Spirit Airlines, a budget airline based in Miramar, Florida, has announced measures to boost its liquidity. The airline will defer deliveries of new Airbus planes and furlough approximately 260 pilots. CEO Ted Christie stated that while these steps are not ideal, they are necessary to ensure a strong and profitable future for Spirit.
The deferral of Airbus plane deliveries is a significant move for the airline. Spirit will delay the delivery of all Airbus planes that were scheduled to be received between the second quarter of 2025 and the end of 2026. Instead, the planes will be delivered in 2030 and 2031. This decision is expected to increase the airline’s liquidity by approximately $340 million over the next two years. Christie explained that deferring these aircraft allows Spirit to focus on its core operations while adapting to changes in the competitive environment.
Spirit Airlines has been facing challenges in recent months, including the grounding of many of its Airbus planes due to a Pratt & Whitney engine recall. The airline’s planned acquisition by JetBlue Airways also fell through earlier this year after a federal judge ruled against it on anti-competitive grounds. To address these issues and improve its financial situation, Spirit will receive monthly payments as compensation for the grounded engines through the end of 2024, amounting to an increase in liquidity between $150 million and $200 million.
In addition to deferring plane deliveries, Spirit Airlines will also furlough around 260 pilots starting in September. The airline already had leaves of absence in place for flight attendants, and there are currently no plans for cabin crew furloughs. The pilot furloughs are a response to the airline’s surplus of pilots, which has been exacerbated by the retirement of its A319 fleet and ongoing issues with Pratt & Whitney engines.
Other airlines have also made adjustments in recent weeks due to a scarcity of aircraft, a stark contrast from the pilot shortage experienced during the height of the pandemic. United Airlines, for example, is offering unpaid time off for pilots next month due to delays in Boeing plane deliveries.
The Air Line Pilots Association, the union representing Spirit pilots, is exploring voluntary measures to limit the number of pilot furloughs. Ryan Muller, chairman of the Spirit ALPA chapter, expressed concern about the implications of the furloughs for the pilot group.
Spirit Airlines plans to publish its next financial outlook for the quarter and full year in the coming week. The airline is expected to report its first-quarter results on May 6.
In conclusion, Spirit Airlines is implementing measures to boost liquidity by deferring Airbus plane deliveries and furloughing pilots. These steps are necessary for the airline to navigate current challenges and ensure a strong future. By resetting the business and focusing on core operations, Spirit aims to adapt to changes in the competitive landscape and improve its financial situation.
