A group of bondholders for Spirit Airlines Inc. have organized themselves in light of concerns about the financial position of the company after a planned combination with JetBlue Airways Corp. was scuttled. They have sought legal advice from Akin Gump Strauss Hauer & Feld regarding this matter, which was disclosed to the media by anonymous sources knowledgeable about the situation.
The financial distress of Spirit Airlines became evident when the company’s debt deepened following a recent court ruling. The airline had announced intentions to refinance bonds that were yielding a rate of 35%, seen by some as an indication of the financial strain the air carrier currently operates under.
Disturbingly, the company’s 8% notes trade at around 67.25 cents on the dollar, up from lows of 51.5 cents a day after a federal judge blocked the planned deal with JetBlue on antitrust grounds last month.
Despite multiple attempts to garner a response from both Spirit Airlines and Akin Gump Strauss Hauer & Feld, there has been no comment from either party.
With the financial position of Spirit Airlines seeming precarious, the steps that the group of bondholders will take and how the airline plans to alleviate its financial distress will be keenly watched by investors, the airline industry, and regulators alike. For further details, please refer to Bloomberg’s detailed report, available here.