Spirit Airlines has been cleared to transfer two gates at Chicago O’Hare International Airport (ORD) over to American Airlines for the price of $30 million as part of cash-raising initiatives under its latest bankruptcy plan. The airline has decided that it no longer requires all four of its preferred gates at ORD, handing two over to American while retaining access to the other two.

Since entering bankruptcy protection for the second time, Spirit has been on a cost-cutting rampage, exiting over a dozen airports and rejecting leases for around 80 aircraft. Meanwhile, American Airlines has been eager to expand its presence at Chicago O’Hare as it looks to make the airport its third-largest hub.

Spirit’s $30 Million Chicago O’Hare Gate Sale

As first reported by Reuters, a judge at the US Bankruptcy Court for the Southern District of New York has approved Spirit’s request to sell the two gates at $15 million per gate. American Airlines has swooped in to acquire the two gates, which will prove a key asset amid the carrier’s fierce competition with United Airlines for dominance at Chicago’s main airport. This move also marks Spirit’s first public asset sale since entering its second bankruptcy proceedings.

Spirit currently holds four preferred-use gates at ORD’s Terminal 3. The two gates that American is interested in are G8 and G10, with Spirit holding on to G12 and G14 for its own usage. It typically flew over 30 departures from Chicago O’Hare on peak days, but this figure has now halved as the airline’s network optimization overhaul continues. Spirit is using the funds generated from the sale to make pre-payments on debtor-in-possession loans, rather than for its short-term liquidity.

American’s Chicago O’Hare Push Continues

United is still the dominant airline at ORD with around 40% of the market, but American is doing its best to close the gap. Its latest $30 million investment will put the carrier in a stronger position to establish a larger foothold in Chicago. With its two new gates situated in Terminal 3, a terminal that AA already dominates, one of its three Admirals Clubs in ORD is situated close to G8, making these gates ideally situated for American’s customers.

Looking at data from aviation analytics company Cirium for December, American has over 2.7 million seats scheduled for the month. Meanwhile, United Airlines has scheduled over 3.8 million seats.

Earlier this year, AA was stripped of four gates at Chicago O’Hare due to underutilization, while rival United gained access to five additional gates. Despite lodging a legal protest against the decision, a judge ruled against American, and the gate reallocation went ahead in October. Nonetheless, American still operated its largest-ever schedule out of ORD this year, adding almost a dozen new routes to the likes of Honolulu, Madrid, and Naples. Its premium capacity also shot up by 40%.

What Next For Spirit Airlines?

With Spirit’s second bankruptcy proceedings well underway, the carrier is exploring various avenues to extricate itself from its predicament. This includes a possible merger or sale, with Spirit claiming it is « engaged with a number of interested counterparties. » Chicago O’Hare was one of Spirit’s ten largest operating airports before its latest bankruptcy stint, but the airline has now halved its presence at ORD to focus on other areas of its network.

Just a few days ago, American submitted a request to receive all filings in Spirit’s bankruptcy case, becoming a ‘party of interest’ in Spirit’s proceedings. While some have interpreted this as American’s possible interest in a merger, an AA spokesperson stated it was due to an « airport-specific agreement, » perhaps referring to the airline’s recent ORD gate acquisitions.