Spirit Airlines is in talks with bondholders about potentially filing for bankruptcy after its failed merger with JetBlue Airways. The Wall Street Journal reported Shares fell 30% in extended trading on Thursday.
The company is also seeking to restructure its balance sheet through an out-of-court deal, with recent talks leading to an agreement with bondholders and other creditors to support the Chapter 11 filing. WSJ reported, citing people involved, that the focus is on That problem.
The timing of such an application, if any, is not imminent, according to the report. Spirit's stock price is below $2, down 86% this year.
In response to a WSJ report, Spirit CEO Ted Christie said during the company's second-quarter earnings conference that the company is holding bonds to meet looming debt maturities in 2025 and 2026. He pointed out that he said he was consulting with his advisors.
“These conversations are ongoing, so I'm not going to go into detail on this subject, respond to questions, or speculate about potential outcomes,” Christie said, adding that it is a priority and the company added that it is focused on ensuring “the best possible outcome”. Get your business going as quickly as possible. ”
News of possible bankruptcy comes months after Christie said the company was not considering Chapter 11 bankruptcy and was “encouraged” by the plans it made after its deal with JetBlue fell through. It was announced later.
JetBlue and Spirit abandoned a $3.8 billion merger agreement in March after a U.S. judge blocked the merger in January, citing anticompetitive concerns.
Had the deal gone through, it would have created the fifth-largest airline in the U.S. and given the debt-laden and cash-strapped Spirit a chance to survive.
Spirit has warned that losses will widen further in the third quarter due to “intense competition” primarily for price-sensitive leisure travelers and an oversupply of airline seats in the domestic market.
Spirit has not reported a profit in five of the past six quarters, raising questions about its ability to service its debt.
In fiscal 2023, the company had approximately $3.06 billion of long-term debt and finance leases, excluding current maturities.
