Spirit Airlines Faces Uncertainty, Possible Bankruptcy

(AP) - Spirit Airlines hasn’t made money since before the pandemic, ticket sales haven’t bounced back as quickly as the carrier expected, and dozens of its planes will be grounded at times this year because of a problem with the engines.

A sale to JetBlue represented a lifeline for Spirit, which faces $1.1 billion in debt maturing next year. But a federal judge in Boston scuttled that plan by ruling Tuesday that JetBlue’s $3.8 billion proposal to buy Spirit violates antitrust law.

Now, some Wall Streeters who follow Spirit are tossing around the B word – bankruptcy. The judge had even hinted at such an outcome during the trial.

After Judge William Young’s ruling on Tuesday, Spirit can look for another buyer, or it could remain independent and try to push through a difficult environment for budget airlines.

But “a more likely scenario is a Chapter 11 filing, followed by a liquidation,” wrote Helane Becker, a veteran airline analyst for financial-services firm Cowen. “We recognize this sounds alarmist and harsh, but the reality is we believe there are limited scenarios that enable Spirit to restructure.”

On Wednesday, Bank of America analysts downgraded Spirit stock to “underperform,” suggesting there is a risk the airline might not be able to make debt payments due in September 2025.

Spirit is also hindered by necessary inspections and possible replacement of Pratt & Whitney engines on many of its Airbus jets because of a manufacturing defect. The airline has predicted that it will average 26 grounded planes — more than 10% of its fleet — during 2024, causing “a dramatic decrease in the company’s near-term growth projections.”