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Spirit Airlines shares dropped sharply on Friday after The Wall Street Journal reported the airline is in talks with bondholders and creditors about a possible bankruptcy filing.
The airline has also considered an “out-of-court transaction” for restructuring, according to the report. This comes after Spirit’s failed $3.8 billion merger with JetBlue, which was terminated in March due to regulatory challenges.
“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 back in March.
In August, Christie said the following regarding the airline’s financial troubles:
“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. 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.”
Spirit Airlines -40% on bankruptcy report.
Airline hasn’t been profitable since 2019. pic.twitter.com/nGCsoZzao6
— Brian Sozzi (@BrianSozzi) October 4, 2024
According to a Fox Business report, Spirit Airlines reportedly carries $3.3 billion in debt. In August, the airline said it was “on track” to achieve $100 million in annual cost savings, with $75 million expected by the end of 2024 through measures like reducing capital spending, adjusting its network, and furloughing some pilots. In the second quarter, Spirit generated $1.28 billion in operating revenue, a 10.6% year-over-year decline, while its net loss increased to $192.9 million.
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