Shares of Spirit Airlines have crashed by 32% in after-hours trading on Thursday after reports surfaced that the company is considering bankruptcy.
According to the Wall Street Journal, Spirit is currently engaged in talks with bondholders and other creditors with the intention to explore potential support for Chapter 11 filing. However, the sources familiar with the talks indicate that the move wouldn’t be imminent even if the airliner selects the bankruptcy route.
Spirit is reportedly also trying to restructure its balance sheet via of-court transactions, but those attempts haven’t been effective so far.
While most airlines bounced back from the pandemic struggles, Spirit has been slow to recover. The company has been dealing with mounting debt while managing to turn a profit just once in the past six quarters.
Spirit attempted to salvage itself through a proposed $3.8 billion merger with JetBlue, but the move, which would create the fifth-larger airline in the nation, ended up being blocked by a federal district judge due to reduced competition concerns. The company was also hurt by an engine recall from Pratt & Whitney that caused more than a dozen of its planes to be grounded for a prolonged period.
Spirit’s stock closed at $2.24 on Thursday before tumbling all the way down to $1.52 per share in extended trading. The stock was already 86.30% down year-to-date before the drop.