Spirit Airlines Faces Bankruptcy Negotiations

Investing.com — Shares in Spirit Airlines (NYSE:SAVE) shed more than 37% of their value in premarket US trading on Friday on a report that the beleaguered carrier was in negotiations with bondholders over a possible bankruptcy.

The ultra-low-cost airline has been pushing to restructure its debt and avoid bankruptcy. However, recent discussions have centered around a deal to support a Chapter 11 filing, according to The Wall Street Journal.

Citing people familiar with the matter, WSJ added that the timing of a filing, if it were to happen, would not be imminent.

In a separate report on Thursday, Bloomberg News stated that Spirit’s push to secure a deal that would restructure its debt and avoid bankruptcy has stalled. Months of discussions with the company’s bondholders have failed to yield a deal, sources told Bloomberg.

Spirit is aiming to secure fresh financing from its creditors and an extension to its current debt. However, agreements still need to be reached regarding which assets bondholders will lay claim to and the amount of new financing Spirit will receive.

Chief Executive Ted Christie recently told analysts that conversations with its bondholders over upcoming debt maturities due in 2025 and 2026 were “ongoing,” adding that he was focused on reaching the “best outcome for the business as quickly as possible.”

Spirit has been facing questions over a potential bankruptcy since the failure of a proposed $3.8 billion merger with JetBlue earlier this year, which would have bolstered the firm during a time when it is burning through cash and facing a sizeable debt pile. A US judge blocked the tie-up due to antitrust concerns.

The airline had approximately $3.06 billion in long-term debt and finance leases, excluding current maturities, in its fiscal 2023 year, according to Reuters.

(Reuters contributed reporting.)