Spirit Airlines (SAVE -0.73%) is a high-risk investment that only the most aggressive investors should be looking at right now. If you pass that screen, then the next big question is whether the risk is worth the reward. Spirit is in a high-stakes battle to avoid bankruptcy, but even if it manages the feat it probably won’t be a millionaire-making achievement.

A lot has gone wrong for Spirit Airlines

Spirit Airlines is a budget airline and there’s nothing wrong with that. The problem is that airlines are always working with tight margins,so when things aren’t going well the impact on the bottom line can be very bad. In this case, the coronavirus pandemic sent Spirit into a spiral from which it has yet to recover.

SAVE data by YCharts

As the chart above highlights, Spirit’s earnings plunged during the pandemic. That makes total sense, given the situation at the time. But earnings have yet to rebound even as the world has learned to live with COVID-19. That’s obviously a big problem for Wall Street, highlighted by Spirit’s steadily declining stock price. The issue here is that Spirit’s business model is based on selling cheap tickets that require customers to pay extra fees for things like selecting a seat or putting a bag on to the flight. That has given the airline a bad reputation, as the fees it charges are seen as a nuisance. And, following the pandemic other airlines, with better reputations, have been competing more on price to win back customers. Given the stripped down service offering Spirit is selling, it has had a hard time competing.

In the middle of this dismal financial performance Spirit threw a Hail Mary pass, agreeing to be bought by JetBlue (JBLU 4.79%). Basically, the company’s management decided to let someone else deal with the mess as it looked to salvage as much value as it could for shareholders. The problem is that JetBlue is a fairly large airway at this point and it looked like regulators would block the deal, leading JetBlue to call the marriage off.

Spirit Airlines tries again

Financially struggling Spirit Airlines suddenly found itself in an even more precarious position than it had been in before the proposed JetBlue deal. That’s because valuable time had elapsed with, basically, nothing being done to strengthen the underlying business. The risk of bankruptcy is very real here.

That statement is backed up by the company’s actions. That includes cost-cutting and the sale of aircraft. These are the types of moves that deeply troubled companies make as they attempt to keep the doors open long enough for something, perhaps anything, good to happen. At this point, the best opportunity looks like Spirit inking a new deal to sell itself. To that end, it is rumored to be in discussions with Frontier Group, owner of Frontier Airlines.

The problem is that Spirit is obviously working from a position of weakness at this point. If it is able to come to an agreement with Frontier Group, the price it fetches for the business will probably be only modestly above the current share price. Even if Spirit managed to get a 100% premium to its current share price, which is highly doubtful, the stock is only trading hands at about $6 a share right now. You would need to own a huge amount of stock for the best-case scenario to result in you attaining millionaire status.

The downside risk is huge

So now that you’ve got the backstory and thought about the best-case outcome, consider the worst case. Bankruptcy would likely leave stockholders with nothing. The balance here looks like a total wipeout if you are wrong with only a modest upside if you are right. That’s a really bad risk/reward profile, particularly since you’d have to invest huge sums of money to turn this trade into a millionaire-making move. Even highly aggressive investors should probably avoid Spirit Airlines right now.