Spirit Airlines reportedly plans to file for bankruptcy following the collapse of a proposed merger with Frontier Airlines that led to a rapid decline in its shares.
The low-cost carrier hopes bankruptcy protection will help Spirit combat mounting losses and growing debt, according to the Wall Street Journal.
The airline’s executives are said to be in “advanced discussions” to find a way forward that would be satisfactory to its investors and creditors. The Chapter 11 filing is expected to occur “within a few weeks,” the Journal reported Tuesday evening.
Spirit shares fell following news of the aborted merger. Shares closed Wednesday at $1.31 after being valued at $3.22 per share, a drop of more than 59%.
Shares of Frontier Group Holdings saw only minor turbulence on 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 rely on budget airlines. The move caused Spirit’s shares to fall from $15 to $5 each.
Frontier Airlines wanted to buy Spirit in 2022, but JetBlue offered a better deal, according to Fast Company.
