Spirit Airlines delays Q3 report amid debt negotiations

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Spirit Airlines delays Q3 report amid debt negotiations

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Airbus A380 | Airbus

By Sky Industry News

Nov 14, 2024

Spirit Airlines has delayed its Q3 financial report filing, citing a focus on enhancing liquidity. The airline revealed in a U.S. Securities and Exchange Commission (SEC) filing on November 13 that submitting the report would require "unreasonable effort or expense."

The airline is engaged in discussions with creditors to postpone the maturity of security notes due in 2025 and convertible senior notes due in 2026. Additionally, Spirit's management is exploring alternative liquidity solutions but acknowledges this has diverted resources from finalizing financial statements.

"If a definitive agreement with such Noteholders is reached and documented, it would be effectuated through a statutory restructuring that is not expected to impair general unsecured creditors, employees, customers, vendors, suppliers, aircraft lessors or holders of secured aircraft indebtedness," the company stated. However, it warned of considering "all alternatives" if negotiations fail.

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Previously reported by the Wall Street Journal (WSJ), Spirit Airlines was preparing for Chapter 11 bankruptcy protection following Frontier Airlines' withdrawal from acquisition attempts. Frontier had initially offered $2.13 and 1.9126 shares per Spirit stock but renewed merger talks as part of Spirit's potential restructuring.

A merger between JetBlue and Spirit was blocked by the Department of Justice (DOJ) and several states, with Judge William Young citing potential harm to consumers who benefit from Spirit's low fares.

Spirit anticipates a 12% decrease in operating margins year-on-year for Q3 due to reduced revenues and increased expenses. Revenue is expected to be $61 million lower than Q3 2023 figures owing to industry-wide lower average yields and the cessation of change and cancellation fees.

The company's Q3 costs rose due to increased aircraft rent expenses and other operational costs despite reduced fuel expenses. At the end of Q2, Spirit held $845.3 million in cash equivalents and projects ending the year with around $1 billion in liquidity after various initiatives.

In an October filing, Spirit extended deadlines for senior secured notes maturing in December 2025 and accessed its full $300 million revolving credit facility maturing September 30, 2026.

On November 4, Spirit announced a deal with GA Telesis for selling Airbus A320ceo/A321ceo aircraft delivered between 2014-2019. The sale aims to improve liquidity by approximately $225 million through year-end 2025.