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Spirit Airlines raises fourth-quarter forecast, shares rise

by SuperiorInvest

Spirit Airlines aircraft on the runway at Fort Lauderdale Hollywood International Airport. (Joe Cavaretta/South Florida Sun Sentinel/Tribune News Service via Getty Images)

Joe Cavaretta | South Florida Solar Sentinel | fake images

Spiritual airlines On Friday it raised its financial forecast for the fourth quarter of 2023 and said it is looking to refinance its debt, sending its shares soaring more than 17%. A defeat earlier this week came after a judge’s ruling Tuesday blocking JetBlue Airways to buy the budget airline.

Spirit said in a statement that it expects revenue to reach around $1.3 billion, the highest level of its previous forecast, thanks to strong bookings at the end of the year. It estimated adjusted negative margins of 12% to 13%, an improvement from a previous forecast of up to 19% negative margin for the final three months of the year.

The airline also attributed its better estimates to lower fuel costs and other expenses.

Friday’s gains weren’t enough to erase Spirit stock’s losses this week. The stock fell 55% through Friday’s close and lost more than $873 million in market capitalization, as the ruling raised questions about the airline’s future while it was already in an unstable position. Some analysts said the airline could be on track to declare bankruptcy, if not liquidate entirely.

The two airlines said they disagreed with the decision and were evaluating next steps, which could include an appeal.

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Spirit confirmed Friday that it is weighing options to refinance more than $1 billion in debt due in 2025. It previously sold and leased back some of its aircraft. The airline said in the filing that it had $1.3 billion of liquidity at the end of 2023.

The airline had been struggling even before the antitrust ruling and had last year warned of challenges including higher costs, weaker travel demand and a Pratt and Whitney engine problem that would ground dozens of its Airbus planes this year.

Spirit said Friday it expects compensation from Pratt & Whitney, a unit of RTXregarding that engine problem.

“Discussions with Pratt have progressed considerably since October and, although no agreement has been reached to date, the company believes that the amount of compensation it will receive will be a significant source of liquidity over the next two years,” Spirit said. on Friday in securities presentation.

Spirit plans to hold a quarterly call with analysts on February 8 to discuss the results and its outlook.

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