Bankrupt discount carrier Spirit Airlines, which ceased operations on Saturday, asked a US bankruptcy court for approval to pay retention bonuses to remaining employees and said it had no choice but to end operations.
Spirit is seeking court approval to pay $10.7 million in retention bonuses to employees who remain as the company ends operations – averaging $76,000 per participant – and will pay more to the top three executives but has not yet disclosed how much.
Spirit said the payments to the top three executives will replace some of the payments it would have offered the senior executives under annual incentive and cash incentive plans in place before the bankruptcy.
Bondholders may challenge Spirit’s management bonuses, as some aspects of the wind-down plan, such as how liquidation proceeds and cost savings will be measured, are still being negotiated with the debtor-in-possession lenders, according to a separate filing.
The airline said it will retain about 150 employees before decreasing its headcount to about 40 after the first three months, with expectations that its liquidation plan will be completed within that time frame.
Spirit says it does not have money to conduct an organised auction of its aircraft, engines and other equipment, and is asking the court for permission for fast sales or to abandon and let the lenders repossess.
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