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Beleaguered ultra-low-cost carrier Spirit Airlines (SAVE) is taking off after announcing a financing maneuver that at the very least will help the company to stave off bankruptcy in the near-term. More specifically, SAVE disclosed that it reached an agreement with U.S. Bank National Association to extend a debt refinancing program until December 23, 2023. This marks the second time that SAVE has secured an extension -- originally, the deadline was set for September 20, but its creditors pushed the date to today.

• For some quick background, in May 2009, SAVE entered into an agreement with U.S. Bank National Association (USBNA) in which USBNA would process payments made to SAVE under the Visa (V) or Mastercard (MA) brand names. If SAVE were to default on its debt, then this agreement would be in jeopardy of being dissolved. With about $1.1 bln of secured debt coming due in less than a year, and the company burning through cash at a rapid rate, extending the debt refinancing deadline was imperative.
• While all airlines have been hurt by the ramp up in capacity over the past several quarters, ultra-low-cost carriers like SAVE have been especially crushed. The big four carriers -- Delta Air Lines (DAL), United Airlines (UAL), American Airlines (AAL), and Southwest Airlines (LUV) -- have been able to mitigate the effects of a supply and demand imbalance by leaning on their premium products and higher-margin international businesses. SAVE, on the other hand, has very little wiggle room in this price war.
• This is evident in SAVE's recent financial results. In Q2, the company posted an operating loss of ($152.5) mln and cash flow from operations of ($270.0) mln compared to $130.7 mln in the year-earlier period. 
• The turbulence facing SAVE really intensified when JetBlue (JBLU) and SAVE announced this past March that they agreed to terminate their merger agreement from July 2022. That deal was facing major regulatory approval hurdles making it highly unlikely that the transaction would be completed by the merger agreements outside date of July 24, 2024. Had that deal gone through, JBLU would have been able to help shelter SAVE from its debt troubles.

The main takeaway is that while today's debt refinancing extension brings some much-needed relief to SAVE, it only really kicks the can down the road a bit. SAVE is still facing substantial going concern risks and it ultimately will need to forge significant refinancing agreements with its lenders to avoid bankruptcy.