Shares in Spirit Airlines’ parent company, Spirit Aviation Holdings (FLYYQ), soared as high as 218% on Wednesday morning. This followed media reports that the U.S. government is close to wrapping up a $500 million rescue package for the beleaguered discount carrier.
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According to The Wall Street Journal, which first broke the news, President Donald Trump’s administration is looking to give the rescue loan in exchange for warrants. The financial instrument gives the holder the right, but not the obligation, to buy a company’s stock at a set price before a certain date.
U.S. Government to Rescue Spirit Airlines?
If those warrants are exercised, they could end up making the U.S. government a significant shareholder in Spirit Airlines, the outlet reported, citing people familiar with the matter. The reports come as FLYYQ also soared by about 122% on Tuesday following reports that the carrier has reached out to the U.S. government for financial help.
Spirit Airlines is one of the largest commercial carriers in the U.S., ranking in the top 10 in terms of passengers carried annually. However, such an extension from the U.S. government would be unusual, as such aid is typically provided sector-wide during national emergencies and not just to a single company.
Soaring Jet Fuel Costs Pile on Spirit Airlines’ Troubles
The new reports come as earlier ones had suggested that the troubled airline might be forced to suspend operations in a matter of days without help from the U.S. government. It comes even as the U.S.-Israel-Iran war has sent the prices of jet fuel soaring, heaping additional pressure on the already-struggling budget carrier.
The ultra-low-cost airline has been struggling for years with intense competition from larger rivals.
Is FLYYQ a Buy, Sell, or Hold?
Spirit Aviation lacks analyst coverage on Wall Street. However, TipRanks’ Technical Analysis tool flags a Buy rating for the stock based on two Bearish and three Bullish signals logged over the past month.
