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Spirit Airlines Delays Deliveries and Furloughs Pilots
April 8, 2024
Spirit Airlines announced Monday that it has struck a deal with Airbus to push back all aircraft deliveries originally slated for the second quarter of 2025 through 2026. This move comes as part of the company’s efforts to hoard cash, with about 260 pilots facing furloughs.
The budget airline disclosed its plan to postpone the scheduled deliveries to the distant horizon of 2030-2031. This delay, coupled with complications arising from quality issues with Pratt & Whitney engines, has prompted Spirit to initiate pilot furloughs starting Sept. 1.
As a result of these deferrals and the engine woes, Spirit’s shares (trading under SAVE) saw a modest uptick of around 5% during early trading hours.
Problems with Pratt & Whitney’s Geared Turbofan engines have forced Spirit to ground some of its A320neo aircraft, tightening the screws on the company’s finances during an already challenging period.
According to Spirit, the agreement with Airbus is expected to bolster the company’s liquidity by approximately $340 million over the next couple of years. However, this restructuring doesn’t alter the existing orders slated for delivery between 2027 and 2029.
Analyst Stephen Trent from Citi Research views the aircraft deferrals and pilot furloughs as a mixed bag, potentially offering cost relief while simultaneously constraining revenue generation opportunities.
Despite robust travel demand, Spirit has been in the red for several quarters. The airline exclusively operates Airbus aircraft, boasting a fleet of 205 jets as of December 2023.
Now, Spirit anticipates concluding 2025 with a total of 219 jets, with no additions of A320neo aircraft. The earlier plan to add six A320neo jets in 2025 and expand the fleet to 234 jets has been scrapped.
Ryan Muller, chair of Spirit’s Master Executive Council at the Air Line Pilots Association, expressed deep concern over the looming furloughs, emphasizing ongoing efforts to explore voluntary measures to alleviate or reduce the need for layoffs and demotions.
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