Investing.com -- Spirit Airlines (NYSE:SAVE) shares surged over 32% in premarket trading on Wednesday following a report from the Wall Street Journal that Frontier Airlines is exploring a renewed bid to merge with the budget carrier.
The WSJ, citing sources, said the two low-cost airlines have engaged in recent discussions about a potential merger, though the publication noted that talks are still in the early stages and may not result in a deal.
"If a deal between the two carriers is reached, it would likely happen as part of Spirit restructuring its debt and other liabilities in bankruptcy," said the WSJ.
Spirit is in talks with bondholders to negotiate the terms of a possible bankruptcy filing, according to the report. However, the airline is also exploring ways to restructure its balance sheet outside of bankruptcy proceedings.
The renewed merger talks come amid mounting financial pressure on Spirit.
The company has struggled following a failed merger attempt with JetBlue and a series of losses in recent years.
Spirit gained some financial breathing room last week by securing a deal with its credit-card processor to delay a deadline for refinancing $1.1 billion in bonds until late December, according to the WSJ.
Spirit and Frontier have pursued a merger intermittently since 2016. In 2022, the two airlines came close to finalizing a $2.9 billion merger, but JetBlue’s competing offer derailed the deal after a bidding war.
The JetBlue-Spirit merger was ultimately blocked by a federal judge earlier this year, who ruled that the deal would suppress competition and harm budget-conscious travelers.
While Spirit aims to reposition itself with more premium offerings, it continues to face headwinds, including rising costs and an engine recall that grounded part of its fleet.