NEW YORK (AP) — Spirit Airlines said Wednesday that it won’t announce its quarterly financial results because the company is focused on talks with bond holders to restructure its debt.
The budget airline has been struggling to recover from the pandemic-caused swoon in travel and a failed attempt to sell the airline to JetBlue.
In a regulatory filing, the company said the debt-reduction talks have been productive. Should the talks succeed, Spirit Airlines expects its operations to continue with no impact on its employees and customers, but the restructuring would likely cancel its existing stock.
“The negotiations … have advanced materially and are continuing in the near term, but have also diverted significant management time and internal resources from the company’s processes for reviewing and completing its financial statements and related disclosures,” the airline said in Wednesday’s filing.
In early trading, shares of the company based in Miramar, Florida, plunged 55% to $1.77.
Spirit Airlines said that if it does not successfully reach a deal with bondholders, then it will consider all alternatives. The Wall Street Journal, citing anonymous sources, reported late Tuesday that the airline was discussing terms of a possible bankruptcy filing with its bondholders.
The company also gave some guidance about its anticipated results. Compared with a year ago, this year’s third quarter will show lower revenue. Expenses will be higher year over year, with greater aircraft rent expense and salaries offset by lower fuel costs.
Spirit, the nation’s biggest budget airline, has lost more than $2.5 billion since the start of 2020 and faces looming debt payments totaling more than $1 billion over the next year.
People are still flying on Spirit Airlines. They’re just not paying as much.
In the first six months of the year, Spirit passengers flew 2% more than they did in the same period last year. However, they were paying 10% less per mile, and revenue per mile from fares was down nearly 20%, contributing to Spirit’s red ink.
It’s not a new trend. Spirit failed to return to profitability when the coronavirus pandemic eased and travel rebounded. There are several reasons behind the slump.
Spirit’s costs, especially for labor, have risen. The biggest U.S. airlines have snagged some of Spirit’s budget-conscious customers by offering their own brand of bare-bones tickets. And fares for U.S. leisure travel — Spirit’s core business — have sagged because of a glut of new flights.
Frontier Airlines tried to merge with Spirit in 2022 but was outbid by JetBlue. However, the Justice Department sued to block the $3.8 billion deal, saying it would drive up prices for Spirit customers who depend on low fares, and a federal judge agreed in January. JetBlue and Spirit dropped their merger two months later.