Spirit Airlines debt refinancing deadline extended to December

By Rajesh Kumar Singh

CHICAGO (Reuters) – Spirit Airlines (NYSE:SAVE) said on Friday it has reached an agreement with its credit card processor to extend a debt refinancing deadline by two months until Dec. 23.

The extension agreement with U.S. Bank National Association provides some breathing room to Spirit to refinance its $1.1 billion loyalty bonds due to mature next year. The previous refinancing deadline was Oct. 21.

The Florida-based discount carrier also said it has fully drawn down its $300 million revolving credit facility and expects to end this year with over $1 billion in liquidity.

Spirit has been losing money despite strong travel demand. It has failed to report a profit in the last five out of six quarters, raising doubts about its ability to manage looming debt maturities.

Those concerns have hammered its shares, which have slumped about 91% this year compared with a 31% gain in S&P 500 passenger airlines index.

In a regulatory filing, Spirit said it is still in “active and constructive discussions” with its bondholders about the upcoming maturities.

Spirit has been facing an uncertain future after the collapse of its $3.8 billion merger deal with JetBlue Airways (NASDAQ:JBLU). It has warned of a bigger third-quarter loss due to a tough race for price-sensitive leisure travelers and an oversupply of airline seats in the domestic market.

It is also among the airlines most heavily affected by issues with RTX’s Pratt & Whitney Geared Turbofan engines, which have forced it to ground multiple aircraft and have left the carrier with bloated costs. It is trying to attract premium travelers to increase its revenue and doubling down on cost cuts to save cash. It has downgraded and furloughed pilots, offered voluntary unpaid leaves to flight attendants, and deferred all aircraft deliveries from Airbus.