Frontier Airlines (ULCC, Financials) is in negotiations with Spirit Airlines (SAVE, Financials) over a possible merger, The Wall Street Journal said.
Faced financial challenges, Spirit Airlines has failed to show a profit in five of its previous six quarters and is running large debt; the airline just drew down $300 million from its credit line and delayed a refinancing deadline for over $1.1 billion connected to a credit card processing arrangement.
The Journal said that Spirit's attempts to reorganize its debt via bankruptcy would include a possible merger with Frontier. Neither airline responded to the report.
Spirit had before been in merger negotiations with Frontier in 2022, but the plan fell apart after JetBlue Airways (JBLU, Financials) made an all-cash offer of $3.8 billion. Early this year, the U.S. Department of Justice nixed the JetBlue-Spirit merger.
Following its failed merger with JetBlue, Spirit is now talking with bondholders on the conditions of a possible bankruptcy filing, said The Wall Street Journal.
Spirit has furloughed pilots, postponed Airbus deliveries, and launched premium items to draw in more higher-paying consumers in order to handle its financial difficulties. Since the last proposal fell apart, Frontier has not publicly expressed opinions on the prospect of a revived combination with Spirit.
