Spirit Airlines (SAVEQ) may have secured $300 million in fresh debt financing as it looks to exit Chapter 11 bankruptcy, but problems seem to still be stacking up for the budget carrier.
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In a regulatory filing dated January 21st, the company said it was extending by two weeks the deadline for participating in a key $350 million equity placement.
The deadline, initially set for January 31st, has been extended to February 13th, with the possibility of further extensions, the company said in an 8-K filing with the Securities and Exchange Commission, which may signal that Spirit is finding it difficult to get the placement off.
The rights offer was announced on December 30th, part of a restructuring plan crafted after it filed for Chapter 11 bankruptcy protection in November. Faced with $1.1 billion in liabilities due this year, the company reached a deal with bondholders to swap $795 million in debt for $350 million in equity.
On January 16th, the company announced it has secured a commitment for a $300 million exit revolving credit facility, intended to support the company’s operations post-emergence from Chapter 11 bankruptcy proceedings.
Spirit had struggled to recover from the COVID-19 decline in travel bookings, and the stock plunged last year following its failed acquisition by JetBlue Airways (JBLU), an engine recall and weaker sales.
Spirit’s common stock was delisted from the New York Stock Exchange on December 5th, 2024, with the stock now trading on the OTC Pink Market under the symbol SAVEQ.
SAVEQ Makes Job Cuts
Last week it was reported Spirit Airlines was cutting about 200 jobs across the company in a bid to save about $80 million in costs.
In a memo seen by CNBC, CEO Ted Christie said, “The bottom line is, we need to run a smaller airline and get back on better financial footing.”
Meanwhile, U.S. Senators have demanded Spirit disclose if it is manipulating seat fees by using customers’ personal information to charge different fees to passengers on the same flight.
Senators Maggie Hassan, Josh Hawley and Richard Blumenthal want to know why airlines like Spirit ask for personal information from customers before disclosing prices, Reuters reported.
Is SAVEQ a Good Stock to Buy?
Overall, Wall Street has a Strong Sell consensus rating on the stock, based on four Sells and one Hold. The average SAVEQ price target of $0.88 still however implies upside of 75% from the current level.
