Spirit Airlines' acquisition by Frontier Airlines has reportedly fell through, according to a Wall Street Journal report on November 12, 2024. The airline is reportedly moving towards filing for bankruptcy.
The following day after the report, Spirit notified the US Securities and Exchange Commission (SEC) that it would be unable to file its quarterly report for the third quarter of the year.
The company said it is continuing discussions with holders of its senior secured notes due 2025 and convertible senior notes due 2026, as well as exploring avenues to improve its liquidity. As a result, it has “diverted significant management time and international resources” away from its financial reporting disclosures. Spirit added that if does not reach an agreement with noteholders, it will “consider all alternatives”, and said it expects this will lead to the cancellation of its equity.
Spirit said it expects its third quarter 2024 operating margin and adjusted operating margin to both be approximately 12 percentage points lower than last year's third quarter. In addition, total operating revenues are estimated to have decreased $61 million compared to last year. Total operating expenses are expected to have increased around $52 million compared to last year, driven by an increase in aircraft rent, salaries, and operating expenses.
“In the event of a restructuring, focus will then shift to the fate of Spirit's fleet,” said TD Cowen analysts Tom Fitzgerald and Helane Becker. “We expect the airline to sell off the remaining encumbered assets to pay off the associated debt on the aircraft and work to reject leases on the rest of the fleet.”
The Wall Street Journal report said a bankruptcy plan is expected to be filed in the next few weeks.