Spirit Airlines cancels publication of 3. quarter’s financial results, as negotiations on debt restructuring are hot

NEW YORK (AP) – Spirit Airlines said Wednesday it will not release its quarterly financial results because the company is focused on talks with bondholders to restructure its debt.

The low cost airline has struggled to recover from the pandemic-induced malaise in travel and a failed attempt to sell the airline to JetBlue.

In a regulatory filing, the company said debt reduction talks have been productive. Should the negotiations be successful, Spirit Airlines expects its operations to continue without impact to its employees and customers, but the restructuring will likely cancel its existing inventory.

“Negotiations … have progressed substantially and will continue in the near term, but have also diverted significant management time and internal resources from the company’s processes to review and finalize its financial statements and related disclosures,” the airline said in Wednesday’s filing.

In early trading, shares of the Miramar, Fla.-based company fell 55% to $1.77.

Spirit Airlines said that if it fails to reach an agreement with the bondholders, it will consider all alternatives. The Wall Street Journal, citing anonymous sources, reported late Tuesday that the airline was discussing the terms of a possible bankruptcy filing with its bondholders.

The company also provided some guidance on its expected results. Compared to a year ago, this year’s third quarter will show lower revenue. Expenses will be higher year-on-year, with higher airfares and wages offset by lower fuel costs.

Spirit, the nation’s largest low-cost airline, has lost more than $2.5 billion since the start of 2020 and faces looming debt payments totaling more than $1 billion over the next year.

People still fly Spirit Airlines. They just don’t pay that much.

In the first six months of the year, Spirit passengers flew 2% more than they did in the same period last year. But they paid 10% less per mile, and the turnover per miles from fares fell nearly 20%, contributing to Spirit’s red ink.

It is not a new trend. Spirit failed to return to profitability as the coronavirus pandemic eased and travel picked up. There are several reasons for the downturn.

Spirit’s costs, especially for labor, have increased. The major US airlines have captured some of Spirit’s budget-conscious customers by offering their own brand of bare-bones tickets. And fares for leisure travel in the US – Spirit’s core business – have fallen due to a flurry of new flights.

Frontier Airlines tried to merge with Spirit in 2022, but was outbid by JetBlue. However Ministry of Justice sued to block the $3.8 billion deal, saying it would drive up prices for Spirit customers who depend on low fares, and a federal judge agreed in January. JetBlue and Spirit dropped their merger two months later.

US airline bankruptcies were common in the 1990s and 2000s as airlines struggled with fierce competition, high labor costs and sudden increases in the price of jet fuel. PanAm, TWA, Northwest, Continental, United and Delta were swept up. Some liquidated, while others used favorable laws to renegotiate debts like aircraft leases and keep flying.

The last bankruptcy of a major US airline ended when American Airlines emerged from Chapter 11 protection and at the same time merged with US Airways in December 2013.

Associated Press