Originally Posted by JulesWinfield

Bonds ratings companies generally know what they are doing. Fitch has a good report here: thttps://www.fitchratings.com/research/corporate-finance/fitch-downgrades-spirit-airlines-to-ccc-07-05-
2024

tldr:

Spirit Airlines is currently facing severe financial and operational challenges, prompting Fitch Ratings to downgrade its Long-Term Issuer Default Rating to 'CCC'. The airline is struggling with persistent negative operating margins and diminishing financial flexibility, primarily due to overcapacity in key markets and uncertainty around the availability of A320 NEO engines. Despite having $898 million in cash and short-term investments, and an additional $300 million available under a revolving credit facility, Spirit's liquidity is under pressure from ongoing cash burn. The company faces critical refinancing needs for its 2025 loyalty bonds and 2026 convertible notes, and there is a heightened risk of a distressed debt exchange, which could lead to bankruptcy if refinancing efforts fail. To address these issues, Spirit is implementing cost-cutting measures and strategic changes to improve its brand image and revenue, though these efforts carry execution risks and will take time to yield results. Overall, the outlook for Spirit Airlines is precarious, with a significant risk of bankruptcy if it cannot manage its liquidity and refinancing needs effectively.

They seem to suggest a Chapter 11 vs Chapter 7 would be the best approach.