"Spirit Airlines' latest bankruptcy filing has Wall Street tapping its rival to flourish. Frontier Airlines' share price jumped 14.5% on Tuesday, as Deutsche Bank analysts upgraded the stock to a "Buy" rating. They also doubled their 12-month price target from $4 to $8. The stock last closed trading at $5.61. Deutsche Bank's Michael Linenberg wrote that Frontier is "best-positioned to be the biggest beneficiary of Spirit's bankruptcy" because it competes the most with the struggling budget airline."
"Both notes estimated that, for the fourth quarter, around 40% of routes offered by Frontier will also be offered by Spirit. That comes after Frontier announced 20 new routes last week, only two of which didn't overlap with ones offered by Spirit. Syth also said that JetBlue could benefit from its 26% overlap with Spirit's flight network. Southwest Airlines, American Airlines, and Delta Air Lines followed, at just under one in five."
"Meanwhile, as part of its restructuring during the Chapter 11 process, Spirit plans to redesign its network to focus on such key markets. It also said it would "rightsize" its fleet of aircraft. The Deutsche Bank analysts said Spirit has a total fleet of 214, but utilizes 157 of them. 19 of those that are grounded are being prepared to be sold, while the other 38 aren't flying due to an issue with their Pratt & Whitney engi"
Frontier Airlines' stock surged after Deutsche Bank upgraded it to a Buy and doubled its 12-month target from $4 to $8, reflecting investor expectations that Frontier will capture Spirit customers. Analysts estimate roughly 40% route overlap in the fourth quarter between Frontier and Spirit, and Frontier recently announced 20 new routes concentrated on major Spirit hubs. Jefferies flagged JetBlue, Southwest, American, and Delta as potential beneficiaries to varying degrees. Spirit plans to reorganize its network under Chapter 11, rightsize its fleet, and prepare grounded aircraft for sale, likely reducing carrier options and consolidating routes.
Read at Business Insider
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