A US budget airline is reportedly preparing to file for bankruptcy protection after talks to merge with another airline broke down. Florida-based Spirit Airlines is preparing to seek bankruptcy protection after merger talks with Frontier Airlines fizzled, people familiar with the matter told the Wall Street Journal . The publication reported that Spirit is in advanced discussions with bondholders to create a bankruptcy plan, with a bankruptcy filing expected to happen within weeks, according to the sources.
Its stock has fallen by nearly 80 per cent this year, with the airline saying in a statement on Tuesday that its adjusted operating margin in the third quarter is down 12 per cent from last year due to lower revenues and higher expenses. Spirit said its revenues are estimated to be about $61m lower compared to last year, partly due to the airline no longer charging change and cancellation fees. The airline said it is in “constructive discussions” with its noteholders that have “remained positive” to try and find a way to restructure its obligations owed and explore alternatives to improve liquidity.
This would be carried out in a Chapter 11 bankruptcy process, people with knowledge of the matter told Bloomberg . If an agreement with the noteholders is reached, a statutory restructuring will be put into force and lead to the cancellation of Spirit’s existing equity, the airline said in its statement. It added that if the agreement is reached it does not expect the.
