US discount carrier Spirit Airlines has raised “substantial doubt” over its ability to survive beyond a year, as it faces weak travel demand and shrinking liquidity.
Spirit, which emerged from bankruptcy in March, states that previously-announced measures – including putting pilots on furlough and rebuilding its network – have not turned its fortunes around.
It warns that if it is unable to raise enough cash with fresh measures, creditors could declare the airline to have defaulted on its debt obligations, leading to a series of defaults that the airline would not be able to survive.
Spirit has been impacted by uncertainty in the wake of the US government’s economic policies, which led to a softening of domestic travel demand. It expects these conditions to persist for the rest of the year.
“Management has concluded there is substantial doubt as to the company’s ability to continue as a going concern within 12 months from the date these financial statements are issued,” says the carrier, which is based in Miramar, Florida.
Spirit plans additional “liquidity enhancing” measures, including the sale of “certain aircraft”, excess gate capacity, as well as the elimination of certain fixed costs.
Still, the embattled operator says “there can be no assurance” that these measures will be successful in raising enough cash to meet debt obligations.
Since emerging from bankruptcy in March, Spirit has been in the red: for the quarter to 31 March, it widened its losses to $289 million, against $207 million in the year-ago period.
For the three months ended 30 June, it posted an operating loss of $184 million, compared to $153 million a year ago.
