:max_bytes(150000):strip_icc()/GettyImages-2172439643-fff8451b3cc349b6b1993c5647e7e712.jpg "Spirit Airlines Stock Sinks on Report Frontier Merger Talks Break Down")
KEY TAKEWAYS
- Spirit Airlines shares plunged Wednesday on a report that the budget carrier is getting ready to file for bankruptcy protection after revived merger talks with Frontier Airlines parent Frontier Group Holdings collapsed.
- According to The Wall Street Journal, Frontier has pulled out of merger talks with Spirit, which has also been in advanced talks with bondholders to work out a bankruptcy plan.
- “A bankruptcy filing is expected to happen within weeks,” the report said.
- The airline, which is facing looming debt maturities, opened the door to a possible bankruptcy filing, saying it is “unable” to file its quarterly results and that it would cancel its “existing equity” if ongoing talks with bondholders don’t succeed.
Spirit Airlines (SAVE) shares plunged Wednesday on a report that the budget carrier is getting ready to file for bankruptcy protection after revived merger talks with Frontier Airlines parent Frontier Group Holdings (ULCC) collapsed.
The airline, which is facing looming debt maturities, opened the door to a possible bankruptcy filing, saying it had filed a Form 12b-25 with the Securities and Exchange Commission (SEC) to inform the regulator that it is “unable” to file its quarterly results and that it would cancel its “existing equity” if ongoing talks with bondholders don’t succeed.
“If a definitive agreement with the noteholders is not reached, the company will consider all alternatives,” Spirit said.
According to The Wall Street Journal, Frontier has pulled out of merger talks with Spirit, which has also been in advanced talks with bondholders to work out a bankruptcy plan. “A bankruptcy filing is expected to happen within weeks,” the report said.
Spirit is struggling with surging losses and said last month it plans to cut jobs and sell some planes as it tries to shore up its finances.
Spirit also last month extended a deadline for debt refinancing with Visa (V) and Mastercard (MA).
Spirit’s Merger With JetBlue Fell Apart This Year Due To Antitrust Scrutiny
The Journal reported last month that the two airlines had revived merger talks. Frontier’s initial plan to buy Spirit in 2022 fell apart after JetBlue Airways (JBLU) swooped in with an offer deemed superior, although that deal was called off in March amid antitrust scrutiny from regulators.
A JetBlue-Spirit combination would have created the fifth-largest carrier in the U.S. and put it in a position to compete in a domestic airline industry dominated by four big players: American Airlines (AAL), Delta Air Lines (DAL), Southwest Airlines (LUV), and United Airlines (UAL). The shares of the major airlines rose between 2% and 3% Wednesday morning.
Frontier declined to comment.
Spirit shares, which are down 90% this year, lost almost 60% of their value in trading Wednesday.
UPDATE—Nov. 13, 2024: This article has been updated to include fresh stock prices and shares of other airlines.
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