Spirit Airlines CEO Ted Christie told shareholders at an annual meeting Friday morning that the airline is not considering filing for Chapter 11 bankruptcy, an outcome analysts have speculated about since the company collapsed. Proposed merger with JetBlue.
«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 during the meeting, according to a transcript provided by the company. «We are not evaluating a Chapter 11 at this time.» Christie’s comments were first reported by CNBC.
Spirit has struggled to turn a profit since the pandemic for multiple reasons: Pratt & Whitney engine problems that caused it to ground several of its planes; low demand for its low-cost offerings; and excess seating capacity in popular leisure markets.
Speculation that bankruptcy could be on the horizon for Spirit began when a federal judge struck down its proposed merger with JetBlue. Some Wall Street analysts believed at the time that Spirit’s two options were to find another buyer or consider filing for bankruptcy.
Spirit Races to boost your balance
S&P degraded Spirit’s credit rating last week said it believed the airline’s operations «would remain pressured throughout the year.»
S&P’s report also noted Spirit’s $1.1 billion in debt that is expected to come due in September 2025, saying it believes the airline will experience a liquidity shortfall. Spirit is currently studying the possibility of restructuring some of its debt, and a lower credit rating will hurt its ability to do so.
The airline has leased part of its fleet, delayed delivery of some of its Airbus planes and furloughed hundreds of pilots to cut costs and strengthen its liquidity. Spirit previously said it expected to receive up to $200 million in compensation for the Pratt & Whitney groundings.
«Spirit’s debt has been trading significantly below par, which we believe indicates lenders’ growing doubts about the company’s performance and possibly indicates that investors may not be compensated in a refinancing transaction.» », reads the report.
Spirit CFO Scott Haralson will also leave the company next week to take the same role at Hertz.
Executives at the ultra-low-cost airline have said they plan to implement a new strategy to restore profitability. So far, Spirit has made some changes to its business model, such as getting rid of most change and cancellation fees. The airline also recently increased the weight allowance for checked baggage to 50 pounds and expanded eligibility for flight credits from 90 days to one year.
Performance of the airline sector stock index so far this year
What am I looking at? The performance of airline sector stocks within the ST200. The index includes publicly traded companies in global markets, including network operators, low-cost operators and other related companies.
Read the full methodology behind the Skift Travel 200.
