Spirit Airlines Shares Surge 20% Following Upgraded Fourth-Quarter Forecast
Spirit Airlines saw a dramatic surge in its stock price, with shares jumping over 20%, after revising its financial forecast for the fourth quarter of 2023. The positive news comes after a turbulent week for the budget carrier, which experienced a significant decline in share value following a judge’s ruling that blocked JetBlue Airways from acquiring the company.
According to a filing, Spirit Airlines now anticipates fourth-quarter revenue of approximately $1.3 billion, at the high end of its previous estimate. This optimistic outlook is attributed to strong bookings towards the end of the year. The airline also projects adjusted negative margins of 12% to 13%, an improvement compared to its earlier prediction of up to a 19% negative margin.
Fuel costs and reduced expenses are among the contributing factors to the improved estimates provided by Spirit Airlines. The airline’s shares had experienced a 62% decline and a market capitalization loss of over $1 billion in the past week due to uncertainties arising from the JetBlue Airways acquisition block, leading to concerns about the carrier’s future and potential bankruptcy filings.
In response to the financial challenges, Spirit Airlines confirmed its consideration of refinancing options for its more than $1 billion debt, which matures in 2025. In previous efforts to bolster liquidity, the carrier sold and leased back some of its aircraft. As of the end of 2023, Spirit Airlines reported a liquidity amount of $1.3 billion.
Ahead of the antitrust ruling, Spirit Airlines had encountered multiple difficulties, including higher costs, weakened travel demand, and setbacks from a Pratt & Whitney engine issue, resulting in the grounding of numerous Airbus planes throughout the year. However, the airline announced on Friday that it expects substantial compensation from Pratt & Whitney, a unit of RTX, in relation to the engine problem.
Regarding the ongoing discussions with Pratt & Whitney, Spirit Airlines stated, Discussions with Pratt have progressed considerably since October, and while no agreement has been reached to date, the Company believes the amount of compensation it will receive will be a significant source of liquidity over the next couple of years. The airline plans to conduct a quarterly call with analysts on February 8th to delve into its results and provide insights into its future outlook.
With a focus on providing accurate and engaging information to our global audience, we will continue to monitor the progress of Spirit Airlines and provide updates on its financial endeavors.
