New reports from anonymous insiders at Spirit Airlines suggest the carrier is actively considering entering bankruptcy, sending shares tumbling.

After their planned merger with JetBlue was terminated by the U.S. Department of Justice, is Spirit Airlines looking at bankruptcy as an option?

The Wall Street Journal reports the Miramar-based airline is allegedly considering the legal filing as their debt bonds prepare to mature.

Spirit Holding $1.1 Billion in Bonds to Refinance in October 2024

According to the Journal’s reporting, Spirit is currently sitting on over $3 billion of long-term debt and finance leases, including $1.1 billion in loyalty program bonds which need to be refinanced or extended by October 21, 2024. The carrier is represented in restructuring negotiations by both a law firm and investment bank. If a bankruptcy filing does happen, insiders speaking to the newspaper under anonymity say it wouldn’t be an imminent decision.

Despite the travel rebound, Spirit Airlines has not reported a profitable quarter since the COVID-19 pandemic began. As a result, the stock has dropped dramatically, closing at $1.69 per share at the end of trading on Friday, October 4, 2024. This is down from the most recent high of $39.73 on March 12, 2021.

In previous public comments, Spirit CEO Ted Christie told reporters the airline is still working with their bondholders to go over the maturity and determine next steps for the future of the carrier. Although they did not take any questions or discuss the details of the conversations, Christie said the negotiations are “a priority and we are focused on securing the best outcome for the business as quickly as possible.”

As a cost-cutting measure, Deutsche Bank writes Spirit is planning a 20% capacity cut for the remainder of the year. The capacity reduction would pair with recently cancelled routes in November and December.

Share your thoughts about Spirit’s current reported situation on the FlyerTalk forums.