FLORIDA- Spirit Airlines (NK) CEO Ted Christie stated on Friday that the budget airline is not considering a Chapter 11 bankruptcy filing and feels “encouraged” by its current plan following the failed takeover attempt by JetBlue Airways (B6).
Spirit has been grappling with changing travel demand, heightened U.S. competition, and a Pratt & Whitney engine recall that has grounded dozens of its Airbus planes.
Spirit Airlines Not Filing Bankruptcy
Earlier this year, a federal judge blocked JetBlue’s planned acquisition of Spirit on antitrust grounds, leading to concerns on Wall Street about Spirit’s ability to manage its debt. In February, Spirit announced it is seeking to refinance.
“We are proudly executing our plan since exiting the merger agreement with JetBlue and are encouraged by the initial results of our stand-alone strategy,”
Christie said at an annual shareholder meeting on Friday. “We are not considering Chapter 11 at this time.”
On Wednesday, S&P Global Ratings downgraded Spirit, raising concerns about its ability to refinance. S&P highlighted a $1.1 billion loyalty bond due in September 2025 and a $500 million convertible note due in 2026.
“Given the constrained cash flow generation and operating performance, along with management’s public announcement of its decision to engage with lenders to assess options for addressing its upcoming maturities, we believe it’s likely the company will face a distressed exchange,” the rating agency noted.
Earlier this week, it was announced that the company’s finance chief is leaving to become CFO at Hertz.
Share Market Loss
Spirit’s shares have declined by over 77% this year through Thursday’s close. To conserve and generate cash, the company has implemented several measures, including deferring some Airbus deliveries and engaging in sale-leaseback deals.
The airline has also revised its business model by eliminating most flight-change fees and bundling perks that were previously sold separately with a basic fare.
Additionally, Spirit has relaxed other policies, extending the validity of flight credits from 90 days to a year and increasing the maximum weight limit for checked bags from 40 pounds to 50 pounds.
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