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Spirit Airlines shares are sharply lower on Friday after The Wall Street Journal reported that the ultra-low-cost carrier is engaging in talks with bondholders and creditors about the possibility of filing for bankruptcy.
It has reportedly mulled an "out-of-court transaction" for restructuring too, the Journal reported Thursday.
The potential bankruptcy filing comes after Spirit's failed $3.8 million merger with JetBlue Airways. JetBlue announced plans in 2022 to merge with Spirit, but the carriers terminated the plan in March, citing regulatory challenges.
A JetBlue airliner lands past a Spirit Airlines jet at Fort Lauderdale Hollywood International Airport on April 25, 2022. (Joe Cavaretta/Sun Sentinel/Tribune News Service via Getty Images / Getty Images)
"After discussing our options with our advisors and JetBlue, we concluded that current regulatory obstacles will not permit us to close this transaction in a timely fashion under the merger agreement," Spirit CEO Ted Christie said at the time.
A Spirit Airlines aircraft at the Austin-Bergstrom International Airport on Feb. 12, 2024 in Austin, Texas. (Brandon Bell/Getty Images / Getty Images)
Gxstocks reached out to Spirit for comment and was directed to Christie’s remarks during the company's second-quarter earnings call.
JETBLUE, SPIRIT AGREE TO TERMINATE MERGER OVER REGULATORY ISSUES
"We are engaged in productive conversations with the advisors of our bondholders to address the upcoming debt maturities. Because those conversations are ongoing, we are not going to go into detail or take any questions on this topic or speculate on potential outcomes," he said in August. "Needless to say, it is a priority, and we are focused on securing the best outcome for the business as quickly as possible, while staying focused on driving performance and implementing our new travel options and elevated guest experience."
| Ticker | Security | Last | Change | Change % |
|---|---|---|---|---|
| SAVE | SPIRIT AIRLINES INC. | 1.65 | -0.59 | -26.50% |
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That maturation date for some of its bonds is coming next year, according to The Journal.
The airline’s debt load reportedly totals $3.3 billion.
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Travelers check-in at the Spirit Airlines counter at Fort Lauderdale-Hollywood International Airport in Fort Lauderdale, Florida, on Oct. 24, 2023. (Eva Marie Uzcategui/Bloomberg via Getty Images / Getty Images)
In late July, Spirit unveiled a slew of "new offerings" meant to provide an "even friendlier, more comfortable, and cost-effective travel experience" and help transform the airline.
SPIRIT AIRLINES UPS THE ANTE WITH NEW TRAVEL OPTIONS OFFERING WI-FI, SNACKS AND CHECKED BAGS
A Spirit Airlines jet taxis at Los Angeles International Airport on April 4, 2024 in Los Angeles. (Brian van der Brug / Los Angeles Times via Getty Images / Getty Images)
It also said in August it was "on track" to "achieve $100 million of annual run-rate cost savings with approximately $75 million expected to be achieved by year-end 2024" through various measures. Some of those included reducing discretionary capital spending, adjusting its network and furloughing some pilots.
In the second quarter, the company generated $1.28 billion in total operating revenues, a year-over-year decline of 10.6%. Its net loss, meanwhile, widened to $192.9 million.
