Spirit Airlines Stock Plummets By More Than 62 Percent Amid Debt Negotiations

Spirit Airlines planes are prepared for flight at the Fort Lauderdale–Hollywood International Airport in Fort Lauderdale, Fla., on May 16, 2022. Joe Raedle/Getty Images

Spirit Airlines is negotiating a debt-restructuring deal with creditors, a revelation that has sent the company’s stock price crashing.

Spirit has been in “active and constructive discussions” with some of its note-holders—those who have lent money to the airline—to restructure the company’s debt obligations, according to a Nov. 12 company statement.

The discussions were regarding debts due in 2025 and 2026.

The airline is also “exploring strategic alternatives and other ways to improve liquidity,” it said. If an agreement is reached, a debt restructuring would be implemented, which can also lead to canceling the company’s existing equity. If an agreement is not reached, Spirit “will consider all alternatives.”

Spirit’s shares collapsed in after-hours trading on Tuesday. Shares closed the trading day at $3.22, but slipped a further 62 percent, to $1.20, after hours. The airline’s stock price has collapsed by more than 80 percent so far this year.

A debt restructuring could be seen as a sign of potential bankruptcy.

Spirit has been in financial distress for a long time. Its quarterly revenues have been declining on a year-over-year basis since the third quarter of 2023. Meanwhile, the company has suffered net losses in 17 of the past 18 quarters.

The airline also revealed that its operating revenues for the third quarter of 2024 are expected to be roughly $61 million lower than last year. Operating expenses are expected to have risen by $46 million.

The company blamed higher expenses on factors such as an “increase in aircraft rent expense, other operating expense, salaries, wages and benefits, and landing fees and other rents expense.”

To tackle the financial distress, Spirit announced a furlough of 260 pilots in April. And in October, the company revealed an $80 million cost-savings plan, which would be “driven primarily by a reduction in workforce.” The cost reductions are set to begin in early 2025.

Furthermore, Spirit said it would sell 23 aircraft, valued at roughly $519 million. The sale is expected to boost liquidity by $225 million through the end of next year.

The airline’s debt restructuring follows a potential merger with JetBlue that fell apart earlier this year after a judge deemed that the proposal violated antitrust regulations. Spirit could have received a financial lifeline if the deal had gotten through.

In May, Fitch Ratings downgraded Spirit from B- to a CCC rating. The downgrade followed the company’s first-quarter earnings announcement and guidance that showed “ongoing profitability weakness.”

“Fitch believes there is a heightened risk that a pending refinancing of Spirit’s 2025 loyalty bonds and 2026 convertible notes may constitute a distressed debt exchange,” the agency said at the time.

The airline faces profitability issues, including challenges with engine availability, intense competition, and overcapacity in certain leisure markets, it said.