BENGALURU: Fitch Ratings last Friday downgraded the long-term credit rating of Spirit Airlines to CC from CCC, bringing it below the low-cost carrier’s North America peers and warning that a near-term default appears probable.
Earlier last week, the carrier said that it was in talks with creditors and was continuing to explore strategic alternatives to improve liquidity.
The negotiations, with a supermajority of the noteholders, remained productive, advanced materially and would resume in the near term, it added.
The Dania Beach, Florida-based airline has been losing money despite robust travel demand.
It reported losses in five of the past six quarters, casting doubt on its capacity to address upcoming debt obligations.
“Spirit now faces the risk that customers may increasingly opt to book away towards other carriers, fearing a potential bankruptcy, thus accelerating the company’s cash burn,” Fitch said in its report.
The rating agency expects 2024 cash outflow to be around US$600mil, partly offset by proceeds from asset sales and compensation from Pratt & Whitney for being unable to use aircraft with engine issues. — Reuters
