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Spirit Airlines needs good news to convince Wall Street that it can do well by itself in the wake of its abandoned merger with JetBlue Airways. Unfortunately, its latest earnings report only proves that it can do badly all by itself. The company reported its 10th consecutive quarterly loss, for $160 million, and it’s forecasting another loss next quarter.
“We are making progress towards our financial goals,” said CEO Ted Christie in a statement accompanying the numbers. “I thank the entire Spirit team for their continued focus on running a reliable operation and delivering value to our Guests as we implement our go-forward standalone plan.” That’s not the kind of “progress” investors had been expecting: Spirit shares are down 8% in early Monday trading, heading for a new record low.
Last quarter, Spirit had told investors that it would soon be cash-flow positive by now. It also told them that it would be in court next month fighting to keep its JetBlue merger going. Things change. In March, after the Justice Department won an injunction blocking the $3.8 billion deal in January, Spirit and JetBlue called off their tie-up.
Since then, Spirit has been trying to figure out how it make a go of things alone. It has deferred deliveries of aircraft and got a little financial compensation from manufacturer Pratt & Whitney for engine trouble that’s grounding some of its Airbus planes. But it still has $1.5 billion in debt that it has to pay off in the next couple of years. Its debt due 2025 is trading at 73 cents on the dollar, and its 2026 debt is at 55 cents. The carrier is trying to do something to assuage those investors, even as they brace for bankruptcy or worse.
“Spirit’s advisors have started discussions with our loyalty bondholders and convert holders that come due in September 2025 and May 2026, respectively, and expect a resolution at some point this summer,” CFO Scott Haralson said in the earnings statement.