KBRA Comments on Aviation ABS Exposure to Spirit Airlines

Spirit Airlines Inc. (Spirit), an ultra-low-cost carrier headquartered in Dania Beach, Florida, has experienced financial deterioration in recent years as the airline has struggled to recover from the COVID-19 pandemic, with recent headlines indicating that Spirit is preparing to file for bankruptcy protection.

Spirit is a lessee in six aviation lease asset-backed security (ABS) transactions rated by KBRA. While none of the exposures exceeds 10% of the underlying portfolio value, the transactions may be susceptible to future cash flow interruption due to further credit deterioration of the airline. Under bankruptcy protection, Spirit may elect to either reject or affirm its leases. If a lease is rejected, ABS cash flows could be negatively impacted while the related servicer attempts to re-lease or sell the aircraft. Leases may also be affirmed but restructured, resulting in lower lease rates, which would also negatively impact cash flows.

The six KBRA-rated aviation lease ABS transactions that have exposure to Spirit, based on data from the October 2024 payment date reports (apart from SLAM 2024-1, which is as of the closing date), include the following:

• MAPS 2019-1 Limited with one aircraft, approximately 8.4% by value, serviced by Merx Aviation Servicing Limited
• SLAM 2024-1 Limited with two aircraft, approximately 5.5% by value, serviced by SKY Leasing LLC
• AASET 2022-1 Limited with two aircraft, approximately 5.4% by value, serviced by Carlyle Aviation Management Limited
• Navigator 2024-1 Aviation Limited with two aircraft, approximately 4.7% by value, serviced by Dubai Aerospace Enterprise (DAE) Ltd.
• AASET 2019-2 Trust with two aircraft, approximately 4.2% by value, serviced by Carlyle Aviation Management Limited
• Tailwind 2019-1 Limited with one aircraft, approximately 3.9% by value, serviced by Airborne Capital Limited

KBRA will continue to monitor developments and report if needed on potential implications on our rated aviation ABS universe.

Related Publication

• Aviation ABS: Gaining Altitude

About KBRA

KBRA is a full-service credit rating agency registered in the U.S., the EU, and the UK, and is designated to provide structured finance ratings in Canada. KBRA’s ratings can be used by investors for regulatory capital purposes in multiple jurisdictions.

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