Spirit Airlines (NYSE: SAVE) is in talks with creditors to improve its liquidity amid reports of potential bankruptcy, the ultra-low-cost carrier said on Tuesday, sending its shares tumbling 53%.
The Florida-based airline confirmed “constructive discussions” with a supermajority of noteholders are advancing, while warning that a failed agreement could lead to equity cancellation. The company said it is exploring all strategic alternatives.
Spirit projects its third-quarter adjusted operating margin will decline 12% year-over-year. The carrier has reported losses in five of the last six quarters despite robust travel demand.
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Cost-cutting measures include plans to furlough approximately 330 pilots beginning January 31 and the sale of 23 older Airbus aircraft for $519 million, expected to generate $225 million in liquidity next year.
The airline’s stock has plunged 91% this year, contrasting sharply with the S&P 500 passenger airlines index’s 52% gain. .
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