Spirit Airlines reportedly in talks over potential bankruptcy-filing terms

By Bill Peters

In August, CEO said 'we must consider every possible avenue available to us to find incremental revenue, cost savings and market opportunities'

Shares of ultra-discount carrier Spirit Airlines Inc. sank after hours on Thursday after the Wall Street Journal reported that the airline is talking over the conditions of a possible bankruptcy filing.

The Journal reported the news as the debt-ridden, money-losing airline searches for a lifeline in the wake of steeper competition and JetBlue Airways Corp.'s decision in March to scrap its merger plans with the company.

The Journal, citing people familiar with the matter, said that Spirit (SAVE) and its creditors were seeking an agreement for a chapter 11 filing. The Journal also said the airline had been "exploring restructuring its balance sheet through an out-of-court transaction."

Sources told the Journal said that any potential filing "wouldn't be imminent."

Shares fell 24.5% after hours.

Spirit, when reached for comment, pointed to remarks made by Chief Executive Ted Christie during Spirit's earnings call in August.

In those remarks, Christie said: "We are engaged in productive conversations with the advisers of our bondholders to address the upcoming debt maturities."

"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," he said at the time.

Spirit's debt stood at $3.3 billion, with more than $1.1 billion in bonds due in under a year, the Journal said. Christie, during the earnings call in August, said, "we must consider every possible avenue available to us to find incremental revenue, cost savings and market opportunities."

He added: "The chatter in the market about Spirit is notable, but we are not distracted. We are focused on refinancing our debt, improving our overall liquidity position, deploying our new reimagined product into the market and growing our loyalty programs."

Still, Spirit has cut flight routes and it has faced more competition with legacy carriers who offer their own no-frills discounted fares. JetBlue (JBLU) ended its merger agreement with Spirit after the Justice Department a year earlier sued to block the deal, saying it would hinder competition and leave passengers with higher fares.

As of Thursday's close, shares of Spirit were down 86.6% over the past 12 months.

-Bill Peters

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10-03-24 1854ET

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