[ad_1]
It didn’t take long for the stock to drop by just one quarter and a nickel, but Spirit Airlines stock closed Wednesday at an all-time low of $5.21.Investors weren’t just pessimistic about the airline. $3.8 billion merger with JetBlue Airways canceledthey are also digesting Bloomberg reporting Spirit’s creditors are preparing for the worst.
The newspaper cited unnamed sources as saying that owners of some of the company’s debt due next year and the year after are trying to figure out how to preserve their positions in the event of bankruptcy. Reported.
Spirit has more than $1 billion in debt that it will soon have to pay off. Some of the debt is trading below par. This suggests the market has doubts about whether the notes are worth as much as the company says they are. One issue due in 2026 is trading at 74 cents on the dollar. Another set of notes expiring in 2025 trades at 76 cents on the dollar.
When a federal judge granted the U.S. Department of Justice’s request to block the JetBlue merger, Fitch Ratings downgraded Spirit’s credit rating, citing problems with the airline: “We are facing significant headwinds to improving profitability.” The company has struggled to find a path back to profitability, and some analysts believe it will return to profitability. There is a possibility of a complete liquidation..
Spirit has been making a lot of reassuring noises on the debt issue, but Also included in JetBlue’s bad news press release “We have taken, and continue to take, prudent steps to ensure the strength of our balance sheet and continued business, including evaluating refinancing options for upcoming debt maturities,” the company said in a statement. This includes hiring a financial advisor to buy more time, but whether that will be possible remains to be seen.
[ad_2]
Source link
