A Spirit Airlines aircraft performs operations in preparation for departure at Austin-Bergstrom International Airport in Austin, Texas, on February 12, 2024.
Brandon Bell | fake images
Spiritual airlines Chief Executive Ted Christie said Friday that the low-cost airline is not considering filing for Chapter 11 bankruptcy and is “encouraged” by its plan after a failed acquisition by JetBlue Airways.
Spirit has been struggling with changing travel demand, increased competition in the United States and a Pratt & Whitney engine recall that grounded dozens of its 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 money-losing airline's ability to service its debt. The airline said in February that it is looking to refinance.
“We are proud to execute our plan upon exiting the merger agreement with JetBlue and are encouraged by the initial results of our standalone plan,” Christie said at an annual shareholder meeting on Friday. “We are not evaluating a Chapter 11 at this time.”
On Wednesday, S&P Global Ratings downgraded Spirit, raising questions about its ability to refinance. It noted a $1.1 billion fidelity bond due September 2025 and a $500 million convertible note due 2026.
“Given the limited cash flow generation and operating performance, coupled with management's public announcement of its decision to engage with lenders to evaluate options to address its upcoming maturities, we believe the company is likely to face a currency issue.” , said.
The company's chief financial officer is leaving to become Hertz's chief financial officer, the companies said earlier this week.
Spirit shares have lost more than 77% this year through Thursday's close. The company has taken a number of measures to save and accumulate cash, including the deferral of some Airbus deliveries and sale and leaseback agreements.
The airline also recently changed its business model, eliminating most flight change fees and combining benefits it previously sold a la carte along with a cheap fare.
It has also relaxed other policies, extending the life of flight credits from 90 days to a year and increasing the maximum checked baggage weight from 40 to 50 pounds.
