(Bloomberg) — Shares of Spirit Airlines Inc. rose the most in thirteen years of trading after the airline was given more time to tackle a burdensome debt burden that has raised the prospect of bankruptcy.
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A deal with the US Bank National Association announced late Friday has at least temporarily removed the most immediate threat to Spirit, which has struggled since a federal judge in January rejected the planned takeover by JetBlue Airways Corp. blocked. An engine part failure has grounded some of its planes and fares during the critical summer travel period have been limited by an oversupply of capacity across the sector.
Spirit now has until Dec. 23 to roll over or refinance its 2025 bonds to maintain its credit card processing agreement with the bank. The beleaguered rate discounter previously had to deal with a Monday deadline. The airline also said it had borrowed all $300 million available under a revolving line of credit.
Shares rose 69% to $2.48 at 11:38 a.m. in New York on Monday, the highest level since the airline began trading publicly in May 2011. The stock had lost 91% of its value this year through Friday.
The extension of the deadline, along with lower oil prices and the extension of its revolving credit line, “could result in a short-term bounce for Spirit’s stock,” Stephen Trent, a Citi analyst, said in a note. He added that the developments could also lead to “short-term profit-taking” at competitors JetBlue and Frontier Group Holdings Inc., suggesting their shares could fall.
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