It looks like Spirit Airlines (NYSE:SAVE) is not getting grounded anytime soon. The low-cost airline’s CEO, Ted Christie, stated at an annual shareholder meeting that the company is not considering filing for bankruptcy and is optimistic about its plans after JetBlue’s (NASDAQ:JBLU) failed takeover attempt.
Spirit is facing numerous challenges, including shifting travel demand, rising competition, and an engine recall that has resulted in most of its planes being grounded. To add to its woes, the company’s CFO, Scott M. Haralson, resigned earlier this week amid its dismal Q1 results.
Spirit’s Debt Woes
As if this was not enough, earlier this year, a federal judge blocked JetBlue’s proposed takeover of Spirit, citing antitrust concerns. This resulted in analysts being concerned about the company’s ability to service its debt.
Earlier this year, Spirit stated that it is seeking to refinance the airline. However, there are questions about Spirit’s ability to refinance, as S&P Global Ratings downgraded the company earlier this week. The airline faces a $1.1 billion loyalty bond due in 2025 and a $500 million convertible note due in 2026. S&P stated that given SAVE’s weak cash flows and operating performance, it expects a distressed debt exchange.
Distressed debt exchanges are an alternative for companies to restructure their unmanageable debts outside of bankruptcy court.
What Are Bearish Analysts Saying?
Spirit’s debt concerns are also echoed by analysts bearish on the stock. According to the TipRanks “Bulls Say, Bears Say” tool, analysts bearish on SAVE have stated that the company’s “significant” debt indicates “financial strains on the company.”
What Is the Future Price of SAVE Stock?
Analysts remain bearish about SAVE stock, with a Moderate Sell consensus rating based on four Holds and Sell each. Over the past year, SAVE has declined by more than 70%, and the average SAVE price target of $3.21 implies a downside potential of 9.6% from current levels.
