Spirit Airlines shares soared by as much as 65% on Monday after the budget airline struck a deal to extend its debt refinancing plan by two months.
The agreement with US Bank National Association to push the deadline — which was set to expire Monday — until Dec. 21 provides some wiggle room for Spirit to refinance its $1.1 billion loyalty bonds due to mature next year.
The Florida-based airline said it has fully drawn down its $300 million revolving credit facility and expects to end the year with more than $1 billion in liquidity.
“Spirit has to address debt payment timing and resizing the fixed cost structure, and it is still unclear if this can be completed with/without Chapter 11,” Savanthi Syth, analyst at Raymond James, said.
In a regulatory filing, Spirit said it is still in “active and constructive discussions” with its bondholders about the upcoming maturities.
Spirit and US Bank did not immediately respond to requests for comment.
Spirit struggled to compete in a crowded industry as passengers returned to summer travel in full force this year.
The budget airline was also hit by the collapse of its $3.8 billion merger with JetBlue Airways, which the companies called off in March after they lost an antitrust lawsuit.
Spirit closed up 53%, at $2.25.
Despite the boost, Spirit shares are down nearly 90% this year, compared with an overall 33% increase in the S&P 500 Passenger Airlines index over that span.
The company has failed to turn a profit in five of the last six quarters.
Like other low-cost airlines, Spirit has announced plans to offer premium seating in a last-ditch effort to win back cash-strapped customers.
In August, Spirit introduced four new tiers – Go Big, Go Comfy, Go Savvy and Go – as well as improved passenger benefits, like priority check-in and increased check bag weight guidance.
Spirit has set its sights on cutting costs by downgrading about 100 captains, offering unpaid voluntary leave to flight attendants and pausing its hiring and training of new pilots and flight attendants.
The airline previously announced its plans to furlough about 240 pilots and postpone Airbus deliveries.
Spirit was one of the airlines hit hardest by an RTX engine defect that forced it to ground flights, adding to its financial woes.
RTX’s Pratt & Whitney announced in 2023 that more than 1,000 of its engines had to be removed from Airbus planes and checked for microscopic cracks.
Spirit is expected to end 2025 with about 67 planes on the ground, compared to the average 20.
With Post wires
