Spirit Airlines Shares Surge 20% Amid Plan To Sell Planes And Cut Jobs

Posted by Admin October 25, 2024 Jobs

Topline

Spirit Airlines announced in a regulatory filing it would sell some of its older planes and eliminate jobs to reduce costs, causing shares of the budget airline—which dropped after reports the company was considering bankruptcy—to surge 20% on Friday for the stock’s latest rally.

The low-cost airline’s stock has rallied in recent weeks after the company reportedly considered … [+] bankruptcy.

Key Facts

Spirit’s shares increased to over $2.90 as of around 12:30 p.m. EDT, the highest value reached by the stock since Aug. 19 ($2.91).

The company disclosed in a Securities and Exchange Commission filing late Thursday it would sell 23 of its older Airbus aircraft starting this month, which Spirit estimates will bring in about $519 million.

Spirit said it also plans to cut about $80 million in annual costs by a “reduction in workforce” that would be dependent on the airlines’ expected flight volume for 2025, though it’s not immediately clear how many employees would be impacted.

Get Forbes Breaking News Text Alerts: We’re launching text message alerts so you’ll always know the biggest stories shaping the day’s headlines. Text “Alerts” to (201) 335-0739 or sign up here.

Surprising Fact

Despite increasing by 53% on Monday and another 45% on Wednesday, Spirit Airlines’ shares are still down nearly 82% on the year. The stock hit a high for the year of $16.39 as trading opened on Jan. 1. The stock traded at more than $84 at its all-time high in December 2014.

Key Background

Spirit’s stock has soared over the last week, after the airline—which advertises ultra-low fares—was reportedly in talks to enter bankruptcy earlier this month. The company has been financially constrained since a $6.6 billion deal to merge with JetBlue was blocked in January, though CEO Ted Christie later told shareholders he was “encouraged” by the airline’s plans post-merger. Spirit’s efforts to restructure its debt and avoid bankruptcy stalled in recent months, according to Bloomberg, before the airline disclosed an agreement to extend a deadline to refinance its debt until Dec. 23.

What To Watch For

Frontier Airlines has reopened discussions to acquire Spirit, The Wall Street Journal reported, after both companies reached an agreement to merge in 2022 before JetBlue submitted a competing offer. If a deal is reached, it would likely happen as Spirit restructured its debt and liabilities in bankruptcy, people familiar with the matter told the Journal.