Spirit is selling planes to buy time
Spirit Airlines has had a chaotic week:
On Monday, Spirit’s shares jumped as much as 60% on news that the company had reached a deal with its credit-card processor to extend its debt-refinancing deadline by two months to December 23. For context, if the struggling airline fails to refinance its $1.1 billion 8% senior secured notes due in September 2025 by the deadline, which was previously October 21, the credit-card processor can terminate its agreement with Spirit at the end of 2024.
On Tuesday, Frontier Airlines was reportedly exploring renewing its bid to acquire Spirit, sending the latter’s stock climbing another 18%.
On Thursday, Spirit announced plans to sell 23 Airbus planes to raise $519 million. Spirit only owned 58 of its planes outright before this sale, leaving it with 152 leased planes and just 35 owned planes post-sale. However, cash is king as the company has two months to refinance that $1.1 billion debt.
Spirit has been in a tailspin since a federal judge blocked JetBlue's acquisition of the budget airline, agreeing with the Department of Justice's opinion that the deal was anticompetitive. However, a new takeover bid from Frontier could provide a lifeline for the struggling company, and selling off some of its fleet to raise cash may buy Spirit the time it needs to allow a new offer to materialize.
On Tuesday, Frontier Airlines was reportedly exploring renewing its bid to acquire Spirit, sending the latter’s stock climbing another 18%.
On Thursday, Spirit announced plans to sell 23 Airbus planes to raise $519 million. Spirit only owned 58 of its planes outright before this sale, leaving it with 152 leased planes and just 35 owned planes post-sale. However, cash is king as the company has two months to refinance that $1.1 billion debt.
Spirit has been in a tailspin since a federal judge blocked JetBlue's acquisition of the budget airline, agreeing with the Department of Justice's opinion that the deal was anticompetitive. However, a new takeover bid from Frontier could provide a lifeline for the struggling company, and selling off some of its fleet to raise cash may buy Spirit the time it needs to allow a new offer to materialize.
