According to Wall Street Journal, Spirit Airlines is in talks with bondholders about the of a potential bankruptcy filing after failing to complete a merger with JetBlue Airways. As a result, the company's shares fell 30%.
The company is still considering restructuring its balance sheet through an out-of-court transaction, but the most recent negotiations are more focused on reaching an agreement with creditors to the bankruptcy filing.
According to the report, a bankruptcy filing, if it occurs, will not be in the near future. In response to the report by Wall Street Journal, Spirit Airlines cited the second-quarter earnings call, where CEO Ted Christie mentioned that the company is in discussions with its bondholders' advisers to manage debt maturities scheduled for 2025 and 2026.
“As these discussions are ongoing, we will not go into detail or answer questions on this topic, nor will we speculate on possible outcomes.”, Christie said, adding that it was a priority and that the company was focused on ensuring the “best outcome for the business as quickly as possible”.
Information about the possible bankruptcy of Spirit Airlines comes months after CEO Ted Christie said the company was not considering filing for bankruptcy and was “encouraged” by the plan in place following its failed merger with JetBlue. The $3,8 billion merger deal was called off in March after a U.S. judge blocked the deal in January over anticompetitive concerns.
A Spirit Airlines Boeing Co. has indicated it will face a wider loss in the third quarter, driven by “intense competition” for price-sensitive leisure engers and a glut of available domestic seats. The carrier has failed to make a profit in five of the past six quarters, raising questions about its ability to service its debt.
Had the merger gone through, it would have created the fifth largest U.S. carrier, offering Spirit a chance for survival at a time when the company is facing financial difficulties and is overwhelmed by debt.
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