Spirit Air Heads For Bankruptcy After Merger Talks Break Down
There's lots of news breaking about Spirit Airlines and none of it is good.
On Tuesday, the Wall Street Journal reported that the company is preparing for bankruptcy protection and its planned merger with rival low-cost carrier Frontier Airlines had broken down again.
Report Says Spirit Airlines is Planning Declare Bankruptcy
Spirit Air, Atlantic City International Airport's primary carrier, said Tuesday it was in "active and constructive discussions" about filing for a debt restructuring deal.
Bloomberg reports that could be carried out with a Chapter 11 bankruptcy.
Spirit added that if the agreement with its bondholders is reached, it would lead to the "cancellation of the company's existing equity".
In other words, people who own Spirit Air stock would be out of luck.
After staging a remarkable recovery and soaring over 100% in value in late October, Spirit stock fell by over 62% Tuesday, closing at $1.20.
Spirit Revenues Down By Over $60 Million
Spirit Airlines gave a scary snapshot of its financial picture, according to Forbes. In the third quarter of 2024, the company said its operating margin was down by about 12% since 3rd quarter of 2023, with revenues down about $61 million year-over-year.
Tuesday morning, the Wall Street Journal reported that Spirit's preliminary talks with Frontier to revive a merger had fallen through and Frontier had decided not to move ahead with the deal.
Spirit's Bad Financial Luck in 2024
Spirit Airlines started 2024 with the news that its $3.8 billion merger deal with JetBlue was being blocked.
A federal judge ruled against the proposal and agreed with the Justice Department that the deal between the airlines would have led to higher prices for consumers.
Before the JetBlue deal, Spirit had a previous round of merger talks with Frontier that didn't come to fruition.
Spirit Airlines has said recently it plans to sell 23 of its older planes and cut jobs to save money.
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