The plan going forward
08-29-2024, 06:00 AM
#352
Gets Weekends Off
Thread Starter
Joined APC: Oct 2017
Posts: 3,232
https://seekingalpha.com/article/471...-silver-lining
good read!
somebody mentioned in the comments there September 20 we will get some news on Spirit refinancing their debt. hopefully something good to happen the yellow and blac…er… I mean turquoise.
good read!
somebody mentioned in the comments there September 20 we will get some news on Spirit refinancing their debt. hopefully something good to happen the yellow and blac…er… I mean turquoise.
08-29-2024, 07:01 PM
#353
Gets Weekends Off
Joined APC: Dec 2022
Posts: 864
https://seekingalpha.com/article/471...-silver-lining
good read!
somebody mentioned in the comments there September 20 we will get some news on Spirit refinancing their debt. hopefully something good to happen the yellow and blac…er… I mean turquoise.
good read!
somebody mentioned in the comments there September 20 we will get some news on Spirit refinancing their debt. hopefully something good to happen the yellow and blac…er… I mean turquoise.
This is the most dangerous article that I've seen on Seeking Alpha!
Spirit is under pressure to renegotiate/refinance its $1.1 billion bond by SEPTEMBER 20, 2024. They don't have time to seek an acquiror.
Spirit doesn't have $1.1 billion in available cash to repay it's $1.1 billion, September 2025 bond. They've been in negotiation with bondholders, according to management, since early 2024 (Seeking Alpha earnings transcript, May 6, 2024).
There is now a time limit, which obviously can be extended. SAVE's credit card processor said it will continue to process payments for SAVE as long as the debt is refinanced by September 20, 2024. From Spirit's 10-Q report, filed August 1, 2024 - which management told us to read in their earnings conference call:
" the failure to refinance or extend the specified minimum outstanding principal amount of the Company's 8.00% senior secured notes due 2025 by September 20, 2024, will result in an advancement of the termination date of such agreement from December 31, 2025 to December 31, 2024."
As of June 30, 2024, Spirit had an "air traffic liability" of $497.0 million, again, according to it's SEC form 10-Q. This is largely money that customers charged on their credit cards to pay for tickets for future travel (also include those who paid cash). The credit card processor has given Spirit roughly $497 million. If Spirit does decide to declare bankruptcy, the credit card processor owes refunds to all customers who prepaid tickets. It receives little or nothing from Spirit (unsecured creditor). It could be a roughly $497 million WRITE-OFF for the credit card company. If Spirit doesn't refinance it's $1.1 billion bond, it's processor will not accept credit cards on Spirit's behalf as of December, 31, 2024. It doesn't want the risk of Spirit's bankruptcy any longer.
But wait, there's more!
On Spirit's second quarter conference call, an analyst, Dan McKenzie asked about Spirit's discussions with its credit card processor:
"Daniel McKenzie
Understood. Second question here is on the credit card processing agreement just per the 10-Q this morning. It looks like there is a September 20th date in it and a $200 million deposit into a, compensating for a compensating balance arrangement. And, that is a term that I have I don't think I have seen before, but it sort of looks like a soft, credit card holdback. And I'm just wondering if you can just elaborate a little bit that. Is that is that at risk of being, a hard, credit card holdback at some point?
Edward Christie
No. It is just purely a deposit account, at the parent bank of our credit card processor. It is unrestricted cash and reported as such on the balance sheet. And yes, there is a date in that agreement with Elavon that aligns with our plans for our negotiations with the existing bondholders and their advisors to find a solution for the 2025 loyalty notes."
Seeking Alpha Earnings transcript, August 1, 2024
The credit card company asked Spirit to deposit $200 million at its bank. The bank hasn't seized the funds (the "hard credit card holdback" in the question and "No" in the answer), but the credit card company has the right to take a consumer's credit card payment and put it into an escrow account rather than giving the money to Spirit. If this were to happen, Spirit doesn't receive cash from selling advance tickets until the customer actually flies. It's incoming cash declines while it continues to incur costs to fly customers. The $497 million air traffic liability, at June 30th, turns into real cash expenses with no additional cash receipts for providing the service.
A deadline is only a word. There's nothing magic about September 20th that can't be delayed until October 1st. Or November 1st.
Spirit has been given an ultimatum by its credit card company. Essentially, "make me feel comfortable about sending you $400+ million of cash or I won't help you collect credit card payments from customers who want to buy tickets." Something like that. I obviously don't know for certain.
It should be clear to investors, but wasn't clear at all to Noah's Ark, that Spirit is running out of time to fix it's business. The game clock is set at 23 days, as of August 29th. The game is highly likely to run into overtime. But we are no longer in the first, second or third quarter of the game. I'm not going to guess which minute of the fourth quarter we're in or how long overtime might be. I'll let each reader decide.
08-29-2024, 09:20 PM
#354
Line Holder
Joined APC: May 2017
Position: Space Shuttle
Posts: 58
You’re saying there is a chance
From the comments
This is the most dangerous article that I've seen on Seeking Alpha!
Spirit is under pressure to renegotiate/refinance its $1.1 billion bond by SEPTEMBER 20, 2024. They don't have time to seek an acquiror.
Spirit doesn't have $1.1 billion in available cash to repay it's $1.1 billion, September 2025 bond. They've been in negotiation with bondholders, according to management, since early 2024 (Seeking Alpha earnings transcript, May 6, 2024).
There is now a time limit, which obviously can be extended. SAVE's credit card processor said it will continue to process payments for SAVE as long as the debt is refinanced by September 20, 2024. From Spirit's 10-Q report, filed August 1, 2024 - which management told us to read in their earnings conference call:
" the failure to refinance or extend the specified minimum outstanding principal amount of the Company's 8.00% senior secured notes due 2025 by September 20, 2024, will result in an advancement of the termination date of such agreement from December 31, 2025 to December 31, 2024."
As of June 30, 2024, Spirit had an "air traffic liability" of $497.0 million, again, according to it's SEC form 10-Q. This is largely money that customers charged on their credit cards to pay for tickets for future travel (also include those who paid cash). The credit card processor has given Spirit roughly $497 million. If Spirit does decide to declare bankruptcy, the credit card processor owes refunds to all customers who prepaid tickets. It receives little or nothing from Spirit (unsecured creditor). It could be a roughly $497 million WRITE-OFF for the credit card company. If Spirit doesn't refinance it's $1.1 billion bond, it's processor will not accept credit cards on Spirit's behalf as of December, 31, 2024. It doesn't want the risk of Spirit's bankruptcy any longer.
But wait, there's more!
On Spirit's second quarter conference call, an analyst, Dan McKenzie asked about Spirit's discussions with its credit card processor:
"Daniel McKenzie
Understood. Second question here is on the credit card processing agreement just per the 10-Q this morning. It looks like there is a September 20th date in it and a $200 million deposit into a, compensating for a compensating balance arrangement. And, that is a term that I have I don't think I have seen before, but it sort of looks like a soft, credit card holdback. And I'm just wondering if you can just elaborate a little bit that. Is that is that at risk of being, a hard, credit card holdback at some point?
Edward Christie
No. It is just purely a deposit account, at the parent bank of our credit card processor. It is unrestricted cash and reported as such on the balance sheet. And yes, there is a date in that agreement with Elavon that aligns with our plans for our negotiations with the existing bondholders and their advisors to find a solution for the 2025 loyalty notes."
Seeking Alpha Earnings transcript, August 1, 2024
The credit card company asked Spirit to deposit $200 million at its bank. The bank hasn't seized the funds (the "hard credit card holdback" in the question and "No" in the answer), but the credit card company has the right to take a consumer's credit card payment and put it into an escrow account rather than giving the money to Spirit. If this were to happen, Spirit doesn't receive cash from selling advance tickets until the customer actually flies. It's incoming cash declines while it continues to incur costs to fly customers. The $497 million air traffic liability, at June 30th, turns into real cash expenses with no additional cash receipts for providing the service.
A deadline is only a word. There's nothing magic about September 20th that can't be delayed until October 1st. Or November 1st.
Spirit has been given an ultimatum by its credit card company. Essentially, "make me feel comfortable about sending you $400+ million of cash or I won't help you collect credit card payments from customers who want to buy tickets." Something like that. I obviously don't know for certain.
It should be clear to investors, but wasn't clear at all to Noah's Ark, that Spirit is running out of time to fix it's business. The game clock is set at 23 days, as of August 29th. The game is highly likely to run into overtime. But we are no longer in the first, second or third quarter of the game. I'm not going to guess which minute of the fourth quarter we're in or how long overtime might be. I'll let each reader decide.
This is the most dangerous article that I've seen on Seeking Alpha!
Spirit is under pressure to renegotiate/refinance its $1.1 billion bond by SEPTEMBER 20, 2024. They don't have time to seek an acquiror.
Spirit doesn't have $1.1 billion in available cash to repay it's $1.1 billion, September 2025 bond. They've been in negotiation with bondholders, according to management, since early 2024 (Seeking Alpha earnings transcript, May 6, 2024).
There is now a time limit, which obviously can be extended. SAVE's credit card processor said it will continue to process payments for SAVE as long as the debt is refinanced by September 20, 2024. From Spirit's 10-Q report, filed August 1, 2024 - which management told us to read in their earnings conference call:
" the failure to refinance or extend the specified minimum outstanding principal amount of the Company's 8.00% senior secured notes due 2025 by September 20, 2024, will result in an advancement of the termination date of such agreement from December 31, 2025 to December 31, 2024."
As of June 30, 2024, Spirit had an "air traffic liability" of $497.0 million, again, according to it's SEC form 10-Q. This is largely money that customers charged on their credit cards to pay for tickets for future travel (also include those who paid cash). The credit card processor has given Spirit roughly $497 million. If Spirit does decide to declare bankruptcy, the credit card processor owes refunds to all customers who prepaid tickets. It receives little or nothing from Spirit (unsecured creditor). It could be a roughly $497 million WRITE-OFF for the credit card company. If Spirit doesn't refinance it's $1.1 billion bond, it's processor will not accept credit cards on Spirit's behalf as of December, 31, 2024. It doesn't want the risk of Spirit's bankruptcy any longer.
But wait, there's more!
On Spirit's second quarter conference call, an analyst, Dan McKenzie asked about Spirit's discussions with its credit card processor:
"Daniel McKenzie
Understood. Second question here is on the credit card processing agreement just per the 10-Q this morning. It looks like there is a September 20th date in it and a $200 million deposit into a, compensating for a compensating balance arrangement. And, that is a term that I have I don't think I have seen before, but it sort of looks like a soft, credit card holdback. And I'm just wondering if you can just elaborate a little bit that. Is that is that at risk of being, a hard, credit card holdback at some point?
Edward Christie
No. It is just purely a deposit account, at the parent bank of our credit card processor. It is unrestricted cash and reported as such on the balance sheet. And yes, there is a date in that agreement with Elavon that aligns with our plans for our negotiations with the existing bondholders and their advisors to find a solution for the 2025 loyalty notes."
Seeking Alpha Earnings transcript, August 1, 2024
The credit card company asked Spirit to deposit $200 million at its bank. The bank hasn't seized the funds (the "hard credit card holdback" in the question and "No" in the answer), but the credit card company has the right to take a consumer's credit card payment and put it into an escrow account rather than giving the money to Spirit. If this were to happen, Spirit doesn't receive cash from selling advance tickets until the customer actually flies. It's incoming cash declines while it continues to incur costs to fly customers. The $497 million air traffic liability, at June 30th, turns into real cash expenses with no additional cash receipts for providing the service.
A deadline is only a word. There's nothing magic about September 20th that can't be delayed until October 1st. Or November 1st.
Spirit has been given an ultimatum by its credit card company. Essentially, "make me feel comfortable about sending you $400+ million of cash or I won't help you collect credit card payments from customers who want to buy tickets." Something like that. I obviously don't know for certain.
It should be clear to investors, but wasn't clear at all to Noah's Ark, that Spirit is running out of time to fix it's business. The game clock is set at 23 days, as of August 29th. The game is highly likely to run into overtime. But we are no longer in the first, second or third quarter of the game. I'm not going to guess which minute of the fourth quarter we're in or how long overtime might be. I'll let each reader decide.
this information seems quite relevant. The bonds and their maturity date can be negotiated but the rider of the credit card agreement is substantial. Some serious financial gymnastics going on. But hey DOJ thinks a west coast monopoly is ok so maybe they will allow PE or another merger to happen. Either way we face a **** storm. Good look mngt. Earn your raise fellers, good luck to the 200 low time pilots let go. Hope we get them back next year and our engine issues are resolved.
08-29-2024, 11:03 PM
#355
Gets Weekends Off
Joined APC: Apr 2022
Posts: 1,165
this information seems quite relevant. The bonds and their maturity date can be negotiated but the rider of the credit card agreement is substantial. Some serious financial gymnastics going on. But hey DOJ thinks a west coast monopoly is ok so maybe they will allow PE or another merger to happen. Either way we face a **** storm. Good look mngt. Earn your raise fellers, good luck to the 200 low time pilots let go. Hope we get them back next year and our engine issues are resolved.
08-30-2024, 04:25 AM
#356
Gets Weekends Off
Joined APC: Dec 2019
Position: A320 For Your Health
Posts: 327
What's in it for the bondholders? Knowing Spirit will continue to lose money for at least another year and a half by their own admission, what deal can even be struck? A better return? I doubt it.
08-30-2024, 04:54 AM
#357
Gets Weekends Off
Joined APC: Jul 2023
Posts: 343
They get a longer rwy for merger prospects. Everyone and their mom is trying to get Spirit sold, rather than liquidated.
08-30-2024, 08:37 AM
#358
New Hire
Joined APC: Apr 2024
Posts: 1
Lots of people quoting and making a big deal out of these "seekingAlpha" posts please take a second to see who is writing them. It is a group of two dudes freshly out of undergrad. Interesting book report/summary of available information but not the people you look to when trying to figure out what our path moving forward might be.
08-30-2024, 01:52 PM
#359
Gets Weekends Off
Joined APC: Feb 2013
Position: A320
Posts: 726
this information seems quite relevant. The bonds and their maturity date can be negotiated but the rider of the credit card agreement is substantial. Some serious financial gymnastics going on. But hey DOJ thinks a west coast monopoly is ok so maybe they will allow PE or another merger to happen. Either way we face a **** storm. Good look mngt. Earn your raise fellers, good luck to the 200 low time pilots let go. Hope we get them back next year and our engine issues are resolved.
08-30-2024, 07:49 PM
#360
Gets Weekends Off
Joined APC: Dec 2022
Posts: 864
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