Report: Spirit Airlines is discussing a possible bankruptcy filing

Spirit Airlines stock fell sharply on Friday following a Wall Street Journal story on Thursday that reported Spirit has been in discussions with bondholders about a possible Chapter 11 bankruptcy filing. 

The WSJ report cited “people familiar with the matter.” 

Spirit declined to comment on the report and referred to CEO Ted Christie’s remarks during the company’s Aug. 1 earnings call. 

“I want to note that we are engaged in productive conversations with the advisors of our bondholders to address the upcoming debt maturities,” Christie said. “Because those conversations are ongoing, we are not going to go into detail or take any questions on this topic or speculate on potential outcomes.”

Spirit faces an Oct. 21 deadline from its credit card processor to refinance $1.1 billion in loyalty program-backed debt that comes due in the next year. The airline had total long-term debt of more than $3.1 billion at the end of this year’s second quarter.

Though it is being discussed, a Chapter 11 filing isn’t imminent, according to the WSJ. Spirit continues to explore out-of-court options to restructure its balance sheet, though bankruptcy has been a larger focus in recent talks with bondholders and other creditors, the newspaper said. 

Spirit has struggled ever since the start of the Covid pandemic. Impacted by evolving consumer preferences toward higher-end flying, the discount carrier reported an operating loss of $360 million with a loss margin of minus-11.9% during the first half of this year. Spirit’s operating loss was $496 million in 2023. 

Spirit had sought to improve its financial standing through a merger with JetBlue, but the deal was thwarted early this year by the U.S. Department of Justice.

In an effort to slow losses, Spirit has been slashing routes. Last week, the Fort Lauderdale-based carrier cut 50 to 60 routes for November and December, according to a Deutsche Bank analysis. The airline now plans to fly 14.1% fewer flights during those months than it did last year. 

Spirit’s stock was down 27% in afternoon trading Friday.