Spirit Airlines and its credit card processor agreed to extend their debt refinancing timeline to December, mere hours before the airline hit its deadline. This is the second time that the airline has extended its debt refinancing deadline.

Raising spirits

According to CNBC, Spirit Airlines
reported in a filing late Friday that the airline could extend its debt refinancing timeline to December, on Monday, October 14th, hours before it reached its deadline.

Spirit Airlines and JetBlue planes

Photo: Leonard Zhukovsky | Shutterstock

The deadline to extend or refinance its 2025 notes has been extended from October 21st to December 23rd. The extension agreement with creditor US Bank National Association gives the airline much-needed flexibility to refinance the $1.1 billion loyalty bonds due to mature next year.

In addition, Spirit said it has borrowed $300 million – the entire amount available within its credit line – and expects to end the year with over $1 billion in liquidity. According to the filing, Spirit said:

“As previously disclosed, the Company remains in active and constructive discussions with holders of its senior secured notes due 2025 and convertible senior notes due 2026 with respect to their respective maturities.”

It is the second time that the airline has had to extend the deadline. The previous deadline was set in September and was extended to October 21st. The airline’s stock closed at a new low at the end of trading on Friday, down 3% to $1.50 per share.

However, the news of the agreement increased stock prices by 32%, increasing the value to $1.93 in after-hours trading.

Simple Flying has contacted Spirit Airlines to comment on the matter.

Tough times for Spirit

Despite the high demand for air travel, Spirit Airlines has been suffering. The budget carrier has posted a loss in the last five out of six quarters, which has rightfully raised doubts about its ability to manage its upcoming debt maturities.

Frontier Airlines and Spirit Airlines aircraft at PHX shutterstock_2402735225

Photo: Around the World Photos | Shutterstock

According to Reuters, over the past year, the airline’s shares have decreased by a whopping 91%, compared to the S&P 500’s airline index increasing by 31%. Chief Executive Officer Ted Christie stated that the airline is having “active and constructive discussions” with bondholders.

The airline suffered major blows to its operations in recent years. It was one of the main airlines affected by the Pratt & Whitney
Geared Turbofan contamination saga, which led to many of its

Airbus A320neos being grounded
, preventing the airline from taking advantage of the travel boom.

In addition, the airline was looking to merge with Frontier Airlines in 2022. However, this was disrupted by JetBlue Airways, which began a fierce bidding war, which it eventually won. However, a US Federal Judge blocked the acquisition this year, citing anti-trust laws.

The failure left the Florida-based carrier to navigate its financial troubles. In response, the airline has focused on cutting costs and has taken measures such as furloughing pilots, reducing flights, and delaying new aircraft deliveries.

The airline is currently exploring the possibility of filing for Chapter 11 bankruptcy, which could allow it to restructure its debts while it continues operations. The following weeks will be important for Spirit as it navigates debts, operations, and increased competition from other airlines that have adopted similar pricing strategies.

Related

Spirit Airlines’ Future Uncertain As Discussions Over Bankruptcy Begin

The carrier’s share price has also dipped following the news.

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