Spirit Airlines announces cash raise as revenues miss expectations
Miramar-based Spirit Airlines announced Wednesday it plans to raise cash through debt and equity sales as it seeks to navigate the ongoing economic effects of the coronavirus pandemic.
In a filing with the Securities and Exchange Commission, the discount airline said it would sell 12 million shares in a public offering and issue $150 million in convertible senior notes due 2025. The filing did not specify collateral details.
Meanwhile, the company reported first-quarter revenues Wednesday of $771.1 million, missing analysts’ expectations of $825.7 million. Its net loss of $0.41 per share was narrower than the forecast $0.62 per share loss.
Wednesday’s announcement was made after the closing bell of the New York Stock Exchange. Shares were trading down as much as 13% after hours. For the year, Spirit’s stock is down about 72% — about in line with other airlines who have seen share prices plummet amid the coronovirus pandemic. On April 13, FitchRatings downgraded Spirit from BB to BB-, along with almost all other North American airlines.
Spirit had been in the midst of an impressive turnaround that included record passenger volumes and improved on-time performance.
Spirit confirmed Wednesday it had entered into a Payroll Support Program Agreement with the U.S. Department of Treasury through which it expects to receive a total of approximately $335 million in 2020. The funds will be used “exclusively to pay for salaries and benefits for the company’s Team Members, and the receipt of the funds will subject us to certain ongoing restrictions,” the company said.
Spirit also said it applied for a loan from the Treasury under the CARES Act; its maximum potential availability under the program is approximately $741 million.
Also, the company said president and CEO Ted Christie had reduced his base salary by 30%, while all senior and executive vice presidents and board members have also temporarily reduced their compensation.
“We estimate our current average daily cash burn rate is about $4 million and we are evaluating initiatives to further reduce that amount should demand not begin to rebound in the coming months,” said Scott Haralson, Spirit’s chief financial officer, in a release.
This story was originally published May 6, 2020 at 6:36 PM.
