Fitch downgrades Spirit Airlines' long-term credit rating
Adds details from the release, background throughout
Nov 15 (Reuters) -Fitch Ratings on Friday downgraded the long-term credit rating of Spirit Airlines SAVE.N 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 this 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 $600 million, partly offset by proceeds from asset sales and compensation from Pratt & Whitney for being unable to use aircraft with engine issues.
Fitch also called attention to Spirit's shrinking footprint after its decision to sell 23 of its older Airbus aircraft and furlough 330 pilots in January 2025.
It is one of the airlines affected by issues with RTX's RTX.N Pratt & Whitney engines, forcing the carrier to ground a portion of its aircraft in 2024 and 2025, leaving it with bloated costs.
"Visibility into engine availability is limited, adding a layer of uncertainty to Fitch's forecast, as it is difficult to predict Spirit's ability to deploy aircraft," Fitch said in the report.
Fitch said that its recovery analysis assumes Spirit would be reorganized as a going concern in bankruptcy rather than be liquidated.
Reporting by Aishwarya Jain in Bengaluru; Editing by Shailesh Kuber
Related Assets
Latest News
Disclaimer: The XM Group entities provide execution-only service and access to our Online Trading Facility, permitting a person to view and/or use the content available on or via the website, is not intended to change or expand on this, nor does it change or expand on this. Such access and use are always subject to: (i) Terms and Conditions; (ii) Risk Warnings; and (iii) Full Disclaimer. Such content is therefore provided as no more than general information. Particularly, please be aware that the contents of our Online Trading Facility are neither a solicitation, nor an offer to enter any transactions on the financial markets. Trading on any financial market involves a significant level of risk to your capital.
All material published on our Online Trading Facility is intended for educational/informational purposes only, and does not contain – nor should it be considered as containing – financial, investment tax or trading advice and recommendations; or a record of our trading prices; or an offer of, or solicitation for, a transaction in any financial instruments; or unsolicited financial promotions to you.
Any third-party content, as well as content prepared by XM, such as: opinions, news, research, analyses, prices and other information or links to third-party sites contained on this website are provided on an “as-is” basis, as general market commentary, and do not constitute investment advice. To the extent that any content is construed as investment research, you must note and accept that the content was not intended to and has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such, it would be considered as marketing communication under the relevant laws and regulations. Please ensure that you have read and understood our Notification on Non-Independent Investment. Research and Risk Warning concerning the foregoing information, which can be accessed here.
