(Reuters) -Spirit Airlines is in constructive discussion with its creditors and continues to explore strategic alternatives to improve liquidity, the ultra-low-cost carrier said on Tuesday.

The negotiations, with a supermajority of the noteholders, have remained productive, advanced materially and are resuming in the near term, it added.

If the agreement fails, it will lead to the cancellation of existing equity and it will consider all alternatives, the statement said.

The company said its adjusted operating margin in the third quarter would be down 12% from last year.

Earlier in the day, the Wall Street Journal reported that the company is preparing to file for bankruptcy protection after merger talks with Frontier Airlines broke down.

The company did not immediately respond to a Reuters request for comment.

Shares of the company were down 39% at $1.8 after the bell. The stock has fallen nearly 80% this year, while the S&P 500 passenger airlines index jumped 52%.

The Dania Beach, Florida-based airline has been losing money despite strong travel demand. It has failed to report a profit in the last five out of six quarters, raising doubts about its ability to manage looming debt maturities.

Spirit said in October that it would furlough about 330 pilots on Jan. 31 as part of its efforts to cut costs and shore up its finances. 

The company is also selling 23 older Airbus aircraft for $519 million. The sale proceeds are estimated to provide $225 million of liquidity next year.