By Abhijith Ganapavaram
(Reuters) -Spirit Airlines announced on Friday it was assessing options to refinance its 2025 debt maturities amid concerns over its balance sheet, and said its $3.8 billion deal to merge with JetBlue Airways remained intact.
Shares of Spirit shot up 20% to $6.83 in morning trade, after losing more than half their value since a Tuesday ruling by District Judge William Young found the proposed deal could threaten competition in the U.S. aviation market and harm ticket prices.
If successful, the deal will create the fifth-largest carrier in the United States and help Spirit secure its survival.
The ultra-low-cost carrier has been struggling to report profits due to increased operating costs and supply chain issues, creating uncertainty over its ability to pay down debt due to mature next year.
Following the ruling, some analysts said the carrier might contemplate a bankruptcy filing to streamline its balance sheet and reorganize into a financially robust airline.
Reuters reported on Thursday that Spirit was looking at options to refinance its debt and was not considering restructuring.
The Florida-based airline said on Friday its merger agreement with JetBlue "remains in full force and effect", after Reuters reported earlier in the day that Spirit was seeking to convince its rival to appeal the judge's decision.
JetBlue was not immediately available for comment.
Spirit also said it had made considerable progress in compensation talks with supplier Pratt & Whitney over several jets that were grounded due to a powdered-metal issue in its geared turbofan (GTF) engines.
"While no agreement has been reached to date, the company believes the amount of compensation it will receive will be a significant source of liquidity over the next couple of years," Spirit said in a filing.
Pratt & Whitney-parent RTX Corp was not immediately available for comment.
"We don't think a bankruptcy filing is a foregone conclusion albeit GTF compensation, how much work Spirit has done to address fixed costs to support a smaller operation, and the domestic environment are all important variables," Raymond James analyst Savanthi Syth said.
Spirit also forecast fourth-quarter revenue at the top end of its initial guidance. Revenue is expected to be $1.32 billion, compared with analysts' estimates of $1.31 billion, according to LSEG data.
The airline said the refinancing options it was assessing include $1.1 billion debt due in 2025. As of Dec. 31, 2023, Spirit had $1.3 billion of liquidity.