Shares of Spirit Airlines (SAVE) fell sharply on Wednesday after a report late Tuesday showed the ultra-low-cost carrier is preparing to file for bankruptcy.
The Wall Street Journal (NWSA), citing unnamed sources familiar with the matter, reports that the bankruptcy talks are taking place after a potential merger with Frontier Airlines fell apart. A bankruptcy filing could happen within weeks, The Journal reports, as the airline has faced major losses and looming debt defaults.
Spirit Airlines shares fell nearly 65% to $1.14 per share in pre-market trading on Wednesday. It recovered slightly after markets opened, falling about 57% to $1.38 per share. The stock has lost nearly 92% so far this year.
The talks between Spirit and Frontier came after Spirit’s failed attempt to merge with JetBlue (JBLU). And it wasn’t the first time Frontier and Spirit explored a merger. The airlines had been in on-and-off merger talks since 2016. In February 2022, the companies announced a $2.9 billion definitive merger agreement. That deal fell apart in July of that year.
Spirit left that deal for another offer from another low-cost rival: JetBlue. But after a federal judge blocked the merger over concerns that the combination of the two budget airlines would be anticompetitive, Spirit and JetBlue canceled their $3.8 billion deal last March.
Since then, Spirit has struggled to find its footing (and JetBlue isn’t doing much better). There has been speculation for months that Spirit could go bankrupt.
In a recent filing with the regulator, the company said it had postponed the deadline for refinancing about $1.1 billion in debt until December 23. Spirit also said it had borrowed the entire $300 million revolving credit facility it established in March 2020. The loans under this facility are expected to mature by the end of September 2026. The company also reiterated at the time that it expects to end 2024 with more than $1 billion in loans. liquidity.
— Rocio Fabbro and Melvin Backman contributed to this article.
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