(Bloomberg) — Spirit Airlines’ efforts to restructure its debt and avoid a bankruptcy filing have hit a snag after months of talks with bondholders failed to produce a deal, according to people with knowledge of the matter.
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The troubled airline is seeking new financing from its creditors as well as an exchange that would add to its current debt, said the people, who asked not to be identified because the talks are private. Conditions still to be worked out include what assets bondholders would be entitled to and how much new financing would be provided, one of the people said.
Without a deal, the company would go bankrupt, the people said. While a Chapter 11 filing is not imminent, a filing would pose near-term challenges because it would be unclear who would take control.
The Wall Street Journal reported earlier Thursday that Spirit and bondholders have held discussions about the terms of a possible bankruptcy.
Representatives for Spirit and advisors Davis Polk & Wardwell and Perella Weinberg Partners did not respond to requests for comment outside normal business hours.
Spirit has been looking for a financial lifeline since a federal judge in January rejected the proposed sale to rival JetBlue Airways Corp. blocked on the grounds of antitrust law.
The company has until Oct. 21 to strike a deal to extend or refinance bonds due through 2025 to maintain a key partnership with US Bank on its loyalty credit card, a filing shows.
The card is part of the collateral package to cover the coming maturities.
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