Spirit Airlines Explores Bankruptcy; JetBlue, Frontier Rally

Spirit Airlines plummeted early Friday on reports the discount carrier was discussing a potential bankruptcy filing with bondholders. Peer group airlines JetBlue Airways (JLBU) and Frontier Group (ULCC) surged higher following the news. Delta prepared to kick off the third-quarter reporting season for airlines next week.

A debt-heavy Spirit Airlines (SAVE) is considering filing for Chapter 11 bankruptcy, the Wall Street Journal reported late Thursday. The news comes as the company explores avenues of recovery, after its $3.8 billion merger with JetBlue failed in March, Unnamed sources told the WSJ that if Spirit files for bankruptcy, it wouldn’t be imminent.

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Spirit carried more than $3.1 billion in long-term debt on its balance sheet at the end of June, according to regulatory filings. Current maturities, which include more than $1.1 billion in secured bonds, are due in less than a year. The airline also faces a deadline from its credit card processor to refinance or extend those notes by Oct. 21, the WSJ reported.

CEO Ted Christie during the company’s August earnings call said Spirit was engaged in productive conversations with bondholder advisors to address the maturities. At the time, Christie shrugged off concerns over a potential bankruptcy filing.

Meanwhile, Spirit has reported a loss the last four quarters while revenue has declined over that period.

Spirit Airlines And Carrier Stocks

Spirit Airlines stock tumbled 33% early Friday following the report. SAVE stock has unraveled more than 86% in 2024 through Thursday amid earnings misses and the failed merger.

JetBlue stock rallied 14% Friday. Frontier (ULCC) vaulted more than 20%. JetBlue is up 42%, Frontier has scrambled 79% higher, from August lows.

American Airlines (AAL) climbed about 9% in morning trade, while United Airlines (UAL) surged 6%.

Delta Air Lines (DAL) climbed 4.3% Friday. Its earnings are due on Thursday.

FactSet expects earnings drop 24% to $1.54 per share on slight revenue growth to $14.64 billion.

DAL stock is working on a 52.45 buy point for a cup-with-handle base.

You can follow Harrison Miller for more stock news and updates on X/Twitter @IBD_Harrison

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