On Thursday, Spirit Airlines refuted rumors about its future, labeling them as a "misguided narrative." The ultra-low-cost carrier stated that it has increased its liquidity to ensure survival even if its proposed merger with JetBlue does not materialize. The Florida-based airline is making adjustments to its network and optimizing labor costs to enhance earnings. It anticipates starting to generate cash in March and achieving positive cash flow from the second quarter onwards. Until then, Spirit believes its $1.3 billion liquidity will be more than sufficient to support its operations. The company is also exploring options for its debt maturing in 2025 and 2026.
.gif)
Ever since a U.S. federal judge blocked Spirit's $3.8 billion merger deal with JetBlue last month, there has been speculation about the company's future. Both airlines have appealed against the decision. Analysts predict a challenging future for Spirit without the JetBlue deal, as the budget airline has been struggling to achieve sustainable profitability. Some analysts have even suggested the possibility of bankruptcy if the company fails to stabilize its finances. However, Spirit's CEO Ted Christie dismissed these speculations as a "misguided narrative."
"Liquidity is always king," he said to analysts following the company's earnings announcement. "We have increased our levels to provide us the necessary flexibility to successfully merge with JetBlue or to follow our independent plans." The company's shares saw a 3% increase in morning trading. Spirit is one of the airlines most affected by issues with RTX's Pratt & Whitney Geared Turbofan (GTF) engines. It is the largest operator of GTF-powered aircraft in the United States, which has led to the grounding of several planes. In January, the airline had an average of 13 grounded neo aircraft, and it estimates that this number will steadily increase to an average of about 40 by December 2024.
Spirit has been pursuing "fair" compensation from Pratt & Whitney for its financial losses and stated that the expected compensation will be a "significant" source of liquidity in the next few years. For the fourth quarter, it reported an adjusted loss of $1.36 per share, which is less than the analysts' average estimate of a loss of $1.46 per share, according to LSEG data.