Spirit Airlines has cautioned investors about its ability to continue as a going concern, citing potential difficulties in raising sufficient cash to meet its financial obligations. This warning was included in the company’s recent shareholder report, just months after it emerged from bankruptcy proceedings with a strategy aimed at restoring profitability. Spirit Airlines provides air travel across the United States, Latin America, and the Caribbean. The company focuses on offering low fares to its customers.
According to the filing with the US Securities and Exchange Commission, a failure to maintain adequate cash reserves could lead creditors to declare the airline in breach of its debt agreements. This scenario could trigger a series of defaults, potentially jeopardising the airline’s future. The company stated that its management has substantial doubt about its ability to continue as a going concern within the next 12 months.
Spirit Airlines emerged from bankruptcy in March after a significant debt reduction of approximately $US795 million. This debt was converted into equity for major bondholders, including Citadel Advisors, Pacific Investment Management Co., and Western Asset Management Co. As part of its bankruptcy exit strategy, the company projected a consolidated net profit of $252 million in 2025 to a federal judge.
In an effort to bolster its financial position, Spirit Airlines is considering selling surplus aircraft engines and its rights to airport gates. The company aims to generate enough cash by year-end to reassure its credit-card processor, which has requested increased collateral as a condition for renewing its contract, set to expire on December 31. Failure to meet this condition could further destabilise the airline’s financial situation.
