With merger scuttled, Spirit Airlines faces an uncertain future

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What's next for Spirit Airlines, now that it won't be merging with JetBlue

Spirit Airlines hasn’t made money since before the pandemic, ticket sales haven’t bounced back as quickly as the carrier expected, and dozens of its planes will be grounded at times this year because of a problem with the engines.

A sale to JetBlue represented a lifeline for Spirit, which faces $1.1 billion in debt maturing next year.

But a federal judge in Boston scuttled that plan by ruling Tuesday that JetBlue’s $3.8 billion proposal to buy Spirit violates antitrust law.

Now, some Wall Streeters who follow Spirit are tossing around the B word – bankruptcy. The judge had even hinted at such an outcome during the trial.

After Judge William Young's ruling on Tuesday, Spirit can look for another buyer, or it could remain independent and try to push through a difficult environment for budget airlines.

But “a more likely scenario is a Chapter 11 filing, followed by a liquidation,” wrote Helane Becker, a veteran airline analyst for financial-services firm Cowen. “We recognize this sounds alarmist and harsh, but the reality is we believe there are limited scenarios that enable Spirit to restructure.”

JPMorgan analyst Jamie Baker wasn’t willing to go quite that far, but he too drew a grim picture for Spirit, which has the ticker symbol “SAVE.”

“We are not (yet) predicting an immediate SAVE chapter 11 filing, just an acknowledgement that we cannot reasonably identify a viable return to profitability any time soon,” Baker and colleagues wrote in a note to clients.

Baker noted that Spirit recently raised $419 million by mortgaging many of its planes. But, he added, «from here its liquidity-raising cupboard does not appear robust.”

Spirit did not respond