The stock of discount carrier Spirit Airlines (SAVE) closed 53% higher on October 21 after it announced a new deal that lets its current debt refinancing deadline go until late December.
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The new arrangement gives Spirit until December 23 to refinance its debt with its credit card processor, the U.S. Bank National Association. Spirit had a whopping $1.1 billion in outstanding loyalty bonds due, and those bonds were set to mature next year.
But with the new agreement in place, Spirit has just over two months to refinance instead. Spirit Airlines has completely drawn down a $300 million revolving credit facility, and it looks to end 2024 with over $1 billion in liquidity. However, the company has reported a profit in just one of the last six quarters.
Trying Merger Again?
So how will Spirit address its issues? One report from Simple Flying suggests that Spirit may try to reconnect with Frontier Airlines. Recently, word from Breeze Airways CEO David Neeleman suggested that Spirit and Frontier could try to merge.
While Neeleman believed that Spirit has “…some work to do” in terms of getting its financial problems together, he also believes that a merger with Frontier may not be too far behind. Spirit and Frontier previously tried to combine operations back in 2022, but the deal failed as the project did not have sufficient support from shareholders.
Is Spirit a Buy or Sell?
Turning to Wall Street, analysts have a Strong Sell consensus rating on SAVE stock based on one Hold and six Sells assigned in the past three months, as indicated by the graphic below. After a 85.08% loss in its share price over the past year, the average SAVE price target of $2.40 per share implies 3% upside potential.
