Topic: RE: Spirit Airlines To Go Public With IPO
Username: nkops
Posted 2010-09-19 13:59:07 and read 4999 times.

Quoting ca2ohHP (Reply 6):
I wouldn't be surprised to see ramp and or customer service functions outsourced in the very near future.

They really can't outsource much else.... they only do their own ramp in ACY,DTW and FLL... for ticket counter it is the same cities along with MCO and MYR (not sure about LGA)... all else is outsourced already.

Topic: RE: Spirit Airlines To Go Public With IPO
Username: ca2ohHP
Posted 2010-09-19 17:31:51 and read 4878 times.

Quoting nkops (Reply 7):
They really can't outsource much else.... they only do their own ramp in ACY,DTW and FLL... for ticket counter it is the same cities along with MCO and MYR (not sure about LGA)... all else is outsourced already.

Yeah it's been rumored for those cities, but then again, rumors are a dime a dozen. Personally speaking, I have a number of good friends who work for NK and am hopeful the IPO is successful, possibly proving this "rumor" false.

Topic: RE: Spirit Airlines To Go Public With IPO
Username: Santi319
Posted 2010-09-19 17:34:44 and read 4867 times.

Quoting ca2ohHP (Reply 6):
Exactly - I've heard from unconfirmed sources NK needs to come up with around $50mil within the next 30 days. I've also heard that their pilots negotiated around $200k/yr for senior captains. I wouldn't be surprised to see ramp and or customer service functions outsourced in the very near future. Their hand was definitely forced in offering an IPO.

Not really, they wanted to go public since god knows when...now is the time since everything is steady and they did lose a lot of money during the strike. Management's decisions during the strike (and others after that) have been a total disaster and I am sure that at this point the big guys want them out... It can only mean good things in the near future! Hope for the best! Spirit has survived pretty much everything there is to survive LOL!

[Edited 2010-09-19 17:35:19]

Topic: RE: Spirit Airlines To Go Public With IPO
Username: AWACSooner
Posted 2010-09-19 17:42:01 and read 4854 times.

Quoting Santi319 (Reply 9):
Not really, they wanted to go public since god knows when...now is the time since everything is steady and they did lose a lot of money during the strike. Management's decisions during the strike (and others after that) have been a total disaster and I am sure that at this point the big guys want them out... It can only mean good things in the near future! Hope for the best! Spirit has survived pretty much everything there is to survive LOL!

Ummm, they lost waaaaaaaaaaaay more than money during the strike.
I look at it this way, whereas upstart airlines like G4 do IPO's as a way to garner more cash for expansion, this looks and smells like a last ditch effort for cash infusion to remain solvent. Only time will tell...

Topic: RE: Spirit Airlines To Go Public With IPO
Username: Santi319
Posted 2010-09-19 18:34:11 and read 4789 times.

Quoting AWACSooner (Reply 10):
whereas upstart airlines like G4 do IPO's as a way to garner more cash for expansion

If you read the prospectus, is does say that they are looking to expand, it even goes as far as mentioning FLL being not big enough for their expansion plans and looking at other alternatives in South Florida.....

http://www.sec.gov/Archives/edgar/da...1498710/000119312510212371/ds1.htm

Topic: RE: Spirit Airlines To Go Public With IPO
Username: LAXintl
Posted 2010-09-19 18:41:51 and read 4777 times.

To me Spirit is hardly desperate. They have posted 3 years of consistent profits in the midst of terrible industry environment and are on the way to another one this year.

As mentioned in the IPO document about half of the proceeds are to pay down debts, and remainder for general corporates uses. Spirit's ULCC model works, and the company will be slowly the expanding with more A320s.

Yes the strike hurt, but they still posted a 6-month profit of $22mil year to date.

To me the company is well positioned being an opportunistic player with lots more room for growth in Caribbean and Latin America markets while being an extremely lean, cost efficient, and productive operation, with very strong ancillary revenue generation ($31/pax) capacity.

I'm quite bullish on Spirit.

Topic: RE: Spirit Airlines To Go Public With IPO
Username: Mainland
Posted 2010-09-20 03:47:39 and read 4591 times.

Quoting Santi319 (Reply 11):
If you read the prospectus, is does say that they are looking to expand, it even goes as far as mentioning FLL being not big enough for their expansion plans and looking at other alternatives in South Florida.....

As for the looking at alternative airports... it's standard boiler plate material from their risk factors. It's nothing to be worried about.

Quote:

Our inability to expand or operate reliably or efficiently out of Fort Lauderdale–Hollywood International Airport, an airport on which we are highly dependent, could harm our business, results of operations and financial condition.

We are highly dependent on markets served from South Florida, where we maintain a large presence with approximately 64% of our daily flights either departing from or arriving at Fort Lauderdale–Hollywood International Airport, or FLL Airport. We operate out of the only international terminal at FLL Airport, Terminal 4. FLL Airport is in the process of a renovation project, which includes the expansion of Terminal 4. The airport expansion would allow us to increase the number of routes we serve from FLL Airport (although the expansion could also increase the number of routes our competitors serve from FLL Airport). If the airport expansion does not occur or is delayed, however, our expansion strategy may be impeded. In addition, FLL Airport presently has relatively low costs and there is no guarantee that the fees and other costs related to operating out of FLL Airport will not increase. Our operating performance and results of operations could be harmed by an increase in fees charged by the airport. If we are unable to operate reliably or efficiently from FLL Airport, we may need to move our South Florida operations to a smaller or more expensive area airport.

Topic: RE: Spirit Airlines To Go Public With IPO
Username: FutureUScapt
Posted 2010-09-20 18:28:55 and read 4316 times.

Quoting LAXintl (Reply 12):
Yes the strike hurt, but they still posted a 6-month profit of $22mil year to date.

A $22M operating profit; the strike did cause them to swing to a net loss of $2.8M for the first six months though. Still, anyone would be impressed with those 2009 numbers!

http://atwonline.com/airline-finance...ising-tide-profits-0?cid=nl_atw_dn


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