Spirit Airlines in Advanced Talks Over a Bankruptcy Filing: WSJ

13.11.2024 - 01:19 / skift.com / Spirit Airlines / Meghna Maharishi / Frontier Airlines

Spirit Airlines is preparing to file for bankruptcy protection after talks with Frontier about a potential merger broke down, according to a report published in The Wall Street Journal on Tuesday. 

The ultra-low-cost carrier is currently in advanced talks with bondholders to figure out a bankruptcy plan that would support the majority of creditors, according to the Journal. A bankruptcy filing could come in weeks. 

Spirit has struggled with mounting losses and debt as it has sought ways to shore up its balance sheet. The carrier is the only in the U.S. to have not reported third-quarter earnings. 

Spirit did not immediately respond to a request for comment. In a statement released Tuesday, Spirit said it would need to delay filing third-quarter earnings as it was still in negotiations with bondholders. The carrier said the discussions had been “active and constructive.”

“The negotiations, with a supermajority of the Noteholders, have remained productive, have advanced materially and are continuing in the near term, but have also diverted significant management time and internal resources from the Company’s processes for reviewing and completing its financial statements and related disclosures,” Spirit said in the statement.

Frontier declined to comment on the matter. 

The Journal reported in October that Spirit was already in talks with bondholders about a bankruptcy filing. The report said that Spirit had been exploring ways to restructure its balance sheet through an out-of-court transaction, but talks then shifted to reaching an agreement with bondholders and creditors over a Chapter 11 filing. 

Spirit was also said to be exploring a merger with Frontier as part of restructuring its debt and other liabilities related to a bankruptcy filing. Frontier previously made a bid for Spirit two years ago, but the bid fell through after JetBlue made an all-cash offer that won the support of shareholders. A federal judge later blocked the acquisition. 

More recently, Spirit inked a deal with GA Telesis valued at $519 million to sell some of its older Airbus aircraft. The sale would have given Spirit $225 million in liquidity through the end of 2025. 

It also received an extension for a key deadline to refinance a little over $1.1 billion in debt in a deal related to the company that processes its credit card transactions. Now, Spirit has until December to refinance those bonds. 

Spirit sharply reduced its capacity outlook for 2025, furloughed pilots and delayed some of its Airbus deliveries to stay afloat. In the statement, Spirit said it expects its third-quarter operating margin to decrease 12%. It estimated that total operating revenues would decrease by about $61 million compared to the year before,