UPDATE 2-Spirit Airlines calls speculation about its future 'misguided narrative'
(Adds comments from earnings call throughout, updates shares)
By Rajesh Kumar Singh and Shivansh Tiwary
Feb 8 (Reuters) - Spirit Airlines on Thursday dismissed speculation about its future as a "misguided narrative," saying the ultra-low-cost carrier has boosted liquidity to survive even if its proposed merger with JetBlue fails to close.
The Florida-based carrier said it is making changes to its network and "right sizing" labor costs to boost earnings. It expects to start generating cash in March and operate with a positive cash flow from the second quarter.
Until then, Spirit said its $1.3 billion of liquidity "should be more than adequate to sustain" it. The company is also assessing options for debt that is due to mature in 2025 and 2026, it said.
Speculation about the company's future has swirled since a U.S. federal judge last month blocked its $3.8 billion merger deal with JetBlue. Both airlines have appealed the ruling.
Without the JetBlue deal, analysts say Spirit faces a rough time ahead as the budget carrier has been struggling to return to sustainable profitability. Some analysts have even suggested the company could face bankruptcy if it cannot shore up its finances.
Spirit's CEO Ted Christie, however, dubbed it a "misguided narrative."
"Liquidity is always king," he told analysts after the company's earnings. "We have enhanced our levels to give us the necessary flexibility to successfully close with JetBlue or to pursue our standalone plans."
The company's shares were up 3% in morning trading.
Spirit is among the carriers hardest hit by a snag with RTX's Pratt & Whitney Geared Turbofan (GTF) engines. It is the largest operator of GTF-powered aircraft in the United States.
As a result, it has been forced to ground a number of planes. In January, the airline had an average of 13 grounded neo aircraft and it estimates that number will climb steadily, to an average of about 40 in December 2024.
Spirit has been seeking "fair" compensation from Pratt & Whitney for its financial loss and said the amount it expects to receive will be a "significant" source of liquidity over the next couple of years.
It reported an adjusted loss of $1.36 per share for the fourth quarter, compared with analysts' average estimate of a loss of $1.46 per share, according to LSEG data. (Reporting by Rajesh Kumar Singh in Chicago and Shivansh Tiwary in Bengaluru; Editing by Pooja Desai, Kirsten Donovan)
