Spirit Airlines, Inc. SAVE announced that on October 11, it modified its card processing agreement to extend the deadline for its 2025 notes from October 21 to December 23 and the early maturity date from December 31 to March 3.
The budget airline was in the process of renegotiating an agreement with the U.S. National Bank Association concerning the processing of payments made to it through Visa or MasterCard credit cards, per an exchange filing (dated October 18).
The Wall Street Journal had earlier reported that Spirit was in discussions with bondholders regarding the conditions of a possible bankruptcy filing.
According to Benzinga Pro, SAVE stock has lost over 90% in the past year.
On October 15, Spirit indicated that it had fully utilized the $300 million available under its revolving credit facility and anticipated finishing the year with more than $1 billion in liquidity.
Since the pandemic, Spirit has not reported a profit, and its future as an independent airline became unclear after a federal judge halted its merger with JetBlue Airways Corporation JBLU, reported Skift. Additionally, problems with Pratt & Whitney engines have forced the airline to ground parts of its fleet.
According to Benzinga Pro, JBLU stock has gained over 82% in the past year. Investors can gain exposure to the stock via Themes Airlines ETF AIRL and LeaderShares Activist Leaders ETF ACTV.
Spirit has reported losses in almost every quarter since February 2020, per data from Benzinga Pro. For the 2024 fiscal year second quarter, the company reported an adjusted net loss of $157.9 million.
According to a report by Quartz, JetBlue’s founder further escalated matters following the airline’s unsuccessful merger attempt with Spirit Airlines.
David Neeleman, who left JetBlue in 2007 and now runs Breeze Airways, told the Washington Post that Spirit should have pursued a merger with Frontier Group Holdings, Inc. ULCC instead. However, JetBlue made a more attractive offer to partner with Spirit. After a judge blocked the JetBlue-Spirit merger on antitrust grounds in January, both companies ultimately abandoned the effort in March.
In a release dated August 1, the company announced that it is on track to realize $100 million in annual run-rate cost savings, with around $75 million anticipated to be achieved by the end of 2024.
Compared to the third quarter of 2023, in the third quarter of 2024, the company will have exited 42 markets while adding 77 new ones, offering more routes on specific days of the week to facilitate expansion with a lower risk profile, and aggressively managing capacity to better align with seasonal and daily demand fluctuations.
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