Mike Blake/Portal
A Spirit airliner prepares to land at San Diego International Airport.
New York CNN –
Shares of troubled Spirit Airlines rallied more than 20% in Friday trading sought to reassure investors that a court decision blocking JetBlue Airways' purchase would not force the company out of business.
In a securities filing, Spirit also said it had not given up on a potential takeover by JetBlue, despite a federal judge blocking the deal on antitrust grounds on Tuesday.
The budget airline said in the filing that it expects to beat analysts' expectations by year-end. But that doesn't mean a profit – it just means the company expects to lose less money in the fourth quarter than forecast, which would still leave it in a worse position than it was in the fourth quarter of 2022. The company also wants 1.1 US dollars refinance billions of dollars in debt due in September 2025.
Spirit shares fell 47% in trading on Tuesday after the court blocked JetBlue's takeover, and fell another 22% on Wednesday. A note from Cowen Airline analyst Helane Becker late Wednesday speculated that Spirit could be forced into liquidation because aircraft leasing companies, which own more than half of Spirit's 200-plus Airbus jets, would be more inclined to take the planes to repossess and find other customers rather than negotiate new financing terms.
Other analysts predicted neither bankruptcy nor liquidation, but still predicted a difficult path for Spirit as it tries to survive on its own. JPMorgan Chase airline analysts wrote in a note that “while we do not (yet) anticipate an immediate” bankruptcy filing by Spirit, “we cannot reasonably foresee a viable return to profitability in the foreseeable future.”
In its forecast Friday, the airline said its revenue was expected to be $1.32 billion, slightly better than the forecast of $1.31 billion. Operating loss was estimated at $158 million to $172 million, down from the third quarter's operating loss of $178 million and better than forecast for a loss of $197 million.
But the quarter will still be worse than the fourth quarter a year ago, when the company posted revenue of $13.9 billion and adjusted operating profit of $58 million.
All U.S. airlines lost billions in the first two years of the pandemic, despite receiving billions of dollars in federal aid to keep flying and prevent mass layoffs. But as demand for air travel picked up again in 2022, so did the profitability of larger airlines.
But smaller airlines — like Spirit — that offer lower fares to attract award-winning leisure travelers continue to struggle. After $1 billion in losses in 2020 and 2021, the company lost $264 million in the first nine months of 2023. The company is forecast to lose another $175 million in the final three months of 2023 and another $310 million this year, according to analysts polled by Refinitiv.