(Bloomberg) -- Spirit Airlines’ efforts to restructure its debt and avoid filing for bankruptcy have hit a snag after months of talks with bondholders failed to result in a deal, according to people with knowledge of the matter.

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The struggling air carrier is seeking new financing from its creditors, as well as an exchange that would extend its current debt, said the people, asking not to be identified because the talks are private. Terms that still need to be worked out include which assets bondholders would have a claim on and how much new financing would be provided, one of the people said.

Without a deal, the company would be forced into bankruptcy, said the people. While a Chapter 11 filing isn’t imminent, a near-term filing would pose challenges as it would be unclear who would take control.

The Wall Street Journal earlier Thursday reported that Spirit and bondholders have held discussions over the terms of a potential bankruptcy.

Representatives for Spirit as well as advisers Davis Polk & Wardwell and Perella Weinberg Partners didn’t respond to requests seeking comment after normal business hours Thursday.

Spirit’s shares sank as much as 38% Friday morning to a record low, before paring losses to end the session down by about 25%, at $1.69. The firm’s so-called loyalty bonds — about $1 billion of 8% notes due 2025 — briefly declined as much as 6 cents on the dollar to 45 cents, according to pricing source Trace.

The carrier’s “combination of high leverage and negative free cash flow leaves little room for error,” Citigroup Inc. analyst Stephen Trent wrote in a Thursday night note. The firm has a sell rating on Spirit’s stock.

Spirit has been seeking a financial lifeline ever since a federal judge in January blocked its proposed sale to rival JetBlue Airways Corp. on antitrust grounds.

The company has until Oct. 21 to reach a deal to extend or refinance bonds due 2025 in order to maintain a key partnership with US Bank concerning processing payments made by credit card, it said in a filing.

According to Spirit’s second-quarter report, the company owned just 58 of its 210 planes, with just seven of them unencumbered.

--With assistance from Kevin Kingsbury.

(Updates to correct reference to credit card processing agreement in ninth paragraph.)