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Spirit Airlines asks for approval to pay retention fees as it closes its operations

Spirit Airlines, the bankrupt discount airline that ceased operations last Saturday, has asked for approval to pay retention bonuses to its remaining employees. It also said it had no other choice than to cease operations.

Spirit seeks court approval for $10.7 million to be paid in retention bonuses, which is $76,000 per employee. The top three executives will also receive more money but the amount hasn't been revealed yet.

"After fighting valiantly to reorganize for months, and having almost succeeded, (Spirit) is left with no alternative but to orderly wind down of operations," Chief Financial officer Fred Comer stated on Monday in a filing to the court. "There is no viable path to a restructuring, or continuing operations."

Spirit announced that it would replace some of the payments made to senior executives as part of its annual incentive and cash incentives plans before bankruptcy.

Spirit claims it lacks the money to hold an auction for its aircraft, engines, and other equipment and asks the court to allow for quick sales or abandonment and to let the lenders repossess.

The carrier was in advanced discussions with the Trump Administration over a $500-million government bailout, which would have helped it exit bankruptcy. It also granted the government up 90% of Spirit's equity. These talks collapsed when some creditors objected.

Since the U.S. and Israeli strikes on 'Iran, the Strait of Hormuz has been disrupted. This is the worst crisis for the air travel industry since the COVID-19 Pandemic. Spirit Airlines was already struggling to make a profit prior to the fuel shock, and now faces $100'million in additional fuel costs.

Spirit stated that the material costs were too high for it to absorb. (Reporting and editing by Nick Zieminski, Bill Berkrot and Dietrich Knauth)

(source: Reuters)