Spirit Airlines Shares Plunge 30% As Airline Reportedly Explores Bankruptcy
by Ty Roush · ForbesTopline
Shares of Spirit Airlines fell by over 30% on Friday, pacing the company’s worst loss since a merger with JetBlue Airways was blocked earlier this year, after reports indicated the low-cost airline was exploring bankruptcy.
Key Facts
Spirit’s shares dropped to just over $1.50 as of around 9:50 a.m. Friday, following an earlier plunge in premarket trading.
The stock’s furthest fall before Friday came on Jan. 15, when shares fell by 47% after a federal judge ruled a $3.8 billion merger between Spirit and JetBlue would eliminate the airline industry’s popular discounted flight options and drive up prices.
The budget air carrier has discussed a potential bankruptcy filing with bondholders since the failed JetBlue merger, the Wall Street Journal reported Thursday.
Spirit’s efforts to restructure the company’s debt and avoid filing for bankruptcy have stalled in recent months, people with knowledge of the matter told Bloomberg.
Savanthi Synth, an analyst with Raymond James, said in a note Friday the airline “should be able” to renegotiate with its creditors outside of bankruptcy, though the investment bank has concerns about whether Spirit can maintain its low costs without entering bankruptcy.
Spirit did not immediately respond to a request for comment from Forbes.
Big Number
91%. That’s how much Spirit’s shares have decreased as of Friday since hitting a 52-week high of $16.77 on Oct. 23, 2023.
Key Background
Spirit, an airline that advertises ultra-low fares, has been financially constrained since JetBlue’s failed takeover. Before a deal with JetBlue, Spirit announced plans to merge with Frontier Airlines in a $6.6 billion deal in February 2022, though those plans dissolved after JetBlue submitted an offer at a higher valuation. Ted Christie, Spirit’s chief executive, told shareholders in June he was “encouraged” by the airline’s plan after the merger, adding the company was not considering bankruptcy. Spirit has taken some steps to increase capital and save money, Christie said, including scrapping fees for changing flights and raising the maximum weight of checked bags to 50 pounds from 40.