(Reuters) -Spirit Airlines has warned of going-concern doubts, just months after emerging from bankruptcy as weak domestic demand and dwindling cash reserves strain its operations. Adverse market
Spirit Airlines Faces Financial Uncertainty After Bankruptcy Exit
Financial Challenges Facing Spirit Airlines
(Reuters) -Spirit Airlines has warned of going-concern doubts, just months after emerging from bankruptcy as weak domestic demand and dwindling cash reserves strain its operations.
Adverse market conditions such as elevated domestic capacity and weak demand for leisure travel in the second quarter has resulted in a tough pricing environment for airline, it said in its quarterly report on Monday.
The company expects these pressures to persist through the rest of the year, adding to operational uncertainty. Last month, Spirit said it would furlough about 270 pilots, while demoting another 140, to conserve cash.
Operational Uncertainty
The Florida-based airline, known for its bright yellow livery, had filed for bankruptcy protection last November, after years of losses, failed merger attempts and heavy debt.
It was the first major U.S. carrier to file for Chapter 11 since 2011. It emerged from bankruptcy in March after a court approved restructuring backed by its creditors.
Uncertainty stemming from President Donald Trump's sweeping tariffs and budget cuts have prompted travelers to curb spending and reassess plans.
Liquidity and Credit Concerns
The airline said on Monday that its credit-card processor has asked it to set aside more funds as collateral or risk losing its contract, which is set to expire on Dec. 31.
Market Conditions Impacting Demand
To address the concerns, Spirit said it plans to bolster liquidity by selling or monetizing aircraft and real estate and shedding excess airport gate capacity.
Uncertainty over meeting minimum liquidity covenants and the outcome of talks with stakeholders have raised substantial doubt about the company's ability to continue as a going concern over the next 12 months, it said.
(Reporting by Shivansh Tiwary in Bengaluru; Editing by Arun Koyyur)
