## Spirit Airlines Faces Delay in Filing Quarterly Report as Debt Restructuring Talks Continue
Spirit Airlines, Inc. (Spirit) has announced a delay in filing its Quarterly Report on Form 10-Q for the period ending September 30, 2024. This delay stems from the company’s ongoing efforts to restructure its debt obligations, which are consuming significant management time and resources.
Spirit has been actively engaged in negotiations with holders of its senior secured notes due in 2025 and convertible senior notes due in 2026. These discussions, involving a supermajority of the noteholders, are aimed at restructuring the company’s obligations, exploring strategic alternatives, and improving liquidity. While these negotiations have made substantial progress and remain ongoing, they have diverted attention from the processes required to finalize financial statements and related disclosures.
The company expects that if a definitive agreement is reached with the noteholders, the restructuring will likely occur through a statutory process. This process is not anticipated to negatively impact general unsecured creditors, employees, customers, vendors, suppliers, aircraft lessors, or holders of secured aircraft debt. However, it is expected that such an agreement would result in the cancellation of Spirit’s existing equity.
In the event that an agreement with the noteholders cannot be finalized, Spirit will evaluate all available alternatives.
Impact on Q3 2024 Financial Performance:
Spirit estimates that its operating margin and adjusted operating margin for the third quarter of 2024 will be approximately 12 percentage points lower compared to the third quarter of 2023. This decline is attributed to a combination of reduced total operating revenues and increased total operating expenses.
Total operating revenues are projected to have decreased by approximately $61 million compared to Q3 2023, primarily due to lower average yields and the discontinuation of fees for changes and cancellations. Meanwhile, total operating expenses are estimated to have increased by approximately $46 million, with adjusted operating expenses rising by approximately $52 million year over year. This increase is largely attributed to higher aircraft rent expenses, other operating costs, salaries, wages, benefits, landing fees, and other rents. However, these increases have been partially offset by a reduction in aircraft fuel expenses.
The announcement comes at a time when Spirit is facing numerous challenges, including rising fuel costs, increased competition, and a labor shortage. The company’s ability to successfully restructure its debt and improve its financial performance will be crucial for its long-term sustainability.
