It's been a hard year for many from an economical standpoint, and it turns out airlines aren't immune to feeling the stresses of an economy. In fact, one major airline appears to be preparing for bankruptcy if things don't improve for the company. The news came thanks to a major filing.
Videos by Wide Open Country
Spirit Airlines recently filed for bankruptcy protection. If you have an upcoming flight with the company, then that's not comforting news that you want to hear.
As soon as the info reached investors, Spirit Airlines prices slashed in nearly half. The airline had its share price fall by 45 percent in just seconds. It's since fallen down to 70 percent by Wednesday. It's not a good look for the airline.
Major Airline Prepares For Bankruptcy
Right now, Spirit is trying to negotiate with bondholders on a restructing plan. It hopes to secure key creditors and their support. It will need it since it currently owes more than $3 billion in debt. However, if that falls through, Spirit may be proceeding with bankruptcy.
Right now, it's talks with Frontier Airlines broke down. It's the final straw for the company to avoid Chapter 11. Troubles for the airline are numerous. Spirit has had to cut costs by scaling back and furloughing staff. It's also planning to sell off planes as well.
Of course, it's possible that Spirit may shutdown completely if Chapter 11 doesn't even help it. The issue is the $3.3 billion dollar debt hanging on the company's neck. A huge chunk of that is due in less than a year, and it doesn't look like Spirit has the dough to pay it.
To put this in perspective, Spirit has been operating at a loss since before even the pandemic. It tried to merge with JetBlue to save itself. But the Department of Justice ruled that the deal would violate current anti-trust laws. So that deal was essentially thrown into the wood chipper.
JetBlue pulled out of the merger, and Spirit has continued to struggle ever since. Talks of a merger with Frontier surfaced in October, but it later broke down as well.
