REKT: Spirit Airline Shares Plunge -90% YTD After Bankruptcy Considerations...

Well friends, it's no secret that Spirit Airlines, the beloved home of $30 flights that feel more like a dare than a travel experience, has been in a financial nosedive ever since the pandemic turned the world upside down. And by "nosedive," I mean the airline hasn’t turned a yearly profit in ages. But, according to The Wall Street Journal, Spirit is apparnetly in deep talks with bondholders about the terms of what could be a Chapter 11 bankruptcy filing.  

(Source: Reuters) 

So, how bad is it? Well, let’s just say Spirit’s $3.3 billion debt load makes my student loans look like I somehow got paid to go to college. And with over $1.1 billion of that due within the next year, combined with an October 21st deadline to either reference or extend some of those notes… the pressure is reaaaal AF. 

(Source: View from the Wing) 

Of course, Spirit knew this was coming, which is why they their $SAVE-ing grace would come from merging with JetBlue - giving both airlines a fighting chance against the big dogs like Delta and United. 

However, in January, a federal judge shut down the deal, siding with the Department of Justice’s antitrust concerns. The DOJ basically said, “Thanks, but no thanks,” arguing that the merger would reduce competition and hurt consumers. So, instead of walking down the aisle with JetBlue, Spirit was left standing at the altar... and now, and now bankruptcy court’s looking like their next hot date.

(Source: New York Post) 

Spirit CEO Ted Christie was originally all about the good vibes. Back in June, the guy was practically whistling “Don’t Worry, Be Happy,” telling anyone who would listen that Spirit wasn’t even thinking about Chapter 11. Fast forward to August, and Ted’s optimism evaporated faster than your will to live on a Spirit flight. During an earnings call, he finally admitted that the airline was in “productive conversations” with advisors to figure out how to deal with their Mount Everest of debt. Translation: We're screwed, folks.

(Source: Giphy) 

But then again, let’s not pretend this is just a Spirit problem. The whole budget airline sector has been getting absolutely “rekt” in the post-pandemic world. Sure, people are flying again, but they’re not exactly lining up to pay for the privilege of sitting on a glorified lawn chair while getting nickel-and-dimed for every sip of water. I mean seriously, when you can Delta or United for just a few bucks more and actually have legroom, why on earth would you subject yourself to the Spirit experience?

(Source: Imgflip) 

Now with that said, it’s not just the airline's customer experience that’s tanking - Spirit’s operational issues are the stuff of nightmares also. For instance, they got hit hard by the recall of Pratt & Whitney engines, grounding 10% of their fleet this year. That’s right—10% of their planes are just sitting on the tarmac, collecting dust. As a result, Spirit has been frantically slashing routes ahead of the holiday season and even furloughed 186 pilots to cut costs.

(Source: CH Aviation) 

So clearly, these ever evolving issues, combined with Spirit's looming debt problem screams of a future that’s 6ft under. Which is why as soon as the Wall Street Journal broke the news about Spirit’s potential bankruptcy, investors basically said, “Yeah, we’re out.” 

Shares of Spirit nosedived 30% in after-hours trading, and over the past year, the stock has lost a soul-crushing 90.04% of its value. Translation: If you’re still holding onto Spirit stock, you might want to go ahead and file that one under “bad life choices” and pour one out for your portfolio. Or better yet, pour out several.

(Source: Giphy) 

In the end though, is this news really surprising to anyone? I mean, flying Spirit has always been a bit like playing Russian roulette. You roll the dice on that $30 airfare and hope you don’t end up paying triple that in baggage fees, seat upgrades, and emotional damage. But now? Now it’s Spirit’s management rolling the dice, and the stakes are higher than the altitude of their friggin canceled flights.

(Source: Giphy) 

Meaning, if Spirit really does go belly-up, it’s going to shake up the U.S. airline industry in a big way. Budget carriers like Spirit have always been the scrappy underdogs—the kind of airlines you fly when your wallet’s thin and your standards are even thinner. But their survival in a post-pandemic world with blistering debt issues is giving the industry straight-up deathmatch vibes.

(Source: Giphy) 

Now only time will tell what the future holds for Spirit Airlines going forward, but if you’re an adrenaline junky… now's your time to redeem those miles while you still can. And if you’re a degenerate “BTFD” investor, congrats Spirit is sitting at $1.66/share today (please act accordingly). 

In the meantime, enjoy the fact you avoided Spirits stock as much as I avoided their travel packages and as always, stay safe and stay frosty, friends! Until next time…

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Stocks.News holds positions in United Airlines as mentioned in the article.