By Rajesh Kumar Singh
CHICAGO (Reuters) – Spirit Airlines (NYSE:) said Friday it has reached an agreement with its credit card processor to extend the debt refinancing deadline by two months to December 23.
The extension deal with the US Bank National Association gives Spirit some breathing room to refinance its $1.1 billion loyalty bonds, which mature next year. The previous refinancing deadline was October 21.
The Florida-based discount carrier also said it has fully drawn down its $300 million revolving credit facility and expects to end this year with more than $1 billion in liquidity.
Spirit has been losing money despite strong travel demand. The country has failed to make a profit in the past five out of six quarters, casting doubt on its ability to manage looming debt maturities.
These concerns have impacted the shares, which are down about 91% this year, compared with a 31% rise in the passenger airline index.
In a filing with the regulator, Spirit said it continues to have “active and constructive discussions” with its bondholders about upcoming maturities.
Spirit faces an uncertain future following the collapse of its $3.8 billion merger deal with JetBlue Airways (NASDAQ:). It has warned of a wider loss in the third quarter due to a tough race for price-sensitive leisure travelers and an oversupply of airline seats in the domestic market.
It is also one of the airlines hardest hit by problems with RTX’s Pratt & Whitney Geared Turbofan engines, which have forced the company to ground several planes and left the airline with skyrocketing costs. It is trying to attract premium travelers to increase its revenue and double down on cost savings to save money. It has demoted and fired pilots, offered voluntary unpaid leave to flight attendants and postponed all aircraft deliveries by Airbus.
