Summary

  • Spirit Airlines reassured its shareholders on Friday that it has no intentions of a Chapter 11 bankruptcy filing.
  • The budget carrier’s struggles continue following its fallout with JetBlue and ongoing engine issues.
  • Changes to its business model and cost-cutting measures have been implemented.

Ultra-low-cost carrier (ULCC) Spirit Airlines will not be filing for Chapter 11 bankruptcy anytime soon. The news comes as the airline continues to deal with the aftermath of its fallout with JetBlue Airways.

Spirit reportedly has plans to address its financial woes, which were intended to be alleviated by merging with JetBlue. The carrier has also been plagued for months by Pratt & Whitney engine issues, affecting its Airbus A320neo and A321neo fleet.

“We are not evaluating a Chapter 11”

According to CNBC, Spirit’s CEO, Ted Christie, said on Friday at an annual shareholder meeting that the carrier is not considering a Chapter 11 bankruptcy filing.

“We are proudly executing to our plan as we’ve exited the merger agreement with JetBlue and are encouraged by the initial results of our stand-alone plan. We are not evaluating a Chapter 11 at this time.”

Spirt Airlines Airbus A321neo and JetBlue Airways A320 at Fort Lauderdale-Hollywood International Airport.

Photo: Leonard Zhukovsky | Shutterstock

Spirit has been struggling to stay afloat after a federal judge blocked JetBlue’s plans to acquire the airline earlier this year. Additionally, travel demand has shifted, and competition from other carriers has increased. The airline most recently changed its business model, removing fees to change flights and bundling perks that it used to sell a la carte with a low base fare.

Check It Out

Top 5: These Are Spirit Airlines’ Longest Routes

Two routes are new for the airline and are set to begin this week.

Other policies were also revised, such as extending the life of flight credits from 90 days to at least a year, and increasing the maximum weight allowance of checked baggage from 40 to 50 pounds.

Downgrading the airline

For several months, Spirit has grappled with ongoing issues related to a Pratt & Whitney engine recall. After discovering faulty engines powering A320neo family aircraft, the company announced that hundreds of aircraft would need to be inspected. As a result, Spirit has had to ground several planes for inspections, which has affected its operation. By Thursday’s close, the carrier’s shares have lost more than 77% this year.

Spirit Airlines Airbus A320 at Raleigh-Durham International Airport.

Photo: Raleigh–Durham International Airport

Earlier this week, S&P Global Ratings downgraded Spirit, which has reportedly raised questions about its ability to refinance. The credit ratings agency pointed to a $1.1 billion loyalty bond due in September and a $500 million convertible note due next year.

“Given the constrained cash flow generation and operating performance, along with management’s public announcement of its decision to engage with lenders to assess options for addressing its upcoming maturities, we believe it’s likely the company will face a distressed exchange,” the agency said, according to CNBC.

Drumming up cash

Spirit has worked in the last few months to save cash and reduce spending. In April, the airline said it would boost its liquidity by around $340 million over the next two years by deferring new Airbus aircraft deliveries and furloughing as many as 260 pilots. Simple Flying also reported that the carrier will cut flights to Florida by nearly 20% this winter.

Read More

Spirit Airlines Continues Cutting Florida-Bound Flights As Network Reshuffles

Despite the capacity cut, Spirit Airlines has strengthened its presence at some airports, including in the Sin City.

On Tuesday, Spirit announced that its Chief Financial Officer, Scott Haralson, will depart the airline next week. Brian McMenamy, the carrier’s current Vice President and Controller, will take over as Interim CFO on June 14th. Simple Flying reached out to the airline for further comment on Saturday, but a representative could not be immediately reached.

Leave a Reply

Your email address will not be published. Required fields are marked *