Spirit Airlines (NYSE: SAVE) experienced another decline of over 7% on Thursday as investors remained unconvinced by the commitment of the airline to fortify its balance sheet following the unsuccessful takeover of the ultra-low-cost carrier.
Spirit Airlines (SAVE) stock has plummeted by over 70% since a judicial ruling on January 16 that halted JetBlue Airways Corp.’s planned $3.8 billion acquisition of the deep-discount carrier. SAVE stock fell as much as 25% in the afternoon trading Thursday, marking the third consecutive drop since the court decision and the fifth overall.
The continued declines come even as in a recently released statement, the company expressed disappointment with the verdict but maintained confidence in its strength and strategy.
The company said,
“Spirit has been taking, and will continue to take, prudent steps to ensure the strength of its balance sheet and ongoing operations,”
Along those lines, Spirit Airlines (NYSE: SAVE) has initiated measures to strengthen its financial position, such as adjusting the pace of new aircraft deliveries until 2030, slowing near-term capacity growth, and exploring avenues to cut $100 million in structural costs for the current year.
In addition, the Wall Street Journal reported that the company is exploring restructuring options to address its financial challenges following the failed deal with JetBlue.
Citi downgraded Spirit from “neutral” to “sell,” citing concerns that potential suitors may be deterred by the airline’s increased debt load, rising from $3.3 billion to $5.5 billion over the past two years. Citi analysts, led by Stephen Trent, noted that a new bid for Spirit Airlines seems unlikely without first restructuring its debt.
Citi analysts said in a research note,
“Although it would be hard to rule out entirely the appearance of other Spirit Airlines suitors, a new bid seems unlikely without the carrier first restructuring its debt.”
JetBlue Airways and Spirit Airlines have not disclosed any plans to appeal the ruling but have stated that they are evaluating legal options.
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