A Spirit Airlines aircraft undergoes operations in preparation for departure at Austin-Bergstrom International Airport in Austin, Texas, on February 12, 2024.
Brandon Bell | Getty Images
Spirit Airlines CEO Ted Christie said Friday that the budget airline is not considering a Chapter 11 bankruptcy filing and is “encouraged” by its plan after a failed takeover by JetBlue Airways.
Spirit is grappling with changing travel demand, increased competition in the U.S. and a recall of Pratt & Whitney engines that 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 money-losing airline's ability to service its debt. The airline said in February it wanted a refinancing.
“We are proud to be executing our plan as we exit the merger agreement with JetBlue and are encouraged by the early results of our standalone plan,” Christie said at an annual shareholder meeting on Friday. “We are not evaluating Chapter 11 at this time.”
S&P Global Ratings downgraded Spirit on Wednesday, raising questions about its ability to refinance. It pointed to a $1.1 billion loyalty bond due September 2025 and a $500 million convertible bond due 2026.
“Given the limited cash flow generation and operating performance, together with management's public announcement of its decision to engage with lenders to assess options for addressing the upcoming maturities, we believe it is likely that the company will face distressed stock market,” the report said.
The company's chief financial officer is leaving to become CFO at Hertz, the companies said earlier this week.
Spirit shares have lost more than 77% this year after Thursday's closing price. The company has taken a host of steps to save and raise cash, including delaying some Airbus deliveries and sale-leaseback deals.
The airline also recently changed its business model, eliminating most flight change fees and bundling perks that were previously sold a la carte alongside a cheap fare.
It also softened other policies, extending the life of flight credits from 90 days to a year, and increasing the maximum weight of checked bags from 40 to 50 pounds.
