Spirit Airlines (SAVE) is looking to shore up extra cash where it can as it faces bankruptcy rumors.
The ultra-low-cost carrier said in a regulatory filing Thursday that it has entered into an agreement with aerospace company GA Telesis for the sale of some of its aircraft. The total price tag on the agreement is approximately $519 million, Spirit disclosed.
Through the end of next year, the sale is expected to give the struggling airline a $225 million infusion. While it expects to end this year with $1 billion in liquidity, Spirit is embarking on a cost-cutting scheme early next year that it said will save it about $80 million annually.
Spirit has continued to struggle financially after a federal judge blocked its proposed $3.8 billion merger with JetBlue Airways (JBLU) in March over concerns that the combination of the two budget airlines would be anti-competitive.
Speculation has swirled for months that Spirit might be approaching insolvency. Earlier this month, Spirit stock tanked following a Wall Street Journal (NWSA) report that the airline may soon file for bankruptcy.
Spirit said in the filing, however, that it estimates its third-quarter adjusted operating margin to come in on the higher end of its previous guidance range, thanks to stronger-than-expected revenue and early results from its transformation plan exceeding expectations.
Shares of Spirit were up more than 8% in pre-market trading Friday. The company will report its full third-quarter earnings in mid-November.
The Journal reported Tuesday that Spirit and Frontier Airlines (ULCC) may be in early talks to revive old merger plans. A deal would likely be part of Spirit’s possible debt restructuring plans, according to the publication.
In a separate filing last week, the company said it pushed back its deadline to refinance roughly $1.1 billion in debt until Dec. 23. Spirit also said that it had borrowed the entirety of a $300 million revolving credit facility it had set up in March 2020. Borrowings under that facility are scheduled to mature at the end of September 2026.
