Spirit Airlines Shares Plummet Ahead of Second Bankruptcy Filing

Spirit Aviation Holdings Faces Bankruptcy Again

• Stock Performance: Spirit Aviation Holdings, Inc. (FLYY) shares fell dramatically by 45.9%, trading at 66 cents during after-hours on Friday following news of a potential bankruptcy filing.

• Bankruptcy Context: This impending bankruptcy comes less than a year after the airline's previous Chapter 11 restructuring, which failed to stabilize its financial situation. The airline had initially sought bankruptcy protection in November due to unsuccessful merger negotiations.

Financial Challenges

• Debt Situation: After emerging from bankruptcy in March, Spirit converted approximately $800 million of its corporate debt into equity but still carries over $2 billion in debt along with high aircraft leasing costs.

• Market Pressures: The airline has faced increasing financial strain, exacerbated by a decline in air travel demand in the first half of the year.

Strategic Moves

• Consultants and Restructuring: Spirit has engaged new consultants to explore further restructuring options. CEO Dave Davis indicated that more work is needed to position the airline for future success, emphasizing the necessity of a court-supervised process for effective changes.

• Stock Exchange Implications: Spirit anticipates being delisted from the NYSE American Stock Exchange due to the bankruptcy filing, with common shares expected to become worthless as part of the restructuring process.

Conclusion

• Future Outlook: The airline's board has concluded that a court-supervised bankruptcy is the best route to ensure long-term viability amidst ongoing market challenges.