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Investing.com -- Moody’s Ratings has downgraded Spirit Airlines (OTC:SAVEQ), LLC’s corporate family rating to Caa3 from Caa1, reflecting concerns about the airline’s deteriorating liquidity position.
The ratings agency also downgraded Spirit’s probability of default rating to Caa3-PD from Caa1-PD and the backed senior secured notes rating of Spirit IP Cayman Ltd. to Caa3 from Caa1. Spirit’s speculative grade liquidity rating was lowered to SGL-4 from SGL-3, with the outlook for both Spirit and Spirit IP changed to negative from stable.
Moody’s cited higher than expected cash burn as the primary reason for the downgrade. The agency forecasts Spirit will burn more than $500 million in cash during 2025 due to weak domestic leisure demand, elevated domestic capacity, and a challenging pricing environment.
This substantial cash burn could cause Spirit to violate its minimum liquidity covenant of $450 million as early as the end of 2025 if the company fails to raise additional funds. Spirit reported unrestricted cash of $408 million as of June 30, 2025.
Further complicating Spirit’s financial situation is a recent amended agreement with its credit card processor. The agreement requires Spirit to transfer $50 million to a pledged account and allows the processor to hold back up to $3 million per day until the bank’s exposure is fully collateralized. In exchange, the agreement was extended to December 31, 2027 from December 31, 2025.
Moody’s noted that Spirit has limited options to raise additional liquidity as all of its assets are already encumbered. The airline had only recently emerged from bankruptcy in March 2025.
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