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Spirit Airlines prepares to file for bankruptcy after talks with Frontier Airlines fail: report

Spirit Airlines is preparing to file for bankruptcy protection after merger talks with Frontier Airlines collapsed, the Wall Street Journal reported, citing people familiar with the matter.

The company’s shares fell 39% to $1.8 in after-hours trading. The stock has fallen nearly 80% this year, while the S&P 500 passenger airline index has gained 52%.

The ultra-low-cost carrier is in advanced discussions with bondholders to develop an insolvency plan that would be supported by the majority of creditors, the report said.


Spirit is preparing to file for bankruptcy within weeks, the Wall Street Journal reported. Getty Images

Spirit is preparing to file for bankruptcy within weeks, the report continued.

Last month, the WSJ said in a separate report that Frontier Airlines was exploring a bid for Spirit. However, Frontier has decided not to move forward with such a merger at this time, as clarified in Tuesday’s WSJ report.

The company did not immediately respond to a Reuters request for comment.


Border planes
Frontier Airlines had considered an offer for Spirit. AFP via Getty Images

The Dania Beach, Florida-based airline has been losing money despite strong travel demand. The company 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 strengthen its finances.

The company is also selling 23 older Airbus aircraft for $519 million. It is estimated that proceeds from the sale will provide $225 million in liquidity next year.

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