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Spirit Airlines has had a rough year. Its takeover by JetBlue fell apart and it found itself needing to eliminate change fees and add more of a First Class experience as travel demand has pivoted in the past few years. Along the way, the financials have not been pretty (it reported a net loss of $192 million in Q2) and this has reportedly led the airline to consider filing Chapter 11 bankruptcy protection.
If a filing were to happen, it would not be imminent. The Wall Street Journal first reported on this possibility or restructuring its balance sheet through an out-of-court transaction. In response to the article, a Spirit spokesperson pointed the reporter to a statement made by Spirit’s CEO, Ted Christie, made during the Q2 earning’s call. He’s quoted as saying:
Because those conversations are ongoing, we are not going to go into detail or take any questions on this topic or speculate on potential outcomes. [The company was focused on securing the] best outcome for the business as quickly as possible.”
Spirit Airlines has $3.3 billion in debt and one third of that will come due in less than a year. The airline must refinance or extend the debt by October 21st under covenants in an agreement with its credit card processor.
The JetBlue and Spirit merger would have likely painted a different picture for the low-cost carrier. A judge ruled in March that the $3.8 billion merger was not moving forward based on anti-competition concerns. Had the deal been completed, the combined airline would have become the fifth largest in the United States.
Reuters reports that Spirit “has warned of a steeper loss in the third quarter mainly due to an ‘intense competitive battle’ for price-sensitive leisure travelers and an oversupply of airline seats in the domestic market.” It will be interesting to see if Spirit’s new bundled fares and more premium offerings do anything to correct its financials. Chapter 11 would give the airline a path as it would help restructure debt while maintaining its operations.
Anthony’s Take: Spirit, Frontier, and JetBlue are all currently struggling. Premium leisure travel demand is at an all-time high while cost-conscious consumers are fading. We’ll see what happens in the next few months with aircraft deliveries and the impact of recent changes.
(Image Credits: Spirit Airlines.)
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Advertiser & Editorial Disclosure: The Bulkhead Seat earns an affiliate commission for anyone approved through the links above This compensation may impact how and where links appear on this site. We work to provide the best publicly available offers to our readers. We frequently update them, but this site does not include all available offers. Opinions, reviews, analyses & recommendations are the author’s alone, and have not been reviewed, endorsed, or approved by any of these entities.
1 comment
Doesn’t look great that they apparently sprang for special pink uniforms/accessories for breast cancer awareness month while not making enough money to stay afloat absent bankruptcy….