Spirit Airlines is on the verge of bankruptcy and its stock is plunging 65%

Spirit Airlines (SAVE-5.29%) The stock fell sharply to just over $1 a share early Wednesday after a report late Tuesday suggested the ultra-low-cost carrier was preparing to file for bankruptcy.

The Wall Street Journal (NWSA+0.36%)Citing unnamed sources familiar with the matter, the company reports that bankruptcy negotiations come after a possible merger with Frontier Airlines fell apart. A bankruptcy filing could come within weeks, The Journal reports, as the airline faces steep losses and looming debt costs.

Spirit Airlines stock fell nearly 65% ​​to $1.14 per share in premarket trading on Wednesday. The stock has lost around 80% so far this year.

The conversations between Spirit and Frontier took place after those of Spirit failed attempt in the merger with JetBlue (JBLU-0.71%). And it wasn’t the first time Frontier and Spirit explored a merger. The airlines have been in repeated merger talks since 2016. In February 2022, the companies announced a Definitive merger agreement valued at $2.9 billion. This deal fell apart in July this year.

Spirit abandoned that deal in favor of another offer from another low-cost competitor: JetBlue. But after that a federal judge blocked it Spirit and JetBlue canceled their $3.8 billion deal last March after the merger emerged amid concerns that the combination of the two low-cost airlines could be anticompetitive.

Since then, Spirit has struggled to gain traction (and JetBlue It doesn’t get much better). Speculation has been circulating for months that Spirit could be on the verge of bankruptcy.

In a current one regulatory filingThe company said it pushed back its deadline to refinance about $1.1 billion in debt to Dec. 23. Spirit also said it has borrowed the entire $300 million revolving credit facility it established in March 2020, which is scheduled to mature at the end of September 2026. The company also reiterated at the time that it expected to end 2024 with more than $1 billion in liquidity.

— Rocio Fabbro and Melvin Backman contributed to this article.