Shares of Spirit Airlines (SAVE) dipped severely on Wednesday due to a reported bankruptcy protection initiation, following unsuccessful merger discussions with Frontier Airlines' parent company, Frontier Group Holdings (ULCC). Struggling with impending debt maturities, Spirit Airlines alerted the Securities and Exchange Commission (SEC) of its inability to submit quarterly results via a Form 12b-25 filing, indicating a move towards bankruptcy if ongoing bondholder conversations are unsuccessful.
According to reports, Frontier has withdrawn from the merger talks, and it is now believed that Spirit is actively discussing a bankruptcy plan with bondholders and could file for bankruptcy within weeks. As part of its financial recovery plan, Spirit disclosed last month its intention to cut jobs and sell some planes. Additionally, it extended a deadline for debt refinancing with Visa (V) and Mastercard (MA).
Earlier reports suggested that Frontier and Spirit Airlines relaunched merger talks last month. However, an earlier bid from Frontier to acquire Spirit in 2022 was disrupted after JetBlue Airways (JBLU) proffered a superior offer. This JetBlue deal also fell through due to regulatory scrutiny over antitrust concerns.
A successful JetBlue-Spirit merger would have resulted in the fifth-largest carrier in the U.S., enhancing competition in a market dominated by American Airlines (AAL), Delta Air Lines (DAL), Southwest Airlines (LUV), and United Airlines (UAL). Meanwhile, shares of these major airlines rose between 2% and 3% on Wednesday morning.
Spirit shares, which have declined by 90% this year, lost around 60% of their value in Wednesday's trading. Frontier did not give any statement regarding this situation. The article has been updated as of Nov. 13, 2024, to feature latest stock prices and shares of other airlines.