A new bid for Spirit Airlines Inc is unlikely, given that the struggling ultra-low-cost airline is saddled with debt.
save the soul,
Net debt has swelled to $5.5 billion from $3.3 billion in the past two years. The company is also looking to pay off more than $1 billion in outstanding debt next year.
A federal judge on Tuesday blocked JetBlue Airways Corp.'s JBLU subsidiary.
The $3.8 billion offer to buy Spirit is in line with the Justice Department's claim that the proposed merger would hurt competition.
Although it would be difficult to rule out the emergence of other candidates for Spirit Airlines, a new bid seems unlikely. [without] “The carrier is first restructuring its debt,” Citi analyst Stephen Trent said in a note late Wednesday.
And the spirit seems to do just that. The Wall Street Journal reported Thursday, citing people familiar with the matter, that the airline plans to discuss its path forward with advisers.
On Wednesday, Fitch Ratings said Spirit faces “significant refinancing risks” next year, with $1.1 billion in loyalty program debt due in September 2025, and “serious headwinds” as it seeks to improve its balance sheet, including… That's excess capacity in some leisure travel markets and intense competition.
Trent said Spirit's EBITDA is unlikely to turn positive until 2025. The analyst lowered his rating on Spirit to sell from the equivalent of hold.
Spirit shares have lost 79% in the past 12 months, in contrast to gains of about 21% for the S&P 500 SPX in the same period.
Read also: JPMorgan says JetBlue dodged a bullet after judge blocked Spirit acquisition
