S&P Global Ratings downgraded the debt of Spirit Airlines Inc. deeper into junk status by cutting it to CCC from CCC+, citing an expected cash crunch and inadequate liquidity in the next 12 months.

The credit rater also put the carrier on negative outlook on Wednesday, saying its “operating performance will remain pressured through the year.”

Spirit is in critical talks with bondholders to avoid bankruptcy by restructuring about $3 billion in debt and slashing costs after the collapse of its planned acquisition by JetBlue Airways Corp. The company has been losing cash for much of the past two years as it dealt with uneven demand, engine issues and higher costs weighing on the US domestic market. 

“Given the constrained cash flow generation and operating performance, along with management’s public announcement of its decision to engage with lenders to assess options for addressing its upcoming maturities, we believe it’s likely the company will face a distressed exchange,” S&P said in a statement. 

S&P also cited the rising likelihood of a restructuring that the ratings firm considers “tantamount to a distressed exchange in the next 12 months.” Distressed debt exchanges provide a way for troubled companies to preserve the value of their bonds and loans by extending maturities on specific obligations, usually with the holders agreeing to take a haircut, or reduced price.

Spirit’s upcoming debt maturities include a $1.1 billion loyalty bond due in September 2025 and a $500 million convertible note due in 2026.

The airline has had a tumultuous year, including the departure this month of Chief Financial Officer Scott Haralson, who has headed up the company’s finances since 2018.