Spirit stock craters 72% after a report says government rescue talks have stalled

The move: Spirit Aviation stock plunged on Friday. Shares of the budget air carrier fell as much as 72% to $0.39, plummeting into penny stock territory after closing at $1.40 on Thursday.

The stock was delisted in 2024 and trades in the over-the-counter market.

The chart:

Why: The stock plummeted after a The Wall Street Journal report that the company is preparing to shut down operations as it runs out of cash before finalizing a bailout deal with the US government.

The report cited people familiar with the matter who said that the company won’t be able to secure adequate support to continue operating.

What it means: The report that fueled Friday’s stock decline stifled hope that the federal government could loan Spirit $500 million as a lifeline to stave of collapse.

Previously, the WSJ reported that the White House was nearing an agreement to support the failing airline after Donald Trump speculated the government should help it.

As part of the plan, the US government would loan $500 million in exchange for warrants that give it the right to buy a majority stake in the company, according to Bloomberg.

Business Insider analysis found that Spirit going under could cause a 14% hike in airfare prices, compounding the already high flying costs due to the inflationary pressure from the war in Iran.