10-21-2024
The low-cost carrier has extended the deadline on its existing debt refinancing plan with credit card processors Visa and Mastercard, causing its stock to soar.
BY Grace Snelling1 minute read
After concern mounted earlier this month that Spirit Airlines was set to announce bankruptcy, the company has lived to see another day in the sky—for now.
On October 4, shares of Spirit Airlines crashed in response to a Wall Street Journal report that the company was discussing a potential bankruptcy filing. Today, though, Spirit’s stock is back up after the airline submitted an 8-K filing to the U.S. Securities and Exchange Commission (SEC) late Friday, which clarifies that it’s not going bankrupt just yet.
Per the filing, Spirit has extended the deadline on its existing debt refinancing plan with credit card processors Visa and Mastercard from today to December 23. That’s after the company already postponed the original deadline (which was set for this past September) once before. The SEC filing also notes that Spirit borrowed all $300 million of a revolving credit line, and now “expects to end the year 2024 with over $1 billion of liquidity.”
More turbulence ahead?
While Spirit has avoided filing for bankruptcy thus far, the company is certainly not out of the woods yet. The low-cost carrier is currently saddled with over $3 billion in debt after failing to turn an annual profit since before the COVID-19 pandemic, according to the WSJ. To make matters worse, $1.1 billion in secured bonds are due in less than a year.
On top of its existing debt problem, Spirit is also reeling from a failed deal earlier this year. The airline was set to be acquired by JetBlue, a merger that would’ve helped to ease its financial woes. In March 2023, the Department of Justice (DOJ) challenged the acquisition, alleging that it would reduce competition and harm the price of tickets. Then, this January, a federal judge ruled on the side of the DOJ, blocking the deal from moving forward. Since that time, Spirit’s shares have fallen by around 90%.
To mitigate its tenuous financial situation, Spirit has cut dozens of routes for the upcoming months of November and December, as well as furloughing 186 pilots back in September.
Fast Company reached out to Spirit for comment and will update this post if we hear back.
ABOUT THE AUTHOR
Grace Snelling is a contributor for Fast Company with a focus on product design, branding, advertising, art, and all things Gen Z. Her stories have included an exploration into the wacky world of water branding, a chat with Questlove about his creative-centric YouTube series, and a look into Wayfair’s first-ever physical store More
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