(Bloomberg) -- Spirit Airlines Inc. is in talks with Frontier Group Holdings Inc. about filing for bankruptcy to facilitate a takeover by the rival discount carrier, according to people with knowledge of the matter.

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An attempt to sell Spirit via Chapter 11 would likely need the advanced approval of the airline’s creditors in order to fast-track the process so that it can emerge without pausing operations or burning through the rest of its dwindling cash. Early-stage discussions between the air carriers have involved working out terms that holders of Spirit’s roughly $2.5 billion of debt will agree to, said the people, who asked not to be named discussing private negotiations.

The Wall Street Journal previously reported that the companies were in talks.

Spirit is staring down a liquidity crisis after its earlier attempt to merge with JetBlue Airways Corp. was blocked on antitrust grounds, and subsequent efforts targeting a rescue by creditors hit a wall. The renewed attempt to join forces with another carrier is expected to garner less scrutiny given Frontier’s smaller size and lesser overlap with Spirit, industry watchers say.

In recent talks kicking off the effort, Spirit’s advisers sought feedback from certain creditors on what terms they would approve for a consensual bankruptcy plan.

Spirit’s debt includes about $1 billion in so-called loyalty bonds — 8% notes due 2025 that are backed by claims on elements of the company’s frequent-flyer program — and $500 million in unsecured convertible bonds due 2026.

--With assistance from Eliza Ronalds-Hannon.

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