Spirit Airlines shares fell over 13% on December 18, 2024, at just $0.59 per share, as of 12pm London time, after Spirit's shareholders were informed they would lose their remaining investment in the airline.
Spirit had filed for bankruptcy in November 2024. The carrier's shareholders had attempted to form an equity committee to negotiate compensation, but had been unsuccessful, according to a report from Bloomberg.
In its pre-approved Chapter 11 bankruptcy filing, Spirit had received backstopped commitments for a $350 equity investment from existing bondholders and will complete a deleveraging transaction to equitize $795 million of funded debt. This will effectively wipe out the value of the shares held by existing shareholders.
Spirit's lawyer Marshall Huebner reportedly said during a New York court hearing that the airline's equity is out of money, but that the situation was understood by the market for a while and that “Spirit is insolvent and that's the way it is.”
The company had exhausted its efforts to try and avoid a bankruptcy filing with a failed merger with JetBlue earlier this year as well as reported negotiations with Frontier Airlines also falling through later in the year.