Business
Spirit Airlines is on shakier ground after avoiding hard decisions in bankruptcy
A Spirit Airlines plane takes off from Oakland International Airport on May 06, 2024 in Oakland, California.
Brandon Bell | Getty Images
In March, Spirit Airlines came out of bankruptcy protection in less than four months and entered a worsening landscape. Consumers were holding off booking flights and U.S. planes were awash in empty seats. Even the most profitable airlines cut the rosy financial forecasts they had issued at the start of the year.
But Spirit, an airline with bright yellow planes that has become synonymous with budget travel in the U.S., now appears on even shakier ground. Last week, five months after getting out of bankruptcy, Spirit warned it might not be able to survive a year without more cash and that its credit card processor was seeking more collateral.
On Thursday, Spirit said it borrowed the entire $275 million available under its revolver. It also reached a two-year extension on its credit card processing agreement with U.S. Bank National Association to hold back up to $3 million a day.
Industry experts said the airline avoided making hard decisions before or during bankruptcy protection, such as renegotiating aircraft leases or shrinking the carrier altogether. Instead, the airline in bankruptcy reached a deal with bondholders, who exchanged debt for equity.
“It made it that much more unlikely for them to succeed without having tackled some of those issues,” said Joe Rohlena, airline analyst at Fitch Ratings, which downgraded Spirit last Friday, saying the company might be unable to avoid a default because of its cash burn.
Bankruptcy attorney Brett Miller, U.S. co-chair of the restructuring department at Willkie Farr & Gallagher who represented the creditors’ committee, said Spirit “didn’t use the tools available to them in Chapter 11” for bigger changes.
Spirit had forecast a net profit of $252 million this year, according to a court filing from December. But its report last week said it instead lost nearly $257 million since March 13, after it exited Chapter 11 through the end of June.
Shares of Spirit Aviation Holdings have dropped close to 58% since its “going concern” warning earlier this month. The stock of other airlines rallied after the cautionary statement. About 10% of Spirit’s seats are on routes with no competition, according to Courtney Miller of Visual Approach Analytics, an aviation research firm.
Signs of strain are showing. Aircraft lessors have reached out to competitor airline executives in recent weeks asking if they would take any of Spirit’s roughly 200 Airbus aircraft, according to people familiar with the matter.
Aviation analytics firm IBA’s chief economist, Stuart Hatcher, said he would have expected Spirit to be more proactive on dealing with aircraft leases during bankruptcy.
“If they’re able to strip 10% of all of their lease rates, that would have had a huge impact on cash flow,” he said.
This doesn’t mean the end of the line for Spirit.
“There’s a lot of incentive to keep airlines alive because there’s a lot of constituencies that would be hurt badly” like employees, consumers and others, said James Sprayregen, vice chairman of financial services company Hilco Global who represented United Airlines and TWA airlines in their respective bankruptcies.
Selling assets
Even before bankruptcy, Spirit had embarked on a project to sell more upmarket products like roomier seats or bundled fares that include seat assignments and baggage, to better compete with larger rivals that have enjoyed a windfall from big-spending customers post-pandemic.
More recently, the carrier has said it is seeking to sell assets like planes, leases and real estate to raise cash. It has also reduced some of its unprofitable flying and last year had announced job cuts and aircraft sales last year to cut costs and raise cash.
Spirit CEO Dave Davis told employees in a memo last week that the changes the Dania Beach, Florida-based company is making “will continue to provide consumers the unmatched value that they have come to expect for many years to come.”
Spirit declined to comment on whether it would file for bankruptcy again or whether lessors are trying to remarket its planes.
“We will not comment on market rumors and speculation,” Spirit said in an emailed statement. “Spirit Airlines is a critical part of the U.S. aviation industry, and we provide high-value travel options to the communities we serve. We have saved consumers hundreds of millions of dollars, whether they fly with us or not. Our focus is on making the necessary changes to better position the company and build a stronger airline. We remain hard at work on many initiatives to protect our business, valued Team Members, partners and Guests.”
Travelers wheel luggage toward Spirit Airlines check-in desk at George Bush Intercontinental Airport, Tuesday, Nov. 21, 2023, in Houston.
Jason Fochtman | Houston Chronicle | Hearst Newspapers | Getty Images
IBA’s Hatcher said it’s getting to be the wrong time of year — the low season, after the peak summer and before the winter holidays — to place aircraft with other airlines, though pricing has been firm. It’s been even stronger for spare Pratt & Whitney engines. The engines for Airbus A321neos that Spirit uses are renting for $15.8 million a month, up about 50% from 2019, according to IBA data.
But some warn that even deep cuts can’t always turn an airline around.
“You have no place to sleep if you burn your bed,” said Brett Snyder, founder of the Cranky Flier travel website, author of a weekly airline industry network analysis and a former airline manager.
Meanwhile, the carrier already plans to furlough hundreds of more pilots, and both aviators’ and flight attendant unions are bracing employees for worse news ahead.
“Spirit is in a fragile financial position, likely more so than at any point in the previous 24 months,” the Association of Flight Attendants-CWA, which represents Spirit’s roughly 5,400 cabin crew members, said in a note to the members on Aug. 12, after Spirit’s warning. “Use this time to assess your financial situation and begin strategizing how best to weather the financial impact that flying cutbacks may have on your household.”
Hundreds of its flight attendants have already taken temporary leaves of absence, which allowed them to keep medical benefits.
Rough few years
Spirit has faced other challenges leading up to its bankruptcy filing last year.
A Pratt & Whitney engine recall grounded many of its aircraft starting in 2023. That same year it reached a deal to merge with fellow budget carrier Frontier Airlines, but shareholders rejected the deal in favor of an all-cash takeover by JetBlue Airways that was ultimately shot down in a federal antitrust case, leaving both carriers on their own.
Frontier was in merger discussions with Spirit last year just before Spirit’s bankruptcy filing, but those talks fell apart.
“They’ve squandered every opportunity to make everything work,” Snyder said.
An oversupply of domestic flights also drove down airfare in recent years, prompting the industry to cut back capacity, and the trend was especially punishing for U.S.-focused carriers. Those low-fare carriers had another problem when wages went up in the wake of the pandemic, upending their low-cost model.
“I think there may have been a bit of optimism on their part in terms of kind of the strategic reset that they had planned,” said Fitch’s Rohlena. “That then came face-to-face with a harder, harsher aviation environment.”
The FTSE 100 closed lower on Thursday, despite gains elsewhere in Europe, held back by a number of stocks trading ex-dividend.
The FTSE 100 index closed down 38.68 points, 0.4%, at 9,216.82. The FTSE 250 ended 60.63 points lower, 0.3%, at 21,744.40 and the AIM All-Share finished down 1.16 points, 0.2%, at 761.21.
On the FTSE 100, insurer Aviva topped the fallers, 3.1% lower as it traded ex-dividend, while LondonMetric Property, down 2.0% and Auto Trader, down 1.6%, also lost ground as they traded without entitlement to their payouts.
Among the risers was sports retailer JD Sports Fashion, up a further 2.8%, building on Wednesday’s gains which followed a well received trading update.
Berenberg raised its share price target to 155 pence from 128p.
“We believe that the 8.5x PE valuation fails to reflect the company’s potential for moderate growth, margin recovery and strong free cash flow,” the broker said in a research note.
In New York, the Dow Jones Industrial Average fell 0.3%, the S&P 500 was 0.1% lower, while the Nasdaq Composite was up 0.1%.
Nvidia was down 1.1% in New York at the time of the London close as concerns over China took some of the gloss off strong results and guidance.
The chip maker has not included any sales from China in its guidance as it grapples with the fallout from its trade war with the US.
Chief executive Jensen Huang said Nvidia is talking to the Trump administration about the “importance of American companies to be able to address the Chinese market”.
Data showed the US economy grew at a stronger pace than expected in the second quarter of the year.
According to the latest reading from the Bureau of Economic Analysis, the US economy rose 3.3% quarter-on-quarter on an annualised basis in the three months to June, upwardly revised from the first estimate which showed 3.0% growth.
The first quarter saw the US economy shrink 0.5%.
The annualised calculation shows how much the economy would expand if that quarterly pace of growth continued for a whole year, according to the BEA.
Friday sees the release of the monthly personal consumption expenditures inflationary gauge. An acceleration in the annual growth rate of core PCE prices to 2.9% is expected for July, from 2.8% in June, according to consensus cited by FactSet.
The yield on the US 10-year Treasury was at 4.22%, trimmed from 4.26% on Wednesday. The yield on the US 30-year Treasury was 4.89%, narrowed from 4.91%.
The pound climbed to 1.3513 dollars late on Thursday afternoon in London, compared to 1.3469 at the equities close on Wednesday. The euro rose to 1.1668 dollars.
In Europe, the Cac 40 in Paris ended up 0.2%, while the Dax 40 in Frankfurt closed little changed.
Back in London, Drax fell 7.5% as it said the UK’s financial regulator had started a probe over the UK energy company’s sourcing for biomass pellets.
The Yorkshire-based power generator said it was notified on Tuesday that the Financial Conduct Authority has commenced an investigation into the company covering the period January 2022 to March 2024.
In a brief statement, Drax said the probe relates to certain historical statements regarding biomass sourcing and the compliance of Drax’s 2021, 2022 and 2023 annual reports with the listing rules and disclosure guidance and transparency rules.
Drax said it will co-operate with the FCA as part of their investigation.
In August 2024, Drax paid £25 million after industry regulator Ofgem found there was an absence of adequate data governance and controls in place that had contributed to the firm misreporting data in relation to the period April 2021 to March 2022.
Elsewhere, Hunting fell 2.9% as it reported increased revenue but lower profit in the first half of 2025 against a “volatile” market backdrop.
Looking ahead, Hunting said oil and gas demand has remained “steady and is likely to remain at a consistent level in the medium to long term”.
But in the near term, the geopolitical and macro-economic outlook remains “choppy”, it added.
PPHE Hotel shares sank 16% as the hotelier lowered full-year earnings guidance, alongside half year results.
The Amsterdam-based operator of Park Plaza and Art’otel hotels, among other brands, expects its full-year earnings before interest, tax, depreciation and amortisation to be “similar” to that of 2024.
A barrel of Brent traded at 67.51 dollars late Thursday afternoon, down slightly from 67.55 on Wednesday. Gold pushed higher to 3,407.04 dollars an ounce against 3,387.91 on Wednesday.
The biggest risers on the FTSE 100 were Anglo American, up 64.00 pence at 2,265.00p, JD Sports Fashion, up 2.74p at 100.10p, Weir, up 42.00p at 2,496.00p, Rio Tinto, up 67.00p at 4,637.00p and DCC, up 56.00p at 4,696.00p.
The biggest fallers on the FTSE 100 were Aviva, down 21.00p at 656.20p, Land Securities, down 12.50p at 559.00p, Endeavour Mining, down 52.00p at 2,492.00p, Relx, down 70.00p at 2,492.00p and LondonMetric Property, down 3.70p at 186.40p.
There are no major events scheduled in Friday’s local corporate calendar.
The global economic calendar on Friday has US personal consumption expenditures data, Canadian GDP numbers, German retail sales figures and CPI prints in France and Germany.
– Contributed by Alliance News
A Dick’s Sporting Goods store is shown in Oceanside, California, U.S., May 15, 2025.
Mike Blake | Reuters
Dick’s Sporting Goods raised its full-year sales and earnings guidance after delivering fiscal second-quarter results that beat expectations.
The company is now expecting comparable sales to grow between 2% and 3.5%, up from a previous range of 1% and 3% and ahead of analyst estimates of 2.9%, according to StreetAccount.
Dick’s said its earnings per share are now expected to be between $13.90 and $14.50, up from a previous range of $13.80 to $14.40. Analysts were expecting $14.39 per share, according to LSEG.
Here’s how the company performed compared with what Wall Street was anticipating, based on a survey of analysts by LSEG:
- Earnings per share: $4.38 adjusted vs. $4.32 expected
- Revenue: $3.65 billion vs. $3.63 billion expected
The company’s reported net income for the three-month period that ended Aug. 2 was $381 million, or $4.71 per share, compared with $362 million, or $4.37 per share, a year earlier. Excluding one-time items related to its acquisition of Foot Locker and other costs, Dick’s posted earnings per share of $4.38.
Sales rose to $3.65 billion, up about 5% from $3.47 billion a year earlier. During the quarter, comparable sales also grew 5%, well ahead of expectations of 3.2%, according to StreetAccount.
“Our performance shows how well our long-term strategies are working, the strength and resilience of our operating model and the impact of our team’s consistent execution,” CEO Lauren Hobart said in a news release. “Our Q2 comps increased 5.0%, with growth in average ticket and transactions, and we drove second quarter gross margin expansion.”
While Dick’s comparable sales guidance came in ahead of expectations, its full-year revenue outlook was slightly below estimates. The company said it’s expecting revenue to be between $13.75 billion and $13.95 billion, below estimates of $14 billion, according to LSEG.
Dick’s said its raised profit guidance includes the impact of tariffs that are currently in effect. In an interview with CNBC’s Courtney Reagan, Dick’s executive chairman Ed Stack said the company has implemented some price increases to offset the impact of higher duties but has been “surgical” in its approach.
“We’ve been able to do what we need to from a pricing standpoint, whether that’s from the national brands or from our own brands, and then other places where we’ve held price, we’ve been able to do that, and we’ve offset it someplace else, which is what you have to do in these in these situations, and the team’s done a great job doing that,” Stack said.
Hobart said during Thursday’s call with analysts that the retailer hasn’t seen its shoppers balking at the “small-level” price increases that have gone into effect.
Hobart said broadly Dick’s hasn’t seen any signs of a consumer spending slowdown as a result of tariffs. She said Dick’s saw growth across all of its key segments during the quarter.
Foot Locker tie-up
The company said its guidance doesn’t include any potential impact from its acquisition of Foot Locker, such as costs or results from the planned takeover, which is expected to close on Sept. 8.
In May, Dick’s announced it would be acquiring its longtime rival for $2.4 billion, giving it a competitive edge in the wholesale sneaker market, most importantly for Nike products, along with a bigger global presence.
Nike is a critical brand partner for both Dick’s and Foot Locker and, at times, their performance is reliant on how well the sneaker brand is doing. During the quarter, Stack said new drops from Nike’s revamped running portfolio, including the Pegasus Premium and the Vomero Plus, are performing so well, it can’t keep the shoes in stock.
“Anything that’s new, innovative and kind of the cool factor, is blowing out,” Stack said.
However, the acquisition also comes with risks. Foot Locker’s business has been in the midst of an ambitious turnaround under CEO Mary Dillon but the company is still struggling.
In the quarter ended Aug. 2, Foot Locker’s sales fell 2.4% and it posted a loss of $38 million. The company faces a range of existential challenges, including its heavy mall footprint, its small online business and a core consumer that often has less discretionary income than the core Dick’s consumer.
Once the businesses are combined, Foot Locker’s struggles could ultimately weigh on Dick’s overall results. On the other hand, the combined company will become the No. 1 seller of athletic footwear in the U.S., which will allow it to better compete against its next biggest rival, JD Sports.
Stack acknowledged to CNBC that Foot Locker’s earnings “were not great” but said the company has a strategy.
“We have a game plan of how to turn this around,” Stack told Reagan. “We think that we can return Foot Locker to its rightful place in the top of this industry and we’re excited to roll up our sleeves and get started with that.”
Dick’s plans to operate Foot Locker as a separate entity. Moving forward, Stack said the company plans to break out details on how each brand is performing when releasing quarterly results. It’ll provide separate details on how Dick’s performed and how Foot Locker performed so investors can get a sense of what’s going on in each part of the business.
Hobart said during Thursday’s earnings call that as part of the acquisition, Dick’s plans to invest in Foot Locker stores and marketing. She also said Dick’s sees opportunities in merchandising and bringing in a new assortment of products.
“As Foot Locker becomes part of the Dick’s family, we are an even more important brand to our wholesale partners, and that’s part of the thesis,” Hobart said.
Earlier this week, Dick’s said it had received all regulatory approvals associated with the transaction. It’s unclear if it had to divest any stores to satisfy the FTC’s requirements.
— CNBC’s Ali McCadden contributed to this report.
Greggs has delayed the appointment of incoming board director Robert Moorhead due to a review into a major accounting error at his previous firm, WH Smith.
The high street bakery chain said Mr Moorhead – the former finance chief at WH Smith – had asked to delay his appointment until a review by Deloitte into the blunder at WH Smith is completed.
He had been due to start at Greggs on October 1 as an independent non-executive director and chair of the audit committee.
Mr Moorhead left WH Smith in 2024 after more than 20 years at the chain.
The delay to his appointment comes after WH Smith saw nearly £600 million wiped off its stock market value last week when it revealed a review of its finances had discovered trading profits in North America had been overstated by about £30 million.
It warned that annual profits would be lower than expected as a result, sending shares down by more than 40% at one stage during the day.
WH Smith said it had found an issue in how it calculated the amount of supplier income it received – leading it to be recognised too early.
It means the group is now expecting a trading profit for the US of about £25 million for the year to August – a cut from the previous £55 million forecast.
As a result, the company lowered its outlook for annual pre-tax profits to around £110 million.
Greggs said Kate Ferry will remain as a non-executive director and will continue as chair of the audit committee in the interim.
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