A federal judge's ruling this week blocking JetBlue's (JBLU) acquisition of Spirit Airlines (SAVE) is a huge blow to the airline, especially Spirit, which faces $1.1 billion in debt in September 2025 and the clock is ticking. This raises questions about future developments.
Shares of Spirit fell as much as 20% on Thursday after a WSJ report said the Miramar, Fla., company was considering options to refinance its debt following the collapse of the merger.
“I think they're going to shop on their own,” Helaine Becker, senior research analyst at TD Cowen, told Yahoo Finance on Thursday.
Analysts believe the ruling will deter other airlines from entering the space and force Spirit to rebuild.
“We believe filing for Chapter 11 is more likely than not,” Becker said.
Becker said JetBlue could acquire some of the assets if the airline is unable to lower its aircraft lease costs and is forced into liquidation.
“We don't think this is actually a bad outcome for JetBlue because we think they will be able to get these assets in Spirit's liquidation,” she said shortly after the ruling.
Frontier made a bid for Spirit nearly two years ago, but later lost out when JetBlue made an all-cash offer of $3.8 billion.
Susquehanna analyst Christopher Staholopoulos said Frontier would have a better chance of gaining regulatory approval than JetBlue if it were to emerge as a potential buyer again.
“While the U.S. airline operating landscape is clearly different today, a merger between two ultra-low-cost carriers (in theory) would avoid a cumbersome regulatory approval process,” the analyst said in a note Wednesday. There is a possibility that it can be alleviated.”
Spirit is considering its options to appeal this week's ruling, but has not announced any formal next steps.
“While we are disappointed with this outcome, we remain confident in our strengths and strategy,” a Spirit spokesperson said in a statement Thursday. We have taken steps and will continue to take them.” Sheets and ongoing operations. ”
Several analysts downgraded the stock this week due to concerns about the company's ability to turn around.
Spirit's market capitalization, which hovered around $6 billion in 2014, was just under $600 million on Thursday.
“We believe Save has a difficult road ahead of it returning to historic levels of growth and profitability,” Bank of America analyst Andrew Deidra said earlier this week.
Spirit stock has fallen about 60% since Tuesday's decision.
Ines Ferre is a senior business reporter at Yahoo Finance. Follow her on Twitter @ines_ferre.
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