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Spirit Airlines To Go Public With IPO  
User currently offlineLAXintl From United States of America, joined May 2000, 25786 posts, RR: 50
Posted (4 years 1 month 1 week 1 day 3 hours ago) and read 6796 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]


From the desert to the sea, to all of Southern California
14 replies: All unread, jump to last
 
User currently offlineSurfandSnow From United States of America, joined Jan 2009, 2887 posts, RR: 31
Reply 1, posted (4 years 1 month 1 week 1 day 3 hours ago) and read 6769 times:

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


Flying in the middle seat of coach is much better than not flying at all!
User currently offlineLAXintl From United States of America, joined May 2000, 25786 posts, RR: 50
Reply 2, posted (4 years 1 month 1 week 1 day 3 hours ago) and read 6736 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.



From the desert to the sea, to all of Southern California
User currently offlineflyingcat From United States of America, joined May 2007, 543 posts, RR: 0
Reply 3, posted (4 years 1 month 1 week 1 day ago) and read 6519 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.


User currently offlineMainland From United States of America, joined Jun 2004, 309 posts, RR: 0
Reply 4, posted (4 years 1 month 1 week 14 hours ago) and read 6225 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.



You don't need a passport to know what state you're in...
User currently offlineoswegobag From United States of America, joined Oct 2008, 169 posts, RR: 0
Reply 5, posted (4 years 1 month 1 week 10 hours ago) and read 6027 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.

User currently offlineca2ohHP From United States of America, joined Sep 2005, 955 posts, RR: 1
Reply 6, posted (4 years 1 month 6 days 10 hours ago) and read 5362 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.


User currently offlinenkops From United States of America, joined Jun 2005, 2673 posts, RR: 6
Reply 7, posted (4 years 1 month 6 days 8 hours ago) and read 5271 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.



I have no association with Spirit Airlines
User currently offlineca2ohHP From United States of America, joined Sep 2005, 955 posts, RR: 1
Reply 8, posted (4 years 1 month 6 days 5 hours ago) and read 5150 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.


User currently offlineSanti319 From Mexico, joined Dec 2005, 400 posts, RR: 0
Reply 9, posted (4 years 1 month 6 days 5 hours ago) and read 5139 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]

User currently offlineAWACSooner From United States of America, joined Jan 2008, 1934 posts, RR: 1
Reply 10, posted (4 years 1 month 6 days 5 hours ago) and read 5126 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...


User currently offlineSanti319 From Mexico, joined Dec 2005, 400 posts, RR: 0
Reply 11, posted (4 years 1 month 6 days 4 hours ago) and read 5061 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


User currently offlineLAXintl From United States of America, joined May 2000, 25786 posts, RR: 50
Reply 12, posted (4 years 1 month 6 days 4 hours ago) and read 5049 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.



From the desert to the sea, to all of Southern California
User currently offlineMainland From United States of America, joined Jun 2004, 309 posts, RR: 0
Reply 13, posted (4 years 1 month 5 days 19 hours ago) and read 4863 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.



You don't need a passport to know what state you're in...
User currently offlineFutureUScapt From United States of America, joined Dec 2008, 765 posts, RR: 1
Reply 14, posted (4 years 1 month 5 days 4 hours ago) and read 4588 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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