Topline
Spirit Airlines shares cratered sharply in after-market trading on Tuesday evening, as the company announced it was in talks with creditors to restructure its debts in a deal—shortly after the Wall Street Journal reported the company is preparing to file for bankruptcy protection and its planned merger with rival low-cost carrier Frontier had broken down.
Spirit Airlines is reportedly on the verge of filing for Chapter 11 Bankruptcy protection after … [+]
Key Facts
In a filing late on Tuesday, Spirit said it was in “active and constructive discussions” with a “supermajority” of its secured bondholders for a debt restructuring deal—which Bloomberg reports could be carried out in a Chapter 11 bankruptcy process.
The company noted that if the agreement with its bondholders is reached, it is “expected to lead to the cancellation of the Company’s existing equity.”
The low-cost carrier’s stock price cratered more than 62.7% in after-hours trading to $1.20.
The company also said it will be unable to file its third-quarter earnings in time due to the ongoing discussions with creditors.
In a snapshot of its numbers for Q3, the company says its operating margin was down approximately 12% year-over-year and its operating revenues were down roughly $61 million year-over-year.
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News Peg
Earlier on Tuesday, the Wall Street Journal reported the company was preparing to file for bankruptcy protection after its merger talks with Frontier Airlines had fallen through. Last month, both the Journal and Bloomberg reported Spirit was in preliminary discussions with Frontier to revive a merger deal. Such a deal would have reportedly been carried out as part of a Chapter 11 bankruptcy process by Spirit. But on Tuesday, the Journal reported Frontier had chosen not to move forward with the deal, although the airline has not publicly commented on the matter.