Frontier Group Holdings Inc. ( ULCC ) is reportedly considering the possibility of a renewed acquisition of Spirit Airlines Inc. ( SAVE ) amid the latter’s ongoing discussions with bondholders over a potential bankruptcy filing.

What Happened: The two low-cost carriers have recently engaged in preliminary merger discussions. However, the talks are still in their early stages and may not result in a deal, The Wall Street Journal reported, citing people familiar with the matter.

If a merger is agreed upon, it is likely to occur as part of Spirit’s debt and liability restructuring during bankruptcy proceedings. Spirit is currently negotiating with bondholders over potential bankruptcy terms while also exploring out-of-court options to restructure its balance sheet.

Spirit has been under significant financial strain, particularly after a failed merger with JetBlue Airways Corporation ( JBLU ) and years of losses.

Frontier Group Holdings Inc. ( ULCC ) and Spirit Airlines Inc. ( SAVE ) did not immediately respond to Benzinga's request for comment.

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Why It Matters: The news of the potential merger comes in the wake of Spirit’s recent stock performance. The airline’s shares dropped by 6.22% on Tuesday, likely due to profit-taking after a Monday rally. This rally followed the announcement of an extension of the company’s debt refinancing deadline.

Earlier in October, Spirit modified its card processing agreement, extending the deadline for its 2025 notes and the early maturity date. This followed ongoing negotiations with the U.S. National Bank Association regarding Visa and MasterCard payments.

Price Action: Spirit Airlines ( SAVE ) stock closed at $2.11 on Tuesday, down 6.22% for the day. In after-hours trading, the stock rose 16.59%. Year-to-date, Spirit Airlines ( SAVE ) has seen a significant decline of 87.09%.

Meanwhile, Frontier Group Holdings Inc. ( ULCC ) closed at $6.72 on Tuesday, down 2.75%. After hours, the stock dipped 0.45%. Year-to-date, Frontier Group ( ULCC ) has experienced an increase of 26.55%, according to data from Benzinga Pro.

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Image via Wikimedia Commons

This story was generated using Benzinga Neuro and edited by Kaustubh Bagalkote