A massive travel company now faces high risk of bankruptcy as the business hovers around $1 billion in debt, sources report.
Spirit Airlines faces a fight for its survival, reports TheStreet.
The company had bet its future on merging with JetBlue, a deal that would have ended Spirit’s low-cost business model.
Like Frontier Airlines, Spirit Airlines operates using a full ‘a la carte’ model.
Customers pay a low price to get a ticket on the plane.
Anything else they want including a seat assignment, carry-on bag, checked baggage, and even water, tea, or coffee costs extra.
Had the merger with JetBlue gone through, Spirit likely would have adopted its new partners’ model.
JetBlue offers low fares with seat assignments and carry-ons included while checked bags still cost extra.
Now that federal regulators blocked that merger, Spirit faces a heavy debt load and continuing losses.
The company lost $214 million in the fourth quarter and $495 million for the year, That followed a $598 million loss in 2022.
“Spirit has maintained a defiant stance, and CEO Ted Christie believes the company has a path forward,” reports the outlet.
“The Spirit team is 100% clear and focused on the adjustments we are currently deploying and will continue to make throughout 2024 to drive us back to cash flow generation and profitability,” he said in the company’s fourth-quarter earnings release.
“Regarding liquidity, we believe our $1.3 billion in total liquidity at year-end 2023 should be more than adequate to get us to our primary goal of getting the business to generate cash,” CFO Scott Haralso said.
“And, while we have confidence in our ability to return to positive cash generation, we will continue to look at other opportunities to further shore up our liquidity resources as we progress through the year.”
Haralso did note that the company has significant debt maturities coming up.
“The company is aware of its 2025 and 2026 debt maturities and is assessing options to address those maturities when the time is appropriate,” he said.
“Spirit has more than $1 billion debt that it has to repay, and soon, but some of that debt is trading for less than par value on public markets, suggesting some market doubt about whether the notes are worth what the company says they are.
One issuance, due 2026, is trading at 74 cents on the dollar.
Another set of notes, due in 2025, are going for 76 cents on the dollar,” the website shared.
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Other Economy News Today
This popular crafts retailer now faces high risk of bankruptcy following several store closures and analytical reports.
Joann is currently grappling with the possibility of a bankruptcy filing, according to Bloomberg.
The retailer has 850 outlets across 50 states.
Joann is exploring options to address its mounting debt, including seeking a deal with lenders and securing additional capital.
The store has not yet responded to requests for comment on the reported bankruptcy plans.
However, reports follow the recent closure of two Joann stores in Ohio, along with previous closures in other states.
Social media discussions have highlighted the impact that store closures might have on local communities.
When a Joann in Wooster closed in February, one customer wrote on Facebook, “I’m really sorry about this. For those of us who enjoy sewing and crafting, it will be a huge loss!”
“We’re sad to see our Wooster store closed,” posted another user.
Financial guidance websites such as CreditRiskMonitor have also flagged Joann as a high-risk candidate for bankruptcy, citing its financial struggles.
The company says the closures were part of “routine store location evaluation and optimization.”
However, Joann reported a net sales decline of 4.1% compared to a year ago in its most recent earnings call.
Established in 1948, Joann offers both online and in-store shopping for sewing and crafting supplies.
Joann remains a popular destination for sewing and crafting enthusiasts across the United States.
But the company’s struggles come during a challenging retail environment, particularly for brick-and-mortar stores, reports The-Sun.
“The outcome of a bankruptcy filing could have significant implications for the company’s employees, customers, and stakeholders.
It could potentially result in the closure of many of its 850 nationwide stores.”
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Also Read: Another Business Now Announces Unexpected Layoffs in Kentucky
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