Spirit Airlines is preparing to file for bankruptcy protection after merger talks with Frontier Airlines nosedived – sparking fears among flyers about mass cancellations.
After news broke about the merger breakdown, the troubled airline’s share price plummeted 45 percent in just seconds – erasing hundreds of millions in market value from the low cost carrier.
The Florida-based airline is in final negotiations with bondholders on a restructuring plan to secure the support of key creditors, the Wall Street Journal reported this evening. It owes more than $3 billion.
The airline could move forward with its bankruptcy filing within the next few weeks, sources familiar with the matter told the WSJ.
Already this year it scaled back growth plans, furloughed staff and inked a plan to sell 23 planes. It is expected that Spirit will file for Chapter 11, a form of bankruptcy that allows it to keep operating as it bids to cut its debts.
However, this could mean significant reductions in routes and staffing. If cost-cutting efforts fall short, the airline may face the prospect of a complete shutdown.
Spirit airlines share price plunged 45 percent in aftermarket trading on Tuesday after news that it was set to file for bankruptcy was reported by the Wall Street Journal. The decline happened in seconds as investors rushed to sell the stock. It briefly recovered before falling back again.
