Spirit Airlines, one of the US’s prominent ultra-low-cost carriers, announced a series of financial and operational steps to stabilize its finances and mitigate bankruptcy risks.
In an Oct. 24 regulatory filing, the company outlined its “continued strategy to return to profitability,” detailing plans to sell aircraft, reduce staffing, and implement a temporary hiring freeze.
Spirit revealed that it will raise approximately $519 million by selling 23 of its older Airbus aircraft to GA Telesis, a company specializing in aircraft maintenance and components. Deliveries of these planes are expected to be completed by February 2025. Alongside the aircraft sale, Spirit aims to cut about $80 million in costs, primarily by reducing its workforce. The company had previously announced job cuts affecting approximately 240 pilots and a demotion of 100 captains and will offer voluntary unpaid leave to existing cabin crew members.
This announcement follows recent fluctuations in Spirit’s stock value. The company’s shares surged 15.3% to close at $2.79, reflecting investor confidence following the debt refinancing agreement it reached last week. The arrangement, made with creditors Visa and Mastercard, grants Spirit additional flexibility by extending a $1.1 billion debt repayment deadline to Dec. 23 and securing $300 million in revolving credit, leaving the airline with around $1 billion in liquidity.
In terms of operational capacity, Spirit reported a slight decline of 1.2% for the third quarter of 2024 and anticipates a fourth-quarter capacity reduction of nearly 20% compared to the previous year. The company attributes this to the sale of aircraft and issues with its fleet’s Pratt & Whitney geared turbofan engines, which have impacted availability. Spirit expects to retire some of its A319ceo planes, ground up to 25 A320neos due to the engine issues, and add six new A321neo aircraft in 2025.
Further adjustments could be on the horizon as Spirit has continued talks with potential merger partners. Although a previously proposed merger with JetBlue was blocked by a federal judge earlier this year, reports indicate renewed interest in a partnership with Frontier Airlines, which had made an acquisition bid for Spirit in 2022.
Spirit is expected to release additional financial and operational updates when it reports third-quarter results in mid-November.
With input from the Street and Local 12.
