Ratings agency S&P Global downgraded Spirit Airlines’ credit rating to “CCC” from “CCC+” as the airline continues to struggle with its debt and liquidity conditions.
“We expect Spirit Airlines’ operating results to be under pressure throughout the year. Competitive Tickets Pricing, network supply and demand imbalances, and limited capacity growth due to engine issues are expected to result in sizable free cash flow deficits for at least the next 12 months, and we now believe the company’s liquidity position is insufficient.
S&P also downgraded Spirit’s Enhanced Equipment Trust Certificates (EETCs) by one notch, consistent with a lower issuer credit rating.
The rating agency expects various operating challenges to continue to hamper Spirit’s ability to improve profitability and cash flow generation through 2025.
Spirit’s profits fell due to aircraft problems, weather conditions on the East Coast and Florida, civil unrest in Haiti and increased competition in key markets when it reported first-quarter results last month.
S&P maintained its negative outlook on the company, saying it reflected uncertainty about Spirit’s ability to address upcoming debt maturities in 2025, the sustainability of its capital structure and the belief that distressed transactions may emerge over the next 12 months. .
“We expect Spirit’s operating results to remain significantly impacted by engine issues that have limited capacity growth and oversupply in its key leisure markets, resulting in negative free cash flow through at least 2024,” S&P said.
