Spirit Airlines, Inc. (NYSE:SAVE) shares are trading higher in the morning session on Friday.
In an exchange filing, Spirit Airlines announced that on October 18, 2024, it entered into a binding term sheet with GA Telesis for the sale of 23 A320ceo/A321ceo aircraft at an expected total purchase price of approximately $519 million.
Delivery of the aircraft is scheduled to begin in October 2024 and continue through February 2025, contingent upon the execution of definitive documentation and other customary conditions precedent.
On October 24, Spirit Airlines provided an update to investors with preliminary estimates for its third quarter of 2024.
Spirit anticipates that the net proceeds from the recent aircraft sale, combined with the discharge of related debt, will enhance its liquidity by approximately $225 million through year-end 2025.
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The estimated adjusted operating margin for the third quarter of 2024 is expected to be about 300 basis points higher than the midpoint of previous guidance, driven by stronger-than-expected revenue from its transformation plan.
For the full year 2025, capacity is projected to decrease in the mid-teens percentage range, considering the aircraft sale, the increased removal of neo aircraft from service due to Pratt & Whitney engine availability issues, the retirement of the remaining A319ceo aircraft, and the addition of six new A321neo aircraft.
To support its path to profitability, Spirit has identified approximately $80 million in annualized cost reductions, which it plans to implement starting in early 2025, primarily through workforce reductions aligned with expected flight volumes.
The company is also in active discussions with holders of its senior secured notes due 2025 and convertible senior notes due 2026 regarding their maturities.
Spirit Airlines had extended its debt refinancing deadline too. Recently, the company announced it modified its card processing agreement, extending deadlines for its 2025 notes.
This follows ongoing negotiations with U.S. National Bank Association regarding Visa and MasterCard payments.
Consistent with previous guidance, Spirit expects to conclude 2024 with over $1.0 billion in liquidity, which includes unrestricted cash, cash equivalents, short-term investment securities, and other liquidity initiatives, assuming successful completion of ongoing efforts.
According to Benzinga Pro, SAVE stock has lost over 30% in the past six months.
Spirit Airlines has faced selling pressure as planes were grounded due to an engine recall and the company's planned acquisition of JetBlue Airways Corporation (NASDAQ:JBLU) was blocked by regulators.
Spirit has also missed analyst estimates on the top and bottom lines in two straight quarters.
Earlier this month, the Wall Street Journal reported that Spirit was exploring potential bankruptcy options as it continues to battle financial challenges, including mounting pressure on its $3.3 billion debt load.
Investors can gain exposure to the stock via U.S. Global Jets ETF (NYSE:JETS).
Price Action: SAVE shares are up 26% at $3.05 at the last check Friday.
- Spirit Airlines Extends Debt Deadlines, JetBlue Founder Suggests Frontier Group A More Suitable Match
