Shares of Frontier Group Holdings (ULCC) and JetBlue Airways (JBLU) took off Friday on a report that discount airline rival Spirit Airlines (SAVE) is considering a bankruptcy filing. Spirit shares plunged 25% soon after markets opened.

The Wall Street Journal reported that the carrier is in discussions with bondholders and other creditors about possible terms for a Chapter 11 filing, although it noted such a filing would not be imminent. The paper said that Spirit is also looking at restructuring its balance sheet through an out-of-court deal, although the focus was on the bankruptcy negotiations.

Spirit has faced losses and falling revenue on tougher competition from both low-cost rivals and bigger airlines. It failed in its $6.6 billion plan to merge with Frontier in 2022. Following that, Spirit agreed to a takeover by JetBlue, only to see that fall through this year as regulators challenged it over antitrust concerns.

A Spirit spokesperson reached by Investopedia pointed to comments by Chief Executive Officer (CEO) Ted Christie III during the company's August earnings call where he explained that it is "engaged in productive conversations with the advisors of our bondholders to address the upcoming debt maturities. Because those conversations are ongoing, we are not going to go into detail or take any questions on this topic or speculate on potential outcomes."

The news sent shares of Frontier up 21% and into positive territory for the year, while JetBlue shares jumped 14% and are up more than 30% in 2024. While Spirit shares sank to an all-time low, shares of American Airlines (AAL), Delta Air Lines (DAL), Southwest Airlines (LUV), and United Airlines (UAL) rose as well.