Spirit Airlines (SAVE, Financial) saw a significant stock surge, with prices rising by 60.48%. This upward movement comes amid news of the company securing additional time to address its debt issues, thereby alleviating immediate bankruptcy concerns. The extension of deadlines until December 23 gives Spirit Airlines a breather to manage its financial commitments.
Spirit Airlines has been facing various challenges throughout the current year. Among them, a blocked sale to JetBlue Airways raised competition concerns, and the airline also faced engine issues with its RTX fleet. The company was under pressure to refinance or extend its bonds by October 21, which would help maintain its crucial credit card processing agreement for ticket sales, thereby avoiding bankruptcy.
The recent extension, coupled with declining fuel prices and a cash influx from its revolving credit line, has provided Spirit Airlines with a much-needed opportunity to avert financial collapse.
From a stock analysis perspective, Spirit Airlines (SAVE, Financial) remains a challenging investment. The airline displays poor financial strength, with an Altman Z-Score of 0.28, indicating a distress zone that implies potential bankruptcy within the next two years. The Piotroski F-Score stands low at 1, suggesting poor business operation. Furthermore, the Beneish M-Score indicates possible financial result manipulation, with a score of -1.34.
Despite these concerns, the stock's price-to-book (PB) ratio of 0.32 and price-to-sales (PS) ratio of 0.04 both hover near their 10-year lows. The stock is classed as "Distressed" and has been flagged as a "Possible Value Trap" on the GF Value scale, urging investors to exercise caution.
Given its volatile financial situation and recent pressures, Spirit Airlines (SAVE, Financial) remains a speculative choice for risk-tolerant investors. Although the company's stock is close to historical lows, cautious evaluation and closely monitoring strategic developments will be vital for potential investors.
