Stayontarget

Ah roger. At another airline with similar problems approaching so just trying to keep a bead on the inspection timelines.

checkgear

And to make matters worse, Sept 20th 2024 is the deadline to refinance the debt expiring next year. Recapitalizing or restructuring (Ch11) of the company may be required per the 10-Q report.

DrSteveBrule

Yeah, the investors are smart. The line of questioning moving to liquidity and assets with Spirit refusing to discuss the bonds...that's a pretty good indicator of where they believe this is all going.



"The Company is currently in discussions with representatives of certain of its bondholders to negotiate the terms for refinancing or extending its existing 8.00% senior secured notes due in September 2025, as well as representatives of certain of its convertible notes due 2026. There is no guarantee that the Company will be able to extend or refinance its existing 8.00% senior secured notes due in September 2025 or its convertible notes due 2026. Absent additional amendment to the Company's agreement with its credit card processor, 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. That may, in turn, compel management to pursue further negotiations with the Company's credit card processor and other parties, or may require various additional measures to conserve or raise additional liquidity, including further recapitalizing or restructuring the business. In addition, the Company is pursuing plans to refinance the fixed-rate debt associated with the Company's owned aircraft. There can be no guarantee that such measures will be successful.

The Company has assessed the impact of the current pricing environment and its planned policy changes on its liquidity requirements over the next 12 months and has concluded that it is probable the Company will have sufficient liquidity to meet its future cash needs with cash and cash equivalents, cash flows from operations, the implementation of discretionary cost reduction strategies, execution of planned sale leaseback transactions related to owned aircraft and, in the event the specified minimum outstanding principal amount of its existing 8.00% senior secured notes due in September 2025 is not extended or refinanced prior to September 20, 2024, renegotiation of terms with the credit card processor and other parties to facilitate payment processing."

CatPilot1

"Whooptydoo. But what does it all mean Basil?"

Aquaticus

Delta has the most lucrative credit card deal. From 4q earnings report “Remuneration from American Express for the December quarter was $1.7 billion, approximately 11 percent higher than the December quarter 2022, and full year remuneration of $6.8 billion grew 22 percent year-over-year. For the full year, diversified revenue streams, including Loyalty, Premium, Cargo, and MRO comprised 55 percent of total revenues.”

In that 4q income was 1.3b and 5.3b for all of 2023. Delta renegotiated an 11 yr Amex deal in 2018 and united renegotiated a less lucrative deal in 2020. United income in the 4q was .8b and 3.3b for 2023. They are much more tight lipped about their chase deal.

DrSteveBrule

Reads to me: six weeks to refinance the bonds, otherwise they on the hook for the 1.1 billion, will also have to pay up on the revolving credit by eoy pending any unlikely renegotiation, since the current deal tied to the bonds is the renegotiated terms.

Spirit claims they have enough cash to survive for one year once they sell the remaining unencumbered aircraft and get a refund for their deposits on aircraft orders.

Assuming no deals are made, they suggest "restructuring". I assume that refers to chapter 11.

nene

This is where IMHO the ULCC's in the US have lost their way. They're unique benefit is the non-stop routes. Even using smaller airports is a benefit to the infrequent traveler as easier to park, travel into/out of. I even fly them when a nonstop with a reasonable frequency is available. They seem to begin this way, but migrate towards competing with the legacies to earn "business travelers" etc and then find out the legacies will defend their turf and have other revenue streams to support them in the aggregate.

Now if your going to do a nonstop thin route, you at least have to be dependable. When you strand people for days/weeks on routes that there is no other option, it makes people leery to try again. So to run a successful ULCC you need to find non-stop routes that bypass the big cities and run a stable operation.

Chimpy

everyone see the investor update this morning? -30% margin for Q3???

https://s24.q4cdn.com/507316502/file...e-08-01-24.pdf

sailingfun

2nd quarter operational results at Delta.

June Quarter 2024 GAAP Financial Results

• Operating revenue of $16.7 billion
• Operating income of $2.3 billion with an operating margin of 13.6 percent
• Pre-tax income of $1.8 billion with a pre-tax margin of 10.6 percent
• Earnings per share of $2.01
• Operating cash flow of $2.5 billion

The Amex cards generated 1.9 billion in non operating revenue however you have to deduct the cost of passengers carried on points to arrive at the profit. That number is hard to come by.

checkgear

Yeah it’s not looking good. I know it’s a slow time of the year but still…

My class date can’t come fast enough.