Spirit Airlines sought to reassure skittish investors in a Friday regulatory filing that summarized its liquidity strategy.
After a court decision on Tuesday blocked the JetBlue-Spirit merger, the airline's stock price plunged. It was down nearly two-thirds when the markets closed on Thursday. The ruling has sparked concerns that Spirit might be headed for a bankruptcy filing.
In the Friday update, Spirit stated that it had $1.3 billion in liquidity as of Dec. 31 and that it is assessing options for refinancing $1.1 billion in loyalty program debt that will come due in September 2025.
Spirit also said it is in negotiations with engine maker Pratt & Whitney over compensation for incurred losses from long-lasting maintenance checks of engines for potential metal contamination. The maintenance check for each plane is expected to take up to 300 days, and Spirit expects an average of 26 Airbus A320neo planes to be grounded for those shop visits over the course of this year.
Spirit said it expects the compensation amount to be a significant source of liquidity over the next couple of years.
Spirit's struggles after the pandemic
Post-pandemic, strong premium demand and significantly escalated labor costs have placed discount carriers at a disadvantage to full-service competitors. The engine issue has also been a drag on revenue.
In last year's third quarter, Spirit reported a net loss of $157.6 million, with operating losses of 15%. At the time, the company had projected an operating loss of 15% to 19% in the fourth quarter.
On Friday, Spirit offered updated and less pessimistic guidance for Q4. The carrier now expects an operating loss of 12% to 13%. Spirit improved its outlook due to lower-than-expected fuel costs and revenue that will be at the high end of its earlier forecast.
Spirit's Q4 financial report is scheduled for Feb. 8.
Spirit hints at appeal of merger ruling
Spirit also continued to hint that it is considering an appeal of the JetBlue-Spirit rejection.
"Spirit has stated that it disagrees with the U.S. District Court's ruling and continues to believe that a combination with JetBlue is the best opportunity to increase much needed competition and choice by bringing low fares and great service to more customers in more markets while enhancing their ability to compete with the dominant U.S. carriers," the company said.
Friday's regulatory filing appeared to improve investor sentiment. Spirit stock was up 23% in the early afternoon Friday.