The stock of Spirit Airlines (SAVE) has plunged 40% as bankruptcy reports swirl around the U.S.-based discount carrier.
The steep decline in Spirit Airlines’ stock comes amid media reports that the company is in talks with its bondholders about a potential bankruptcy filing.
Executives at Spirit Airlines have been exploring ways to restructure the company’s finances for months.
The Wall Street Journal reported that the focus has now turned to a Chapter 11 bankruptcy filing that’s used to protect a company from its creditors while it restructures its balance sheet.
Spirit Airlines has struggled financially since the Covid-19 pandemic grounded its aircraft and forced the company to operate at reduced capacity.
Spirit has $3.3 billion U.S. in debt and is struggling with declining ticket sales.
The situation at the carrier turned dire earlier this year after a federal judge blocked a proposed merger between the low-cost airline and rival JetBlue Airways (JBLU), citing competition concerns.
Spirit Airlines’ stock is now trading at $1.34 U.S. per share. Before today (Oct. 4), the company’s share price had declined 86% this year.