Reduced air traffic into Atlantic City is causing headaches at the South Jersey Transportation Authority as bankruptcy protection and bailout possibilities failed to save troubled Spirit Airlines.
"Fitch Ratings has placed South Jersey Transportation Authority' senior and subordinate transportation system revenue bonds on Rating Watch Negative," said Fitch.
The rating change happened on Monday creating bad news for bond holders.
"SJTA's senior transportation system revenue bonds are rated at BBB+, and subordinate transportation system revenue bonds are rated BBB-," said Fitch.
The SJTA operates the Atlantic City Expressway, Atlantic City International Airport (ACY), and a regional network of transportation services that includes shuttles and light rail.
"Spirit accounted for approximately 76% of traffic at Atlantic City International Airport as of March 31, 2026, and its departure temporarily leaves the airport without daily service," said Fitch.
"The loss of service could ultimately impair SJTA's financial metrics below Fitch's sensitivities because the 10-year average senior and total debt service cover ratio under Fitch rating cases is 1.8x before Spirit's departure is incorporated."
The airport is still served by American, Breeze, and Allegiant airlines but Fitch is expecting an increase in the airport's operating deficit.
Fitch is also eyeballing automotive traffic into Atlantic City and hoping it remains steady.
"The Atlantic City Expressway is expected to generate sufficient toll revenue to provide a financial cushion while also supporting ACY," said Fitch.
In January, S&P Global Ratings raised its long-term rating on the SJTA's on the N.J.'s senior-lien transportation revenue bonds to 'A-' from 'BBB+'.
It also raised the authority's subordinate-lien transportation revenue bonds outstanding to 'BBB+' from 'BBB' and labeled the outlook as stable.
"The upgrade reflects our expectation that SJTA will maintain healthy debt service coverage, supported by annual toll rate increases, conservative budgeting practices, and no additional debt plans," said S&P.
Picking through the wreckage of the airline includes repossessing most of its fleet. Over 60 of the planes are owned by aircraft leasing companies who want them back as quickly as possible.
Per the court documents, 28 planes are owned by the airline and are expected to be sold off to pay creditors.
"Slots" at major airports also have a cash value and the company owns an office building in South Florida that could be sold.
Spirit began in 1964 as a trucking company that moved into chartered flights in 1983.
It began scheduled service in 1992 with flights between Detroit and Atlantic City. By 2023 it was the seventh largest passenger carrier in North America.
The airline suffered from a reputation for bad service, legacy carriers offering economy fares, failed mergers, the pandemic, and two bankruptcies before finally closing shop on May 2.
Effects from the war in Iran were cited as the final straw. "recent geopolitical events resulted in a massive and sustained increase in fuel prices," said Spirit in a court filing.
Last August Spirit reported having $8.1 billion in debts and $8.6 billion in assets.
