Spirit Airlines (NASDAQ:SAVE) made clear it still wants to merge with JetBlue (NASDAQ:JBLU) as it reported results this morning.
The budget airline reported a loss of $148.7 million, $1.36 per share fully adjusted on revenue of $1.32 billion. The loss was smaller than expected. The company also reported a loss for the year of $448 million, $4.10 per share.
SAVE stock opened today at $7.32 per share, a market capitalization of about $750 million.
Can This Spirit Be Saved?
Spirit CEO Ted Christie was optimistic about the results, but what reporters and analysts wanted to talk about was the merger. That was blocked by a federal judge in January on antitrust grounds. It was the first time that had happened in 20 years. The two airlines have appealed the decision.
If the deal could go through, it would lead to a fat profit for Spirit investors. The stock is now selling for less than 20% of the original merger price. That’s much better than they would do if Spirit now showed a small profit. The court’s decision cut the stock price by 60%, and has not recovered.
Time is running out for Spirit in court, however. The two airlines have until July 24 to complete the deal, or else it would have to be renegotiated. It’s doubtful the current price on it would hold in that event. A hearing on the appeal is set for June.
Meanwhile, the best move for Spirit may be to move toward bankruptcy. That would at least give the industry a political win, even if everyone else loses.
Spirit reported having $865 million in cash and $112 million in securities in its December report. That might be enough to get it through 2025 without new funding if losses can be cut.
SAVE Stock: What Happens Next?
You can speculate on the deal being saved or some white knight coming in to resurrect part of Spirit. But your chances of making money at this point look small.
As of this writing, Dana Blankenhorn 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.
