A federal judge’s ruling this week blocking JetBlue (JBLU) from acquiring Spirit Airlines (SAVE) has raised questions about what’s next for the carriers — particularly Spirit, whose clock is ticking with $1.1 billion in debt due in September 2025.
On Thursday, Spirit stock sank as much as 20% after a WSJ report that the Miramar, Fla., company is exploring options to refinance its debt following the merger’s collapse.
“We think they’re going to shop themselves around,” TD Cowen senior research analyst Helane Becker told Yahoo Finance on Thursday.
The analyst thinks the ruling will dissuade other airlines from stepping up, forcing Spirit to restructure.
“We think a Chapter 11 filing is more likely than unlikely,” said Becker.
Becker said if the airline is unable to lower its aircraft lease costs and the company is forced to liquidate, JetBlue could acquire some of the assets.
“For JetBlue, we think this is actually not a bad outcome because we think they’ll be able to get those assets in a liquidation of Spirit,” she said immediately following the ruling.
Frontier had made a bid for Spirit almost two years ago but was later outbid when JetBlue came in with an all cash $3.8 billion offer.
If Frontier were to emerge as a buyer again, Susquehanna analyst Christopher Stathoulopoulos says the airline would have a better shot at obtaining regulatory approval than JetBlue did.
“While the operating landscape for US airlines is clearly different today … a merger of two ultra-low-cost carriers could (in theory) have a less onerous regulatory approval process,” the analyst wrote in a note on Wednesday.
Spirit is exploring the option to appeal this week’s ruling but hasn’t announced any formal next steps.
“While we are disappointed with this outcome, we are confident in our strengths and strategy,” a Spirit spokesperson said in a statement on Thursday. “Spirit has been taking, and will continue to take, prudent steps to ensure the strength of its balance sheet and ongoing operations.”
Several analysts downgraded the stock this week amid concerns over the company’s ability to turn itself around.
Spirit’s market cap, which hovered at $6 billion in 2014, was sitting just below $600 million on Thursday.
“We believe SAVE has a difficult path ahead to return to its historical level of growth and profitability,” Bank of America analyst Andrew Didora said earlier this week.
Spirit shares have fallen about 60% since Tuesday’s decision.
Ines Ferre is a senior business reporter for Yahoo Finance. Follow her on Twitter at @ines_ferre.