S&P upgrades Spirit to CCC+ after emergence from bankruptcy

Following the company's emergence from chapter 11 bankruptcy earlier in March, S&P Global has upgraded Spirit Airlines to CCC+ from D. 

Spirit's post-emergence capital structure includes a new $275 million revolver, a new $840 million exit senior secured notes, $136 million of existing US Treasury-issued payroll support (PSP) loans, and around $1.6bn of various existing aircraft debt. The agency said it does not rate the new exit facilities. 

Spirit repaid the $309 million debtor-in-possession (DIP) financing and the $300 million drawn on the previous revolver. With its emergence, Spirit total funded debt was lower by $1.4bn — including DIP financing repayment — with the maturities extended out from 2025.

“The emergence from creditor protection has reduced Spirit's debt levels and improved its liquidity position, but risk remains,” the ratings agency read in its report. 

S&P added that Spirit's liquidity of around $1bn should “provide some runway” for Spirit to executive its premium rebrand over the next year. The agency projected around $950 million at the end of 2025, noting that the new senior secured notes have $450 million minimum liquidity covenant. 

The agency said it estimates a “gradual recovery” for Spirit's operating performance following a “period of deterioration” where it reported operating losses and free cash flow deficits in 2023 and 2024. In addition, the airline was impacted by the continued geared turbofan (GTF) engine issues, grounding some of its fleet and limiting capacity growth.