Spirit Airlines Inc.'s stock is on the rise in premarket trading, fueled by the carrier's optimistic outlook for the holiday season and its ability to match or surpass Wall Street's fourth-quarter revenue projection.

Strengthening Liquidity and Addressing Doubts

Following the termination of its merger deal with JetBlue Airways Corp., Spirit Airlines (SAVE) is addressing concerns about its balance sheet. The airline disclosed that it currently holds $1.3 billion in liquidity as of December 31st and has access to an additional $300 million through a revolving credit facility.

To ensure its competitiveness in the current demand landscape and restore profitability, Spirit Airlines has taken significant steps to shore up its liquidity, as mentioned in a recent filing.

Stock Rebounds After Turbulent Week

After a turbulent week marked by a federal judge's ruling against its proposed $3.8 billion acquisition by JetBlue, Spirit Airlines saw its stock soar by 19% in premarket trading. This rebound comes as a relief, recouping some of the losses incurred earlier this week.

Strong Fourth-Quarter Revenue Forecast

Spirit Airlines is optimistic about its projected fourth-quarter revenue, estimating it to reach $1.32 billion, slightly exceeding FactSet's consensus estimate of $1.3 billion.

The airline expects a modest year-over-year capacity growth of 1% to 2% in the fourth quarter. Furthermore, strong bookings for the peak travel period during Christmas and New Year's will contribute to the higher end of the total revenue forecast.

Favorable Operating Expenses and Cash Generation

Spirit Airlines anticipates lower fuel costs, which will help keep operating expenses under control. In addition, the airline raised $419 million in cash through sale-leaseback transactions on aircraft and repaid existing debt.

Moreover, the company's negotiations with Pratt & Whitney on compensation for financial damages related to geared turbofan (GTF) neo-engine availability issues are expected to provide a significant source of liquidity over the next few years.

Evaluating Debt Refinancing Options

To manage its debt maturities in 2025, including $1.1 billion worth of aggregate principal amount of 8.00% senior secured notes, Spirit Airlines is currently evaluating various options for refinancing.

Overall, with a strong performance in holiday bookings and an efficient cost structure, Spirit Airlines demonstrates confidence in its ability to navigate the current market environment and deliver favorable financial results.

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