A Spirit Airlines plane undergoes operations in preparation for departure at Austin-Bergstrom International Airport in Austin, Texas, February 12, 2024.
Brandon Bell | Getty Images
Spirit Airlines CEO Ted Christie said Friday that the low-cost airline is not considering filing for Chapter 11 bankruptcy and is “encouraged” by its plan after its failed takeover by JetBlue Airlines.
Spirit is struggling with changing travel demand, increased competition in the U.S. and the retirement of Pratt & Whitney engines that have grounded dozens of Airbus planes.
Earlier this year, a federal judge blocked JetBlue’s planned acquisition of Spirit on antitrust grounds, raising concerns on Wall Street about the loss-making airline’s ability to repay its debt. Spirit said in February it was seeking to refinance.
“We are proud to be moving forward with our plan following the termination of our merger agreement with JetBlue and are encouraged by the preliminary results of our stand-alone plan,” Christie said at the annual shareholder meeting on Friday. “We are not assessing Chapter 11 at this time.”
S&P Global Ratings downgraded Spirit on Wednesday, raising questions about its ability to refinance. He pointed to a $1.1 billion loyalty bond maturing in September 2025 and a $500 million convertible bond due in 2026.
“Given confined cash flow generation and operating results, as well as management’s public announcement of its decision to engage with lenders to assess its ability to meet upcoming maturities, we believe it is likely that the company will face challenging stock market conditions,” we read in the report.
As the companies announced earlier this week, the company’s chief financial officer is leaving to take up the position of chief financial officer at Hertz.
Spirit shares have lost more than 77% this year through Thursday’s close. The company has taken a number of steps to save and raise cash, including deferring some Airbus deliveries and entering into sale-leaseback arrangements.
The airline also recently changed its business model, waiving most flight change fees and combining benefits it previously sold a la carte with a low-cost fare.
It also relaxed other rules, extending the validity period of flight points from 90 days to a year and raising the maximum weight for checked bags from 40 to 50 pounds.
