Spirit Airlines has entered into an agreement to sell 23 of its Airbus A320 and A321 aircraft to aviation services company GA Telesis, a move expected to improve the airline’s liquidity as it navigates financial challenges.
The sale, valued at approximately $519 million, will see the planes delivered between October and February, and is anticipated to benefit Spirit’s cash flow by around $225 million through the end of next year, per a filing with the Securities and Exchange Commission (SEC).
This transaction comes as Spirit faces significant financial strain, exacerbated by a failed merger with JetBlue and sustained operating losses. Recently, Spirit reported a 1.2% decline in capacity for the latest quarter and forecasted a more substantial 20% capacity reduction in the fourth quarter compared to the previous year, citing both the aircraft sale and broader fleet downsizing. Spirit anticipates that its overall capacity could decrease further in 2025, projecting reductions in the mid-teens due in part to the sale and ongoing issues with Pratt & Whitney engines affecting aircraft availability.
As Spirit works to address its $3.3 billion debt load, it is also implementing cost-cutting measures, including an estimated $80 million in annual savings, largely through workforce adjustments. Despite these moves, Spirit’s stock has suffered an 85% drop this year, although the announcement of the aircraft sale led to an 8.7% after-hours rise in share value.
In addition to the sale, Spirit is in “active and constructive discussions” with holders of its senior secured notes maturing in 2025 and convertible notes due in 2026. Recently, the Wall Street Journal reported that Frontier Airlines is exploring a potential acquisition of Spirit, which could align with a debt restructuring initiative if Spirit proceeds with a bankruptcy filing.
Looking forward, Spirit expects to conclude the year with over $1 billion in liquidity if its strategic initiatives proceed as planned.
With input from the Wall Street Journal, Bloomberg, Market Watch.
