(Reuters) - Fitch Ratings on Friday downgraded the long-term credit rating of Spirit Airlines ( SAVE ) to 'CC' from 'CCC', bringing it below the low-cost carrier's North America peers and warning that a near-term default appears probable.

Earlier this week, the carrier said that it was in talks with creditors and was continuing to explore strategic alternatives to improve liquidity.

The negotiations, with a supermajority of the noteholders, remained productive, advanced materially and would resume in the near term, it added.

The Dania Beach, Florida-based airline has been losing money despite robust travel demand. It reported losses in five of the past six quarters, casting doubt on its capacity to address upcoming debt obligations.

"Spirit now faces the risk that customers may increasingly opt to book away towards other carriers, fearing a potential bankruptcy, thus accelerating the company's cash burn," Fitch said in its report.

The rating agency expects 2024 cash outflow to be around $600 million, partly offset by proceeds from asset sales and compensation from Pratt & Whitney for being unable to use aircraft with engine issues.

Fitch also called attention to Spirit's shrinking footprint after its decision to sell 23 of its older Airbus aircraft and furlough 330 pilots in January 2025.

It is one of the airlines affected by issues with RTX's Pratt & Whitney engines, forcing the carrier to ground a portion of its aircraft in 2024 and 2025, leaving it with bloated costs.

"Visibility into engine availability is limited, adding a layer of uncertainty to Fitch's forecast, as it is difficult to predict Spirit's ability to deploy aircraft," Fitch said in the report.

Fitch said that its recovery analysis assumes Spirit would be reorganized as a going concern in bankruptcy rather than be liquidated.