Spirit Airlines is preparing to apply for bankruptcy protection post merger negotiations Frontier Airlines broke down, The Wall Street Journal reportedCiting people familiar with the matter.
The company’s shares were down 39% at $1.8 after the bell. The stock has fallen nearly 80% this year, while the S&P 500 Passenger Airlines Index has jumped 52%.
The ultra-low cost carrier is in advanced discussions with bondholders to pursue a bankruptcy plan that would be supported by a majority of creditors, the report said.
Spirit is preparing to file bankruptcy within a few weeks, the report said.
Last month, the WSJ said in a separate report that Frontier Airlines was exploring a bid for Spirit. However, Frontier decided not to move forward with such a merger at this time, Tuesday’s WSJ report made clear.
The company did not immediately respond to a Reuters request for comment.
Denia Beach, Florida-based airline Loss of money despite strong travel demandIt has failed to post profit in five of the last six quarters, raising doubts over its ability to manage impending debt maturities.
Spirit said in October that it would furlough about 330 pilots on Jan. 31 as part of efforts to cut costs and strengthen its finances.
The company is also selling 23 old Airbus aircraft for $519 million. The sale proceeds are expected to provide $225 million of liquidity next year.
