Airline shares fall amid bankruptcy rumours

While nothing will sink an airline’s investment prospects quite like a formal Chapter 11 filing, even rumors of a looming bankruptcy are often enough to trigger an already imminent downfall.

In the US, Spirit Airlines (SAVE) is the biggest cause of bankruptcy rumors. After a federal judge put the kibosh on JetBlue (JBLU) With plans to acquire it for $3.8 billion in January, the low-cost airline has few options to reverse the string of unprofitable quarters it has reported for more than a year.

While the airline has repeatedly dismissed any bankruptcy speculation, aviation analysts such as TD Cowen’s Helane Becker have argued that “chapter 11 filing followed by liquidation” is the “most likely scenario”.

Related: Spirit CEO says airline won’t file for bankruptcy

The third largest airline in Brazil by passengers carried and the fourth largest in South America, Azul Linhas Areas (THE BLUE) has recently struggled to maintain the profitability of a low-cost model in a country like Brazil – large in size but with high fuel prices and a weak currency.

Current CEO John Rodgerson previously called it “Costo Brasil” (country is spelled with an “s” in Portuguese) to justify the airline’s accumulated losses of more than BRL 30.5 billion ($5.41 billion).

Azul shares fall, but CEO calls reports ‘unfounded’

Financial news outlet Bloomberg reported last week that a US bankruptcy filing is one of the options the airline is exploring amid its debt mountain. Other options named by “people familiar with the matter” would be a merger with rival GOL Linhas Aereas (naked) facing their own financial problems or an equity offering.

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• Walmart store closes, auctions off laptops and flat-screen TVs
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• The famous restaurant files for Chapter 11 bankruptcy

Azul shares fell immediately after the report was released and have only recovered slightly since Thursday, August 29. Having fallen as much as 25% to a peak late in the week, shares ended September 3 down 9.61% at $2.54. Stocks are down 70% year-over-year.

Rodgerson responded by calling the report “baseless” and said the airline was in “active discussions” about financial solutions that did not include bankruptcy. Bloomberg also reported that the airline is also in talks with lenders at Citigroup to avoid bankruptcy by taking on more debt through its cargo division.

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These are the airlines that filed for bankruptcy this year

2024 was a difficult year for many airlines, as more than an average number filed for bankruptcy globally.

Air Malta, Armenia’s FlyArna, as well as Canada’s Lynx Air and Canada Jetlines have declared bankruptcy. In this latest case, the airline that was to fly Canadian tourists to the hot destinations of Florida and Jamaica abruptly canceled all of its flights and told affected travelers to request refunds through their credit cards because they would not be able to provide them.

In May, the flagship nation of small South Pacific carrier Air Vanuatu also left ticket holders stranded after it said the “extensive maintenance requirements” required for the four planes in its fleet were not something it could manage financially.

Liquidators Ernst & Young Australia are currently working with the Vanuatu government to ensure the remote nation of just over 326,000 people is not left without an airline.

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