S&P downgrades Spirit Airlines to 'CCC'

S&P Global Ratings has downgraded to 'CCC' from 'CCC+' as the company struggles with its debt and liquidity position. S&P said: ""In our view, recent events indicate a rising probability of a restructuring that we consider tantamount to a distressed exchange in the next 12 months. Spirit's looming maturities include a $1.1 billon loyalty bond due in September 2025 and a $500 million convertible note due in 2026."" After the $3.8bn JetBlue merger was terminated in March, Spirit had retained advisors to assess options to refinance upcoming maturities. It added: ""We believe Spirit will face a significant liquidity shortfall as the loyalty bonds become current in a few months. Spirit had cash and equivalents of $879 million as of March 31, 2024, with additional support from its undrawn $300 million revolver."" Its total liabilities and shareholders’ equity at the end of first quarter 2024 was $9.5bn. It ended the quarter with $1.2bn in liquidity. It also posted a net loss of $140 million. ""The negative outlook reflects the uncertainty around Spirit's ability to address its upcoming debt maturity in 2025, the sustainability of its capital structure, and our belief that a distressed exchange is likely within the next 12 months,"" the agency said. The agency believes the airline will continue to be ""significantly affected"" by the GTF engine issues putting pressure on its capacity growth. However, the ratings agency noted that Spirit had made some improvements such as adjusting its network and routes to align with demand, as well as sizing down its pilot staff for lower capacity in the future. S&P had downgraded Spirit to 'CCC+' from 'B' on January 16, 2024.