Spirit Airlines CEO Ted Christie denies bankruptcy rumors during the company’s annual shareholder’s meeting. Bankruptcy rumors have circulated since federal judges blocked JetBlue’s deal in January.
Christie said, “We are proudly executing to our plan as we’ve exited the merger agreement with JetBlue and are encouraged by the initial results of our stand-alone plan.”
Bankruptcy Rumors
On June 5th, S&P Global ratings warned about the possible financial trouble for the airline. Spirit may struggle paying the $1.1 billion loyalty bond due in 2025. In addition to this, there’s the $500 million convertible note that should be paid in 2026.
On Wednesday, the S&P reduced the airline’s rating from CCC+ to CCC. This suggests that solutions like delaying new plane deliveries and removing add-ons are not enough to change the airline’s situation.
The rating agency said, “In our view, recent events indicate a rising probability of a restructuring that we consider tantamount to a distressed exchange in the next 12 months.”
JetBlue and Spirit Airlines
The JetBlue and Spirit Airlines merger attempt was a way to compete with much bigger airlines.
JetBlue and Spirit Airlines called off their $3.8 billion merger in March. This decision came after the Department of Justice sued and blocked the merger on antitrust grounds.
The Department of Justice argued that the merger would force customers to pay higher fees. Later, a federal judge agreed with the Justice Department.
After pulling the plug on the merger, Christie said, “We are disappointed we cannot move forward with a deal that would save hundreds of millions for consumers and create a real challenger to the dominant ‘Big 4’ U.S. airline.”
JetBlue’s CEO Joanna Geraghty said, “We are proud of the work we did with Spirit to lay out a vision to challenge the status quo, but given the hurdles to closing that remain, we decided together that both airlines’ interests are better served by moving forward independently.”
Spirit has been losing money since 2020 and is currently down 77% for the year.
