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Spirit Airlines (NYSE:SAVE) faces an uncertain future after a federal judge halted its sale to JetBlue (NASDAQ:JBLU). Analysts predict that the company may now seek alternative options, with the likelihood of a Chapter 11 filing looming large, according to a TD Cowen analyst.
The news had a seismic impact on the market, with Spirit Airlines (SAVE) shares plunging 47% on Tuesday, following the federal judge’s decision to block JetBlue’s planned $3.8 billion acquisition on antitrust grounds. Conversely, JetBlue stock rose 4.9% in the wake of the announcement.
“The reality is we believe there are limited scenarios that enable Spirit to restructure,” TD Cowen analyst Helene Becker wrote in a note on Tuesday, her tone reflective of the gravity of the situation.
In response to the court’s decision, Spirit (SAVE) and JetBlue (JBLU) issued a joint statement articulating their disagreement with the U.S. District Court’s ruling and underlining their intention to evaluate further legal steps as part of the process.
Becker anticipates that Spirit (SAVE) will initially explore the possibility of finding an alternative buyer. However, given the regulatory challenges, securing a new buyer may prove to be a herculean task. She muses upon the possibility of Frontier Group (ULCC) stepping in, but notes that Frontier’s shares have lost 60% of their value since its initial offer for Spirit, casting further doubt on this potential lifeline.
Looking ahead, Becker envisions that Spirit is likely to take the drastic step of filing for Chapter 11 sooner rather than later, as a means of safeguarding its capital. Expressing doubt about the company’s ability to successfully restructure in its current financial state, she emphasizes the pressing need for decisive action.