Spirit Airlines faces huge cash crunch, issues warning
NEW YORK: Spirit Airlines has warned investors it may not survive as a going concern if it can't raise cash quickly enough to satisfy creditors.
The warning came in its latest shareholder report, issued just five months after the troubled air carrier slashed debt and exited bankruptcy court oversight with plans to become profitable.
If the company can't keep enough cash in the bank, creditors could declare Spirit in violation of its debt contracts, creating a cascading series of defaults the airline may not survive, according to the filing with the US Securities and Exchange Commission.
'Management has concluded that there is substantial doubt as to the company's ability to continue as a going concern within 12 months from the date these financial statements are issued,' the company said.
Spirit Aviation Holdings Inc emerged from bankruptcy in March after reducing debt by approximately US$795mil.
The transaction converted debt into equity for its largest bondholders, including Citadel Advisors, Pacific Investment Management Co and Western Asset Management Co.
In order to win court approval of that plan and exit bankruptcy oversight, the company told a federal judge that it would bring in a consolidated net profit of US$252mil in 2025, court documents showed.
In the Monday filing, Spirit said it may sell spare engines or its rights to use gates at various airports.
The goal is to raise enough cash by the end of the year to allay concerns of its credit-card processor.
That processor has demanded Spirit put more cash aside as collateral or the processor will refuse to renew its contract, which expires on Dec 31.
Airlines, including Spirit, are still grappling with a recovery in US travel after demand tanked in early February with President Donald Trump's imposition of initial tariffs. — Bloomberg
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