(Bloomberg) -- Spirit Airlines Inc.’s shares soared the most in 13 years of trading after the carrier secured more time to address a troublesome debt load that has raised the prospect of bankruptcy.
An agreement with US Bank National Association announced late Friday at least temporarily relieved the most immediate threat to Spirit, which has struggled since a federal judge in January blocked its planned acquisition by JetBlue Airways Corp. An engine part defect has grounded some of its planes and fares during the critical summer travel period were restrained by an oversupply of capacity across the industry.
Spirit now has until Dec. 23 to extend or refinance its 2025 bonds to maintain its credit-card processing agreement with the bank. The beleaguered fare discounter previously was facing a Monday deadline. The carrier also said it borrowed all of the $300 million available under a revolving credit line.
Its shares surged 69% to $2.48 at 11:38 a.m. Monday in New York, the most since the carrier began trading publicly in May 2011. The stock had lost 91% of its value this year through Friday.
The deadline extension, along with lower oil prices and the draw of its revolving credit line, “could result in a short-term bounce for Spirit’s shares,” Stephen Trent, a Citi analyst, said in a note. He added that the developments also could lead to “near-term profit-taking” in competitors JetBlue and Frontier Group Holdings Inc., suggesting their shares could fall.
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