Spirit Airlines stock plunges 59% amid report of bankruptcy deal

Nov. 13 (UPI) — Spirit Airlines’ stock plunged 59% on Wednesday as the budget airline worked with creditors to restructure debt amid reports the company could file for bankruptcy protection within the next few weeks.

Spirit Airlines closed at $1.31 a share, down from $1.91. Spirit stock, with the ticker symbol SAVE, has dropped more than 90% this year.

Wednesday’s selloff comes after a Wall Street Journal report Tuesday said Spirit Airlines could file for bankruptcy protection later this month, after merger talks with Frontier broke down. In addition to Frontier, Spirit had been in acquisition talks with JetBlue before a federal judge blocked the deal in January over antitrust concerns.

Spirit has announced it will not report quarterly financial results for the period ending Sept. 30, as it works to reach a deal with its lenders.

In Wednesday’s Securities and Exchange Commission filing, Spirit said it was in “productive” negotiations to restructure its debt, which comes due in 2025 and 2026. The airline vowed passengers, employees and suppliers would not be impacted.

In the first six months of 2024, the airline reported operating losses of $360 million, nearly four times the losses reported in the first half of 2023. Spirit has failed to report a profit in the last five out of six quarters.

Earlier this year, the struggling airline deferred the delivery of new Airbus jetliners to cut costs. In September, it furloughed 186 pilots in an effort “to bolster profitability and strengthen its balance sheet.” Spirit also plans to furlough 330 pilots in January and sell older aircraft.

On Tuesday, TD Cowan analysts lowered their full-year estimates for the airline.

“The news also creates the risk of customers booking away from the airline resulting in even greater pressure on liquidity,” TD Cowen analyst Tom Fitzgerald wrote.

“In the event of a restructuring, focus will then shift to the fate of Spirit’s fleet,” Fitzgerald added. “We expect the airline to sell off the remaining encumbered assets to pay off the associated debt on the aircraft and work to reject leases on the rest of the fleet.”