Spirit Airlines CEO Ted Christie said on Friday that the low-cost airline isn’t considering filing for bankruptcy under the US Chapter 11 procedure and is “encouraged” by its plan after the takeover by JetBlue Airways.
Spirit is fighting changing travel demand, increased competition from the U.S. and a recall of Pratt & Whitney engines that led to the grounding of dozens of its Airbus aircraft.
Earlier this yr, a federal judge blocked JetBlue's planned acquisition of Spirit on antitrust grounds, raising concerns on Wall Street concerning the loss-making airline's ability to pay down its debt. Spirit announced in February that it was looking for refinancing.
“We are proud to be executing our plan after exiting the merger agreement with JetBlue and are encouraged by the early results of our standalone plan,” Christie said Friday at an annual shareholder meeting. “We are not currently considering a Chapter 11 proceeding.”
S&P Global Ratings downgraded Spirit on Wednesday, raising doubts about its ability to refinance, citing a $1.1 billion fidelity bond due in September 2025 and a $500 million convertible bond due in 2026.
“Given the constrained cash flow generation and operating performance, as well as management's public announcement that it will be speaking to lenders to explore options to service upcoming maturities, we believe the company is likely to face distress,” it said.
The group's chief financial officer is leaving the corporate to develop into CFO at Hertz, the businesses announced earlier this week.
Spirit's shares have lost greater than 77 percent this yr through Thursday's close. The company has taken numerous steps to conserve and lift money, including postponing some Airbus deliveries and sale-leaseback agreements.
In addition, the airline recently modified its business model: it eliminated most rebooking fees and as an alternative offered discounts that it had previously offered individually together with low fares.
In addition, other policies have also been relaxed: the validity of flight credits has been prolonged from 90 days to at least one yr and the utmost weight for checked baggage has been increased from 40 to 50 kilos.
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