Spirit Airlines CEO Ted Christie announced on Friday that the budget airline is not considering a Chapter 11 bankruptcy filing, expressing optimism about the company’s recovery plan following the unsuccessful merger attempt by JetBlue Airways. Spirit has been facing challenges due to shifting travel demand, increased competition in the U.S., and a Pratt & Whitney engine recall that grounded many of its Airbus planes.
Earlier this year, a federal judge blocked JetBlue’s planned takeover of Spirit on antitrust grounds, raising concerns on Wall Street regarding the money-losing airline’s ability to manage its debt. In response, Spirit disclosed in February that it is seeking to refinance its obligations.
“We are proudly executing to our plan as we’ve exited the merger agreement with JetBlue and are encouraged by the initial results of our stand-alone plan,” Christie stated during the annual shareholder meeting. “We are not evaluating a Chapter 11 at this time.”
S&P Global Ratings recently downgraded Spirit, casting doubt on its refinancing capabilities. The ratings agency highlighted significant debt maturities, including a $1.1 billion loyalty bond due in September 2025 and a $500 million convertible note due in 2026. S&P Global Ratings noted, “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 airline’s financial difficulties have been compounded by the departure of its finance chief, who will become CFO at Hertz. Spirit’s shares have plummeted more than 77% this year through Thursday’s close.
To mitigate financial strain and generate cash, Spirit has implemented various measures, including deferring some Airbus deliveries and engaging in sale-leaseback deals. Additionally, the airline has shifted its business model to enhance customer experience and drive revenue. Changes include eliminating most flight-change fees, bundling previously a la carte perks with its cheap fares, extending the validity of flight credits from 90 days to a year, and increasing the maximum weight allowance for checked bags from 40 pounds to 50 pounds.
These strategic moves aim to stabilize Spirit Airlines and position it for future growth. Christie’s reassurance about the company’s financial stability and commitment to improving its operational model underscores the airline’s determination to navigate through current challenges and emerge stronger.
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