Report: Spirit Airlines preparing to file for bankruptcy
by Aishwarya Jain, Reuters · KSL.comEstimated read time: 1-2 minutes
WASHINGTON — Spirit Airlines is preparing to file for bankruptcy protection after merger talks with Frontier Airlines broke down, the Wall Street Journal reported on Tuesday, citing people familiar with the matter.
The ultra-low cost carrier is in advanced discussions with bondholders to hammer out a bankruptcy plan that would have support from a majority of creditors, with a filing coming "within weeks," the report said.
Shares of the company were down 39% after the closing bell. The stock has fallen nearly 80% this year, while the S&P 500 passenger airlines index jumped 52%.
Last month, the Wall Street Journal said in a separate report that Frontier Airlines was exploring a bid for Spirit, but the Journal later clarified that Frontier decided not to move forward with such a merger.
Spirit Airlines did not immediately respond to a Reuters request for comment.
The Dania Beach, Florida-based airline has been losing money despite strong travel demand. It has failed to report a profit in the last five out of six quarters, raising doubts about its ability to manage looming debt maturities.
Spirit said in October that it would furlough about 330 pilots on 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 estimated to provide $225 million of liquidity next year.