Spirit Airlines Stock Soars 60% After Extending Deadline To Refinance Debt
by Ty Roush · ForbesTopline
Spirit Airlines’ stock swelled by 60% on Monday, on track for the low-cost airline’s best day since going public, after the carrier announced an extension to refinance its debt while temporarily avoiding the threat of bankruptcy.
Key Facts
Spirit’s shares increased to over $2.30 as of around 1:15 p.m., pacing the stock’s best day since a 37% spike on March 24, 2020.
On Friday, Spirit disclosed an agreement with the U.S. Bank National Association—which processes the airline’s credit card transactions—to extend a deadline to refinance $1.1 billion in loyalty bonds until Dec. 23, after an earlier deadline of Oct. 21, according to a Securities Exchange Commission filing.
The airline also said it has fully drawn down a $300 million revolving credit facility, or funds granted to a company as part of a loan, and expects to have $1 billion in liquidity by 2025.
Stephen Trent, an analyst for Citi, wrote in a note Monday the extension and credit line drawdown will likely result in a “short-term bounce” for Spirit and cause shares of competitors JetBlue and Frontier Group Holdings to fall.
Shares of JetBlue and Frontier have fallen 7% and 2%, respectively, so far Monday.
Big Number
91%. That’s how much Spirit’s shares decreased before Friday since hitting a 52-week high of $16.77 on Oct. 23, 2023.
Key Background
Spirit, whose shares first went public on May 26, 2011, has had its stock decline exponentially so far this year. The stock fell 47% in January, after a federal judge blocked a $3.8 billion merger between Spirit and JetBlue while arguing the deal would eliminate the airline industry’s popular discounted flight options. Ted Christie, Spirit’s chief executive, suggested to shareholders in June he was “encouraged” by the airline—which advertises ultra-low fares—and its plans after the failed merger, adding it was not considering bankruptcy. Earlier this month, Spirit’s shares plummeted after reports indicated the airline was discussing a potential bankruptcy filing. The company’s efforts to restructure its debt and avoid filing for bankruptcy had stalled in recent months, Bloomberg reported. Raymond James analyst Savanthi Synth wrote in a note at the time the airline “should be able” to renegotiate with its creditors, though she expressed concerns about whether Spirit could maintain its low costs.