Fitch Ratings has downgraded Spirit Airlines’ credit rating to CCC- from CCC+, citing mounting operational losses, deteriorating liquidity, and heightened risk of default.
Fitch also downgraded debt tied to Spirit’s loyalty program to CCC- from B-, assigning a recovery rating of RR4, down from RR3.
The downgrade reflects Fitch’s view that Spirit may be unable to avoid a near-term default unless it sees a significant and swift turnaround in operating performance or secures additional liquidity. The airline reported $473 million in negative cash flow from operations in the first half of 2025, and Fitch expects further cash burn through year-end.
Last week the airline said it continues to be affected by “adverse market conditions” including the domestic leisure demand weakness and higher competition. This comes amid mounting economic uncertainties in the industry, which has particularly impacted domestic travel demand in the US. Other carriers, despite demand slip, have been buoyed by international and premium sales, with loyalty programmes providing substantial revenue streams.
Earlier this year Spirit exited Chapter 11 restructuring. As part of this, the airline had restructured certain of its debt obligations, reducing its debt by around $795 million. In addition, the company launched its premium rebrand plan, supported by a $350 million equity investment from existing investors. The company’s reorganisation plan was confirmed by a US bankruptcy court in February 2025, with “overwhelming support from a supermajority of the company’s loyalty and convertible noteholders”.
Spirit ended the second quarter of the year with $407.5 million in cash and equivalents, down sharply from over $1bn at the end of 2024. This includes $275 million in revolver availability, total liquidity stood at $682 million - close to breaching the company’s $500 million minimum liquidity covenant.
Fitch noted that while management is pursuing asset sales, including potentially monetizing its headquarters, the proceeds may be insufficient to prevent a covenant breach absent improved cash flow.
“The company’s financial flexibility is severely constrained, and ongoing operational losses raise serious concerns about its ability to remain a going concern,” Fitch said.
Fitch did however affirm the ratings of Spirit’s Enhanced Equipment Trust Certificates (EETCs), including the 2015-1 and 2017-1 class AA and A certificates. These tranches remain supported by strong collateral values and moderate loan-to-value ratios - 88.2% for 2015-1 and 90.2% for 2017-1 - under Fitch’s 'A' stress scenario.
Aircraft backing the senior EETC tranches, including A320 and A321 models, continue to trade above base values, which Fitch said supports the current ratings. However, further deterioration in Spirit’s credit profile could pressure these ratings in the future.