Spirit tumbles to record low on report it’s exploring a bankruptcy filing. Here’s how it got here
Spirit Airlines shares tumbled to a record low on Friday after a report that it’s exploring Chapter 11 bankruptcy protection. The carrier faces a deadline this month to renegotiate more than $1b in debt. A bankruptcy filing would mark a dramatic turn for the carrier with its iconic yellow planes that caters to budget-conscious travelers. Profitable and punctual before the pandemic, Spirit’s no-frills service became a punchline for late-night comedians and a thorn in the side of big network carriers, enticing customers with double-digit fares and fees for everything else from seat assignments to carry-on luggage. But big airlines soon successfully copied much of that business model with their lowest bare-bones fares. And a federal judge at the start of the year blocked Spirit’s planned acquisition by JetBlue Airways on antitrust grounds, halting what both carriers argued was a key avenue to compete with larger rivals. The scuttled deal left Spirit on its own to struggle with a Pratt & Whitney engine recall, shifting consumer travel patterns and higher costs. After the JetBlue deal fell apart, Spirit said in January that it was looking at options to refinance its debt. Spirit has $1.1b in loyalty-program backed debt that is due next September. It has until Oct. 21 to refinance or extend those secured notes. The carrier has been losing money since 2020 and has reported disappointing results this year, including a nearly $193m loss in Q2. The company has spent much of this year scrambling to cut costs, including furloughing pilots, slashing flights and deferring Airbus jetliner orders. Spirit reduced its November and December capacity growth plans by about 17%, Barclays airline analyst Brandon Oglenski said earlier this week. “As we’ve said, Spirit has been implementing a comprehensive plan to help us better compete, strengthen our balance sheet, and return to profitability,” CEO Ted Christie said in a note to staff on Friday. “We remain engaged in productive conversations with our bondholders, and we’re focused on securing the best outcome for the business as quickly as possible.”<br/>
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Spirit tumbles to record low on report it’s exploring a bankruptcy filing. Here’s how it got here
Spirit Airlines shares tumbled to a record low on Friday after a report that it’s exploring Chapter 11 bankruptcy protection. The carrier faces a deadline this month to renegotiate more than $1b in debt. A bankruptcy filing would mark a dramatic turn for the carrier with its iconic yellow planes that caters to budget-conscious travelers. Profitable and punctual before the pandemic, Spirit’s no-frills service became a punchline for late-night comedians and a thorn in the side of big network carriers, enticing customers with double-digit fares and fees for everything else from seat assignments to carry-on luggage. But big airlines soon successfully copied much of that business model with their lowest bare-bones fares. And a federal judge at the start of the year blocked Spirit’s planned acquisition by JetBlue Airways on antitrust grounds, halting what both carriers argued was a key avenue to compete with larger rivals. The scuttled deal left Spirit on its own to struggle with a Pratt & Whitney engine recall, shifting consumer travel patterns and higher costs. After the JetBlue deal fell apart, Spirit said in January that it was looking at options to refinance its debt. Spirit has $1.1b in loyalty-program backed debt that is due next September. It has until Oct. 21 to refinance or extend those secured notes. The carrier has been losing money since 2020 and has reported disappointing results this year, including a nearly $193m loss in Q2. The company has spent much of this year scrambling to cut costs, including furloughing pilots, slashing flights and deferring Airbus jetliner orders. Spirit reduced its November and December capacity growth plans by about 17%, Barclays airline analyst Brandon Oglenski said earlier this week. “As we’ve said, Spirit has been implementing a comprehensive plan to help us better compete, strengthen our balance sheet, and return to profitability,” CEO Ted Christie said in a note to staff on Friday. “We remain engaged in productive conversations with our bondholders, and we’re focused on securing the best outcome for the business as quickly as possible.”<br/>
