Spirit Airlines is preparing to file for bankruptcy protection after merger talks with Frontier Airlines collapsed. The Wall Street Journal reportedsaid a person familiar with the matter.
After the bell, the company's stock fell 39% to $1.8. Stocks have fallen nearly 80% since the beginning of the year, while the S&P 500 passenger airline index has risen 52%.
The ultra-low-cost airline is in talks with bondholders to develop a bankruptcy plan that will be supported by the majority of creditors, according to the report.
Spirit is preparing to file for bankruptcy within the next few weeks, the report added.
WSJ reported in a separate report last month that Frontier Airlines was considering acquiring Spirit. However, Frontier has decided not to proceed with such a merger at this time, a WSJ report on Tuesday revealed.
The company did not respond to Reuters' request for comment.
The Dania Beach, Fla.-based airline continues to lose money despite strong travel demand. The company has not reported a profit in five of the past six quarters, raising questions about its ability to manage looming debt maturities.
Spirit announced in October that it would furlough about 330 pilots starting Jan. 31 as part of a cost-cutting and financial-strengthening effort.
The company is also selling 23 older Airbus aircraft for $519 million. The proceeds from the sale are estimated to provide $225 million in liquidity next year.
