Spirit Airlines Teeters on the Brink of Bankruptcy
The ultra-low-cost carrier’s stock plummeted to a mere $1.14 per share in pre-market trading on Wednesday, a staggering 65% drop, following reports that the company is preparing to file for bankruptcy.
Merger Talks Fall Apart
According to sources familiar with the matter, the bankruptcy talks come on the heels of a failed merger with Frontier Airlines. This is not the first time the two airlines have explored a merger; they have been in on-and-off talks since 2016. In February 2022, they announced a $2.9 billion definitive merger agreement, which ultimately fell apart in July of that year.
A History of Failed Mergers
Spirit Airlines then turned its attention to another low-cost rival, JetBlue. However, after a federal judge blocked the merger over concerns that the combination of the two budget airlines would be anti-competitive, Spirit and JetBlue called off their $3.8 billion deal this past March.
Financial Struggles Mount
Since then, Spirit has struggled to regain its footing. The company has pushed back its deadline to refinance roughly $1.1 billion in debt until December 23 and has borrowed the entirety of a $300 million revolving credit facility set up in March 2020. The borrowings under this facility are scheduled to mature at the end of September 2026.
A Glimmer of Hope?
Despite its financial struggles, Spirit reiterated that it expects to end 2024 with more than $1 billion in liquidity. However, with steep losses and looming debt costs, the airline’s future remains uncertain. A bankruptcy filing could happen within weeks, according to reports.
What’s Next for Spirit Airlines?
As the airline teeters on the brink of bankruptcy, one thing is clear: Spirit Airlines is facing an uncertain future. With its stock down almost 80% so far this year, investors are left wondering what’s next for the struggling carrier.
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