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Spirit Airlines prepares to file for bankruptcy, WSJ reports

(Reuters) -Spirit Airlines is preparing to file for bankruptcy protection after merger talks with Frontier Airlines broke down, the Wall Street Journal reported on Tuesday, citing people familiar with the matter.

Shares of the company were down 39% at $1.8 after the bell. The stock has fallen nearly 80% this year, while the S&P 500 passenger airlines index jumped 52%.

The ultra-low cost carrier is in advanced discussions with bondholders to hammer out a bankruptcy plan that would have support from a majority of creditors, the report said.

Spirit is preparing a bankruptcy filing within weeks, the report added.

Last month, the WSJ said in a separate report that Frontier Airlines was exploring a bid for Spirit. However, Frontier decided not to move forward with such a merger at this time, Tuesday’s WSJ report clarified.

The company did not immediately respond to a Reuters request for comment.

The Dania Beach, Florida-based airline has been losing money despite strong travel demand. It has failed to report a profit in the last five out of six quarters, raising doubts about its ability to manage looming debt maturities.

Spirit said in October that it would furlough about 330 pilots on Jan. 31 as part of its efforts to cut costs and shore up its finances.

The company is also selling 23 older Airbus aircraft for $519 million. The sale proceeds are estimated to provide $225 million of liquidity next year.

This post appeared first on investing.com

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