Spirit Airlines is reportedly planning to file for bankruptcy following the collapse of a proposed merger with Frontier Airlines that sent its stock into rapid decline.
The low-cost carrier is hoping bankruptcy protection will help Spirit combat growing losses and increasing debt, according to the Wall Street Journal.
Airline executives are said to be in “advanced discussions” to figure out a path forward that would be satisfactory to its investors and creditors. The Chapter 11 filing is expected to come “within weeks,” the Journal reported late Tuesday.
Spirit stock went into a tailspin following news of the aborted merger. Shares closed Wednesday at $1.31 after being valued at $3.22 per share — down over 59%.
Stocks in Frontier Group Holdings experienced only slight turbulence Wednesday, closing at $6.55 per share, down less than 2% from $6.67.
In January, a federal judge blocked JetBlue Airways’ $3.8 billion bid to acquire Spirit Airlines when the Justice Department argued the deal would harm consumers by creating higher prices and fewer options for those who depend on discount airlines. That ruling sent Spirit shares crashing from $15 to $5 each.
Frontier Airlines wanted to buy Spirit in 2022, but JetBlue came in with a better offer, according to Fast Company.