SPIRIT Airlines said on Friday (Oct 18) it has reached an agreement with its credit card processor to extend a debt refinancing deadline by two months until Dec 23.
The extension agreement with US Bank National Association provides some breathing room to Spirit to refinance its US$1.1 billion loyalty bonds, due to mature next year. The previous refinancing deadline was Oct 21.
The Florida-based discount carrier also said it has fully drawn down its US$300 million revolving credit facility and expects to end this year with over US$1 billion in liquidity.
Spirit has been losing money despite strong travel demand. It has failed to report a profit in the last five out of six quarters, raising doubts about its ability to manage looming debt maturities.
Those concerns have hammered its shares, which have slumped about 91 per cent this year compared with a 31 per cent gain in the S&P 500 passenger airlines index.
In a regulatory filing, Spirit said it is still in “active and constructive discussions” with its bondholders about the upcoming maturities.
Spirit has been facing an uncertain future after the collapse of its US$3.8 billion merger deal with JetBlue Airways. It has warned of a bigger third-quarter loss due to a tough race for price-sensitive leisure travellers and an oversupply of airline seats in the domestic market.
It is also among the airlines most heavily affected by issues with RTX’s Pratt & Whitney Geared Turbofan engines, which have forced it to ground multiple aircraft and have left the carrier with bloated costs.
It is trying to attract premium travellers to increase its revenue and doubling down on cost cuts to save cash. It has downgraded and furloughed pilots, offered voluntary unpaid leaves to flight attendants, and deferred all aircraft deliveries from Airbus. REUTERS
