Spirit Airlines shares plummeted to a record low of $1.69 on Friday after reports emerged that the company is considering filing for Chapter 11 bankruptcy protection. The airline, which is known for its budget-friendly service and iconic yellow planes, is facing a deadline this month to renegotiate over $1 billion in debt. This financial strain comes after a federal judge blocked its proposed merger with JetBlue Airways on antitrust grounds, leaving Spirit to contend with mounting challenges like an engine recall and rising costs alone.
Once profitable and known for its ultra-low fares, Spirit’s business model has been increasingly imitated by larger airlines, impacting its competitiveness. The failed JetBlue deal forced the airline to explore refinancing options and cut costs, including furloughs and reduced flight schedules. Spirit has been incurring losses since 2020, including a $193 million loss in the second quarter of this year.
CEO Ted Christie reassured staff that the airline is actively pursuing a comprehensive plan to return to profitability and is engaged in ongoing discussions with bondholders. Meanwhile, stocks of Frontier Airlines, which initially aimed to merge with Spirit, rose 16% on the same day.
Original Story https://www.cnbc.com/2024/10/04/spirit-airlines-tumbles-exploring-bankruptcy-filing.html
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