Spirit Airlines Stock Price Plummets After Bankruptcy Report

It’s the B word that no business wants to hear. Bankruptcy.

Even a hint can send investors scurrying. Such could be the case with Spirit Airlines.

Shares in the low-cost carrier plummeted following a newspaper report that a bankruptcy was possible and that investors were being warned by the company of the potential.

Spirit has been rumored to be heading down the bankruptcy path since early this year, when a nearly $4 billion merger with JetBlue Airways was blocked. The stock price fell nearly 40 percent in the last week.

In total, the stock price has fallen more than 85 percent this year.

"We suspect Spirit should be able to renegotiate with creditors outside of bankruptcy," Raymond James analyst Savanthi Syth said, but they raised concerns on whether the airline can reduce its fixed costs without entering Chapter 11 protection.

Spirit CEO Ted Christie earlier this year dismissed talks of a bankruptcy.

The government would like to see Spirit thrive because of its competitive pricing but the airline has faced challenges in the last several months.

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