Spirit Airlines drew down its entire $275 million revolving credit line and reached a two-year extension with its credit card processor, Elavon, to bolster cash. Management expects both moves to provide breathing room while pursuing a recovery plan to rebuild the customer base, cut costs and return to profitability. The actions follow a warning of "substantial doubt" about the airline's ability to operate over the next year and come after emergence from Chapter 11 with reduced debt and a sizable equity infusion. Post-bankruptcy results showed continued losses, including a nearly $257 million loss between mid-March and the end of June.
After the financial markets closed Thursday, management announced it made two key moves to solidify the Dania Beach-based airline's cash position. The troubled discount carrier said it drew down on the entirety of its $275 million revolving credit line, and negotiated an extended agreement with its credit card processor for another two years. Both steps are expected to give the carrier breathing room as it continues a recovery plan to firm up its customer base, lower costs and eventually return to profitability.
The actions came a little more than a week after the company warned it had "substantial doubt" about its ability to continue flying over the next year unless its business prospects and cash position improved. Spirit, which is still the leading carrier in passengers served at Fort Lauderdale-Hollywood International Airport, emerged from Chapter 11 bankruptcy protection in March with less debt and a sizable equity infusion from major creditors.
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