Spirit Airlines, Inc. (NYSE:SAVE) shares are trading higher during the morning session on Friday.
In an exchange filing, Spirit Airlines announced that it had entered into a binding term sheet with GA Telesis on October 18, 2024 for the sale of 23 A320ceo/A321ceo aircraft for an expected aggregate purchase price of approximately $519 million.
Delivery of the aircraft is expected to begin in October 2024 and continue through February 2025, subject to the execution of final documentation and other customary conditions precedent.
On October 24, Spirit Airlines provided an update to investors with preliminary estimates for the third quarter of 2024.
Spirit expects the net proceeds from the recent aircraft sales, combined with the cancellation of related debt, to increase liquidity by approximately $225 million through the end of 2025.
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Estimated adjusted operating margin for the third quarter of 2024 is expected to be approximately 300 basis points higher than the midpoint of prior expectations, driven by stronger-than-expected revenues from the transformation plan.
For the full year 2025, capacity is expected to decline in the mid-teens given aircraft sales, increased retirements of new aircraft due to Pratt & Whitney engine availability issues, the retirement of the remaining A319ceo aircraft and the addition of six new A321neo aircraft.
To support its path to profitability, Spirit has identified approximately $80 million in annualized cost savings that the company plans to implement beginning in early 2025, primarily through workforce reductions in line with expected flight volumes.
The company is also in active discussions with holders of senior secured notes due 2025 and convertible senior notes due 2026 regarding their maturities.
Spirit Airlines had also extended its debt refinancing deadline. Recently, the company announced that it had amended its card processing agreement, extending the deadlines for its 2025 notes.
This follows ongoing negotiations with American National Banking Association regarding Visa And MasterCard payments.
Consistent with previous guidance, Spirit expects to exit 2024 with over $1.0 billion of liquidity, including unrestricted cash, cash equivalents, short-term investments and other liquidity initiatives, assuming successful completion of ongoing efforts.
According to Benzinga Pro, SAVE stock has lost more than 30% in the past six months.
Spirit Airlines faced selling pressure as planes were grounded due to an engine recall and planned takeover of the company JetBlue Airways Corporation (NASDAQ:JBLU) was blocked by regulators.
Spirit has also missed analyst estimates on the top and bottom lines for two quarters in a row.
Earlier this month, the Wall Street Journal reported that Spirit was exploring potential bankruptcy options as the company continues to face financial challenges, including mounting pressure on its $3.3 billion debt load.
Investors can gain exposure to the stock through US Global Jets ETF (NYSE: JETS).
Price promotion: SAVE shares are up 26% to $3.05 at last check Friday.
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This article What’s going on with Spirit Airlines stock Friday? originally appeared on Benzinga.com
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