Discount carrier Spirit Airlines (NYSE:SAVE) had a rough second quarter: It reported Wednesday that revenue plummeted 86% in the period as the COVID-19 pandemic swept across the globe. Passenger traffic plunged and profits vaporized. After earning $1.67 per diluted share in Q2 2019, Spirit flipped to a $1.81 per share GAAP loss in Q2 2020 -- a $144.4 million loss in total.
That's the bad news. The good news is that the airline has found a way to replace that money in its coffers ... by selling stock.
In a Form 424(B)(5) filing with the Securities and Exchange Commission on Wednesday, Spirit Airlines described its plan to sell 9 million shares of common stock at up to $17.25 per share in a dilutive secondary offering. Assuming Spirit gets the price it wants for these shares, the stock offering should raise $155.2 million in cash to keep the airline going -- and cover its losses from Q2.
In an explanatory 8-K filing accompanying the Form 424(B)(5) filing, Spirit cautioned that it may not succeed in raising its targeted sum. Sales, "if any," will take place "from time to time" at whatever price the market will bear, and the company referenced a possibility that it might be incapable of finding buyers for more than 4 million shares.
Still, Spirit has a good chance of getting all that it's aiming for. Although its stock closed Wednesday at just $16.66 per share, news of the planned capital raise helped boost it on Thursday: Shares were trading about 5% higher at $17.50 as of 1:30 p.m. This suggests there will be solid demand for the secondary offering at its maximum price of $17.25 per share.