(Bloomberg) -- Spirit Airlines Inc. is preparing to file for bankruptcy protection after merger talks with Frontier Group Holdings Inc. broke down, the Wall Street Journal reported.
The budget air carrier is in advanced discussions with bondholders to hammer out a bankruptcy plan that would have support from a majority of creditors, as it struggles with mounting losses and looming debt maturities, the Journal said Tuesday, citing people with knowledge of the matter.
A bankruptcy filing could happen within weeks, it added. Spirit’s shares fell as much as 47% in extended trading.
A spokesperson for Spirit didn’t immediately comment to Bloomberg on the report, while a representative for Frontier declined to comment.
Spirit had held talks with Frontier about filing for bankruptcy to facilitate a takeover by the rival discount carrier, Bloomberg reported last month.
An attempt to sell Spirit via Chapter 11 would likely need the advanced approval of the airline’s creditors in order to fast-track the process so that it can emerge without pausing operations or burning through the rest of its dwindling cash. Early-stage discussions between the air carriers involved working out terms that holders of Spirit’s roughly $2.5 billion of debt would agree to.
--With assistance from Mary Schlangenstein.
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