Spirit Airlines Moves Toward Bankruptcy Filing After Frontier Drops Merger Bid.

The Florida-based budget airline is in advanced discussions with bondholders to hammer out a bankruptcy plan that would have support from a majority of creditors, as it struggles with mounting losses and looming debt maturities. Spirit is preparing a bankruptcy filing within weeks, the people said.

Spirit had also been in discussions with rival Frontier in hopes that the two carriers could revive earlier plans to join forces, likely as part of a broader restructuring in bankruptcy. Frontier decided not to move forward with such a merger at this time, the people said.

Spirit and Frontier declined to comment.

Spirit, a once fast-growing airline, is among carriers that gained favor by offering cheap tickets with add-ons for pretty much everything beyond a seat to appeal to value-minded fliers.

That business model upended the airline industry, inspiring now commonplace surcharges for checked bags and seat assignments. The strategy worked well for years, but has more recently been challenged by high costs and more intense competition from bigger airlines.

Frontier and Spirit had been set to merge in 2022 when JetBlue Airways swooped in with a higher offer and eventually won Spirit’s investors over. But a federal judge in January barred JetBlue from acquiring Spirit, ruling that the deal would be detrimental to competition. Spirit has been on its back foot since.

Spirit this year has sharply cut back its growth plans, furloughed pilots and outlined plans to sell planes. In October, it signed a deal to sell 23 planes to company GA Telesis for $519 million.

However, these measures are likely insufficient to help the company address a $1.1 billion bond maturity in less than a year. Spirit also faces a late December deadline with the company that processes its credit card transactions to refinance those bonds.