Spirit Airlines, opens new tab faces tough choices about its future including looking for another buyer and finding other ways to shore up its finances after a federal judge on Tuesday blocked its $3.8 billion merger deal with JetBlue Airways, opens new tab, industry experts said, Reuters reported. The ultra low-cost carrier has been struggling to return to sustainable profitability amid rising operating costs and persistent supply-chain problems. That has raised concerns about the company's ability to repay its debt that is due to mature next year. The airline this month completed a series of sale and leaseback transactions covering dozens of planes in a bid to repay about $465 million of debt on those jets. But with a recovery in earnings not in sight, some analysts said the company might consider a bankruptcy filing to clean up its balance sheet and reorganize into a financially stronger airline. Helane Becker, airline analyst at TD Cowen, said Spirit is likely to look for another buyer, but that a more likely scenario is a chapter 11 filing, followed by a liquidation. She said the recent capital raise has given the company funds to self-finance a potential chapter 11 filing. "We recognize this sounds alarmist and harsh," Becker said. "But the reality is we believe there are limited scenarios that enable Spirit to restructure." The airline is expected to burn cash over the next several years and will have to continue to raise capital to survive, said Conor Cunningham, an analyst at Melius Research. The airline has been among the carriers hardest hit by a snag with RTX's, opens new tab Pratt & Whitney Geared Turbofan (GTF) engines. It is the largest operator of GTF-powered aircraft in the United States. As a result, it had to ground a number of planes last year. The number of grounded planes is estimated to climb steadily in 2024, from 13 in January to 41 in December. Meanwhile, excess industry capacity in its key markets is hurting its pricing power, forcing the company to indulge in promotional activity with steep discounting to fill up its planes.
