Shares of JetBlue Airways and Frontier Airlines surged Friday as reports emerged that Spirit Airlines could be preparing to halt operations following failed bailout discussions.
The jump came after a Wall Street Journal report stated that Spirit Airlines' anticipated rescue agreement with the US government had collapsed due to Spirit's bondholders not backing the proposed restructuring plan.
Spirit Aviation Holdings Inc. is now reportedly preparing to cease operations after bailout negotiations broke down, with Bloomberg earlier reporting that discussions over a potential $500 million government rescue financing package had stalled.
Despite the alarming reports, Spirit has not officially confirmed plans to stop operating, with a company spokesperson speaking to Bloomberg saying that flights and operations are continuing normally for now.
Competitors including JetBlue and Frontier benefited from speculation that reduced competition in the low-cost airline market could improve pricing power and passenger demand for surviving carriers.
