Spirit Airlines shares plunged almost 60% following a Wall Street Journal report the low-cost carrier is nearing a bankruptcy filing after a potential merger with Frontier Airlines has fallen through.
Per the report, the Florida-based airline is working with creditors to make a bankruptcy plan and a filing could occur within weeks.
Spirit said in a filing late Tuesday that it is in active discussions with a supermajority of noteholders to restructure the debt and is also exploring strategic alternatives to improve liquidity.
The company said the negotiations have “remained productive, have advanced materially and are continuing in the near term” but, should an agreement not be reached, it is expected to lead to the cancellation of existing equity.
The company also said it will not be able to file its Q3 earnings on time due to its ongoing talks with creditors.
It expects its revenue to decrease by $61 million from the year-ago quarter, attributed to lower average yields including the company no longer charging change and cancellation fees.
Adjusted operating margin is expected to be down 12%.
Higher operating expenses are expected due to increased aircraft rent expenses, salaries, wages, benefits and landing fees, partially offset by lower fuel costs.
Shares of Spirit were down 58.2% at about $1.35 on Wednesday morning, down almost 92% in the year to date.