Shares of Spirit Airlines soared as much as 65% on Monday after the airline signed a deal to extend its debt refinancing plan by two months.
The agreement with the American Bankers Association to postpone a deadline that was set to expire Monday until Dec. 21 will give Spirit some breathing room to refinance its $1.1 billion royalty bond due next year.
The Florida-based airline said it has fully drawn down its $300 million revolving credit facility and expects to have more than $1 billion in liquidity at the end of the year.
“Spirit needs to address the timing of its debt repayments and resizing its fixed cost structure, but it remains unclear whether it can complete this with or without Chapter 11,” Raymond James analyst Savanti Sith said. ” he said.
Spirit said in a regulatory filing that it is still in “active and constructive discussions” with bondholders about future maturities.
Spirit and US Bank did not respond to requests for comment.
Spirit struggled to compete in a crowded industry this year as passengers returned to summer travel in earnest.
The low-cost carrier was also hit by the collapse of its $3.8 billion merger with JetBlue Airways, which was called off in March after both companies lost an antitrust lawsuit.
Spirit rose 53% to close at $2.25.
Despite this rally, Spirit stock is down nearly 90% this year, while the S&P 500 Passenger Aviation Index is up 33% overall over that period.
The company has failed to turn a profit in five of the past six quarters.
Like other low-cost airlines, Spirit announced plans to offer premium seats in a last-ditch effort to win back cash-strapped customers.
Spirit introduced four new tiers in August: Go Big, Go Comfy, Go Savvy and Go, as well as improved passenger benefits, including priority check-in and increased weight guidance for checked bags.
Spirit is aiming to cut costs by demoting about 100 captains, placing flight attendants on unpaid voluntary leave and pausing the hiring and training of new pilots and flight attendants.
The company previously announced plans to furlough about 240 pilots and postpone Airbus deliveries.
Spirit was one of the airlines hardest hit by the RTX engine defect, forcing it into flight and further worsening its financial woes.
RTX's Pratt & Whitney has announced that more than 1,000 engines will need to be removed from Airbus planes in 2023 and inspected for microscopic cracks.
Spirit is expected to end 2025 with about 67 aircraft on the ground, compared to an average of 20.
with post wire
