A Spirit commercial airliner prepares to land at San Diego International Airport on January 18, 2024 in San Diego, California, USA.
Mike Blake | Reuters
spirit airlines Shares fell to record lows on Friday after reports that the company was considering Chapter 11 bankruptcy protection. The company faces a deadline this month to renegotiate more than $1 billion in debt.
The bankruptcy filing would be a dramatic turn for the airline with its iconic yellow planes that cater to budget-conscious travelers.
Spirit’s no-frills service, profitable and punctual before the pandemic, has become a punchline for late-night comedians and a thorn in the side of major network carriers, offering everything from seat assignments to carry-on baggage. Attracted customers with double-digit fares and charges. luggage.
However, major airlines soon succeeded in copying much of that business model with minimal fares. And earlier this year, a federal judge blocked Spirit’s takeover plan. jet blue airlines Citing antitrust laws, both airlines argued that shutting down operations is an important way to compete with larger rivals. With the deal falling through, Spirit was left to grapple with the problem alone. pratt & whitney Engine recalls, changing consumer travel patterns, and rising costs.
After the deal with JetBlue fell apart, Spirit announced in January that it was exploring options to refinance its debt.
Spirit has $1.1 billion in debt backed by its loyalty program, which is due next September. These secured bonds must be refinanced or extended by October 21st.
The company has been in the red since 2020, and has reported disappointing results this year, posting a loss of approximately $193 million in the second quarter. The airline has spent much of this year cutting costs, including furloughing pilots, cutting the number of flights it flies and postponing orders for Airbus jetliners.
Brandon Oglensky, an aviation analyst at Barclays, said earlier this week that Spirit had cut its capacity expansion plans for November and December by about 17%.
“As we have said, Spirit is committed to a comprehensive approach to increase our competitiveness, strengthen our balance sheet and restore profitability,” CEO Ted Christie said in a memo to employees Friday. We are implementing the plan.” “We continue to have a productive dialogue with our bondholders and are focused on securing the best outcome for our business as soon as possible.”
A Spirit spokeswoman declined to comment on a Wall Street Journal report that the company was considering filing for bankruptcy. Spirit Advisor Perera Weinberg Partners declined to comment.
Spirit stock fell more than 24% on Friday to an all-time low of $1.69. The stock is down nearly 90% so far this year.
shares of frontier airlines, The airline, which was originally slated to merge with fellow low-cost carrier Spirit before JetBlue’s meteoric rise in 2022, soared 16% on Friday. Other airline stocks also rose.
