Spirit Airlines faces credit downgrade amid bankruptcy talks

"The downgrade follows Spirit's announcement that negotiations with its noteholders had advanced and that an agreement, if reached, would be effectuated through a statutory restructuring," Fitch stated. "A near-term default now appears probable."

Fitch projects a cash outflow of approximately $600 million for Spirit in 2024 but expects this will be partly offset by asset sales and compensation from Pratt & Whitney for engine-related issues. Problems with Pratt & Whitney's RTX engines have led Spirit and other airlines to ground parts of their fleets during 2024 and 2025.

Other major credit rating agencies have also rated Spirit poorly. Standard & Poor's downgraded the airline to "CCC" in January 2024, while Moody's assigned it a "B2" rating in September 2023.

In contrast, Delta Air Lines received an upgrade from Fitch to BBB- in July 2024, which is considered investment grade. American Airlines holds a B+ rating from Fitch.

The U.S. government maintains a Fitch credit rating of AA+, just below the highest possible rating. Few countries hold an AAA rating; some like Russia have seen their ratings reduced to junk status.