Spirit Airlines is facing severe financial turbulence as its stock price nosedived by over 36% on Friday, hitting a record low of $1.38. The budget carrier is grappling with a staggering $3.3 billion debt burden, with more than $1.1 billion due within a year. This financial strain has been exacerbated by the failed merger with a competitor and intensifying industry competition. In response, the airline has implemented drastic measures, including route cuts, workforce reductions, and capacity downsizing, to improve liquidity.
Potential Restructuring on the Horizon
As the company's financial woes deepen, Spirit Airlines is reportedly considering filing for Chapter 11 bankruptcy protection. This move would allow the airline to restructure its debts and potentially secure new financing. Insiders reveal that Spirit is currently in talks with creditors about the terms of such a proceeding. While bankruptcy could offer a lifeline to the struggling carrier, it poses significant risks for shareholders, potentially resulting in substantial losses. The market's swift reaction to these reports underscores the gravity of Spirit Airlines' predicament.
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