Spirit Airlines is struggling to reach a bailout deal to avoid bankruptcy

(Bloomberg) — Spirit Airlines’ efforts to restructure its debt and avoid bankruptcy have hit a snag after months of talks with bondholders failed to produce a deal, according to people familiar with the matter.

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The struggling airline is seeking new financing from its lenders as well as a stock exchange to expand its current debt, the people said, asking not to be identified because the talks are private. Terms to be determined include the assets on which bondholders would have a claim and how much new financing would be provided, one of the people said.

Without a deal, the company would be forced into bankruptcy, the people said. While a Chapter 11 filing is not imminent, a near-term filing would present challenges because it would be unclear who would take control.

Early Thursday, the Wall Street Journal reported that Spirit and bondholders were in talks about the terms of a potential bankruptcy.

Representatives for Spirit, as well as advisers Davis Polk & Wardwell and Perella Weinberg Partners, did not respond to requests for comment after normal business hours.

Spirit has been looking for financial relief since a federal judge in January blocked its proposed sale to rival JetBlue Airways Corp. for antitrust reasons.

The company has until Oct. 21 to reach a deal to extend or refinance bonds due in 2025 to maintain a key partnership with US Bank on its loyalty credit card, according to a filing.

The card is part of the package of guarantees that support future maturities.

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