Struggling ultra-low-cost carrier Spirit has brought on outside advisers as it considers its options, including a possible second restructuring.
The Wall Street Journal reported Friday that the airline has retained New York-based financial adviser PJT Partners and consulting firms FTI and Seabury Airline Strategy Group. The advisers are expected to help the carrier weigh its strategic alternatives as it faces a severe cash crunch, downgrades of its creditworthiness, and growing concerns about its long-term viability.
One option could be a second restructuring to address problems that were not dealt with during Spirit’s time in Chapter 11 bankruptcy protection.
The newspaper cited unnamed sources with knowledge of Spirit’s internal deliberations.
The airline sparked a new round of industry speculation last week by drawing down all $275 million it had available under a revolving credit facility. The move prompted rating house Moody’s to downgrade the carrier’s credit rating by two notches.
Spirit has not commented publicly on the Journal’s report.
Spirit emerged from bankruptcy protection in March with a plan to become the “premium” option among U.S.-based budget carriers. It has nixed some aspects of its former no-frills strategy, and now offers larger seating and extra legroom for a fee. It is also building up its presence at Fort Lauderdale–Hollywood International Airport in Florida, near its Dania Beach headquarters.
But the airline remains critically short on cash, and relatively weak domestic leisure demand is hurting the possibility of a financial rebound. Some experts have criticized Spirit for failing to make important decisions during its bankruptcy period, like renegotiating aircraft leases or scaling back operations, that could have alleviated its debt burden.
Earlier this month, the airline warned investors that it may not survive the year as a going concern if it doesn’t raise more cash. It has furloughed around 500 pilots and is in the process of selling 23 Airbus A320 and A321 aircraft.
CNBC has reported that aircraft lessors are contacting other airlines to gauge their interest in potentially acquiring some of Spirit’s aircraft.
