An otherwise highly turbulent week for Spirit Airlines (NYSE:SAVE) seems to be ending on a high note. Earlier this week, SAVE stock took a steep dive after a U.S. District Court judge blocked JetBlue’s (NASDAQ:JBLU) $3.8 billion acquisition of the discount airline. Following that, shares continued to decline as interest from short sellers mounted and speculation rose that the blocked deal could be the beginning of the end for Spirit. Today, though, the stock is rising after the company stated that the strategic acquisition “remains in full force and effect.” Spirit is also reportedly looking into refinancing its debt, another positive catalyst.
Does this mean that the worst is over for Spirit Airlines? It’s difficult to say, especially as the deal still hasn’t closed and SAVE stock still has plenty of ground to make up. However, this development is worth a closer look.
What’s Happening With SAVE Stock?
Despite a fairly volatile morning, Spirit shares have picked up some momentum today. As of this writing, SAVE stock is up more than 20%. Even with this boost, though, Spirit remains in the red by more than 50% for the past five days, demonstrating how much trouble the stock has experienced.
While Reuters reports that Spirit claims the JetBlue deal is not actually dead, JetBlue has issued no statement on the subject as of yet. As of now, it remains uncertain how and whether the acquisition will proceed.
Still, Spirit is also focused on finding ways to refinance its 2025 debt maturities. This is a reassuring development for investors who likely needed reasons to keep betting on SAVE stock. Per Bloomberg:
“As of Dec. 31, the company had $1.3 billion of liquidity, including unrestricted cash and equivalents, short-term investment securities and $300 million of liquidity under a revolving credit facility. It’s in negotiations with aircraft parts-maker Pratt & Whitney over compensation for issues with the geared turbofan engine, which Spirit said represents a “significant source of liquidity over the next couple of years.”
Even if the company is able to shore up more liquidity, it will need to find a sound and actionable plan for refinancing its debt. However, Wall Street analysts don’t seem too optimistic. According to Bloomberg, Raymond James analyst Savanthi Syth recently stated that the firm doesn’t think a bankruptcy filing is a “foregone conclusion” for Spirit. As of this writing, no analysts rate SAVE stock as a buy on TipRanks.
Will Spirit Stay Grounded?
As of now, it’s difficult to say what the future looks like for Spirit, which hasn’t been stable for some time. Until further progress is made with the JetBlue acquisition, it will likely be hard for many investors to confidently bet on shares, even amid talks of debt restructuring. SAVE stock also has a lot of ground to make up and, despite today’s progress, it’s facing a difficult road ahead.
Investors seeking exposure to the airline sector have had better names than Spirit to bet on long before this week’s news sent SAVE stock down. Currently, all signs point to a highly questionable future for shares of Spirit Airlines.
On the date of publication, Samuel O’Brient did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
