(Reuters) -Spirit Airlines is preparing to file for bankruptcy protection after merger talks with Frontier Airlines collapsed, the Wall Street Journal reported on Tuesday, citing people familiar with the matter.
The company’s shares fell 39% to $1.8 after the bell. The stock is down nearly 80% this year, while the S&P 500 passenger airline index rose 52%.
The ultra-low-cost carrier is in advanced talks with bondholders to work out a bankruptcy plan that would have the support of a majority of creditors, the report said.
Spirit is preparing a bankruptcy filing within 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 clarified.
The company did not immediately respond to a Reuters request for comment.
The Dania Beach, Florida-based airline has been losing money despite strong travel demand. The country has failed to make a profit in the past five out of six quarters, raising doubts about its ability to manage looming debt maturities.
Spirit said in October it would lay off about 330 pilots by Jan. 31 as part of its efforts to cut costs and shore up its finances.
The company is also selling 23 older Airbus aircraft for $519 million. The sale proceeds are expected to provide $225 million in liquidity next year.
(Reporting by Aishwarya Jain in Bengaluru; Editing by Maju Samuel)
