lowecur
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Spirit Order 60 Planes in next 90 days
The interesting thing about this deal is the investor may be looking for an IPO exit strategy similar to Jetblue in the near future. Investor is setting aside an additional $50M in case extra money is needed. They will replace the fleet in 3 to 7 years. My guess is 4 years or 15 a/c per year.
Spirit Sells Majority Stake; Money to Help Expand Carrier's Schedule, Fleet
By Rajiv Vyas, Detroit Free Press
Feb. 24--A California-based investment company and about five other investors picked up a majority stake in Spirit Airlines Inc., Detroit Metropolitan Airport's second-biggest carrier, the airline said Monday.
Oaktree Capital Management LLC of Los Angeles led a $125-million investment deal in Miramar, Fla.-based Spirit, which was established in Eastpointe in 1980. Spirit founder and Chairman Ned Homfeld is to retire.
With new capital in hand, the company plans to buy about 60 new planes and replace its aging fleet of 32 planes in three to seven years, Spirit Chief Executive Jacob Schorr said Monday. Originally, the company planned to buy 50 planes.
Ronald N. Beck, managing director of Oaktree Capital Management, said in a prepared statement that Spirit is ready for its next stage of growth.
The funding also would help Spirit compete in a fast-changing environment that has put two large airlines in bankruptcy. "We raised this money in order to compete better with low-cost carriers of today who are very well financed," Schorr said.
"This is great for Spirit," said Ray Neidl, analyst at New York investment firm Blaylock & Partners. "They got beyond the high end of what they were looking for."
"They could be looking at an IPO exit strategy," Murray Rudin, general partner of the Los Angeles-based private equity firm of Riordan, Lewis & Haden, said of an initial public offering of stock. "There is nobody to buy an airline today."
He said Spirit could be looking at following in the footsteps of JetBlue, which initially raised money from private equity investors and later raised money through a public offering.
Rudin said Oaktree and the group of investors likely would have set aside about $50 million or more for future investments in Spirit. That money would be invested if Spirit needs more to grow or for times of crisis.
Schorr said Monday there have not been discussions about additional funding. Other details of the transaction were sketchy. Spirit remains a private company and is not required to reveal detailed financial information.
For the new planes, Spirit said it expects to place an order in the next 90 days and take delivery by the middle of next year. It would also start retiring its existing fleet of MD80s by the middle of next year. Plans are to retire the entire fleet of 32 MD80s.
"This is a unique window of opportunity for low-fare carriers," said Kevin Mitchell, chairman of Business Travel Coalition, a lobby for business travelers. He said JetBlue, like Spirit, had raised $130 million from private equity funds about five years ago.
Schorr said the airline could add one to two destinations from Detroit each year.
The interesting thing about this deal is the investor may be looking for an IPO exit strategy similar to Jetblue in the near future. Investor is setting aside an additional $50M in case extra money is needed. They will replace the fleet in 3 to 7 years. My guess is 4 years or 15 a/c per year.
Spirit Sells Majority Stake; Money to Help Expand Carrier's Schedule, Fleet
By Rajiv Vyas, Detroit Free Press
Feb. 24--A California-based investment company and about five other investors picked up a majority stake in Spirit Airlines Inc., Detroit Metropolitan Airport's second-biggest carrier, the airline said Monday.
Oaktree Capital Management LLC of Los Angeles led a $125-million investment deal in Miramar, Fla.-based Spirit, which was established in Eastpointe in 1980. Spirit founder and Chairman Ned Homfeld is to retire.
With new capital in hand, the company plans to buy about 60 new planes and replace its aging fleet of 32 planes in three to seven years, Spirit Chief Executive Jacob Schorr said Monday. Originally, the company planned to buy 50 planes.
Ronald N. Beck, managing director of Oaktree Capital Management, said in a prepared statement that Spirit is ready for its next stage of growth.
The funding also would help Spirit compete in a fast-changing environment that has put two large airlines in bankruptcy. "We raised this money in order to compete better with low-cost carriers of today who are very well financed," Schorr said.
"This is great for Spirit," said Ray Neidl, analyst at New York investment firm Blaylock & Partners. "They got beyond the high end of what they were looking for."
"They could be looking at an IPO exit strategy," Murray Rudin, general partner of the Los Angeles-based private equity firm of Riordan, Lewis & Haden, said of an initial public offering of stock. "There is nobody to buy an airline today."
He said Spirit could be looking at following in the footsteps of JetBlue, which initially raised money from private equity investors and later raised money through a public offering.
Rudin said Oaktree and the group of investors likely would have set aside about $50 million or more for future investments in Spirit. That money would be invested if Spirit needs more to grow or for times of crisis.
Schorr said Monday there have not been discussions about additional funding. Other details of the transaction were sketchy. Spirit remains a private company and is not required to reveal detailed financial information.
For the new planes, Spirit said it expects to place an order in the next 90 days and take delivery by the middle of next year. It would also start retiring its existing fleet of MD80s by the middle of next year. Plans are to retire the entire fleet of 32 MD80s.
"This is a unique window of opportunity for low-fare carriers," said Kevin Mitchell, chairman of Business Travel Coalition, a lobby for business travelers. He said JetBlue, like Spirit, had raised $130 million from private equity funds about five years ago.
Schorr said the airline could add one to two destinations from Detroit each year.
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