JBLU - Spirit Airlines Is Not Set For A Chapter 11 Landing In 2024

2024-01-23 09:29:51 ET

Summary

• The article provides a comprehensive overview of Spirit Airlines, Inc.'s current situation, addressing recent events, financial metrics, and the potential path forward.
• The federal judge's rejection of the JetBlue-Spirit merger deal led to a significant drop in Spirit's stock price. The appeal for a potential overturn is considered unlikely.
• Spirit Airlines has tangible assets, mainly its aircraft, with a positive tangible book value. However, the company is facing negative operating income.
• Spirit Airlines has a strong liquidity position, with approximately $1.3 billion in cash, short-term investments, and a revolving credit facility. It has over five quarters of liquidity based on its current cash burn rate.
• The fair value of Spirit Airlines is challenging to determine, as it depends on the company's future actions and restructuring efforts. We see a 50% discount on the current book value, estimating a fair value range of $6 to $8 per share.

Thesis

The last few days have been a whirlwind for Spirit Airlines, Inc. (SAVE). From a resolution against its merger by a federal judge, to a flash-back to the GameStop (GME) meme days of 2021, with David Portnoy taking a long position in the name on January 18 and talking about his endeavor all over social media:

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