Spirit Airlines recently announced an agreement with Airbus to defer aircraft deliveries, a move that will have significant financial implications for the struggling airline. The agreement will see planes that were originally scheduled for delivery between the second quarter of 2025 and the end of 2026 now being pushed back to 2030 and 2031. According to Spirit, this decision will improve the liquidity of the airline by $340 million over the next two years. This comes as welcome news for the carrier, which has been grappling with financial challenges, including a $496 million operating loss last year.
Impact on Pilot Force and Grounded Planes
As a result of the deferred deliveries, Spirit will be forced to furlough 260 pilots effective September 1. This move is in addition to grounding approximately 26 Airbus A320neo planes for engine inspections due to potential metal contamination. The airline had reached a compensation agreement with Pratt & Whitney for between $150 to $200 million due to the grounded planes, further highlighting the financial strain that Spirit is under.
Spirit’s decision to defer aircraft deliveries and shore up its financial position is part of a broader strategy to strengthen its balance sheet and position the airline for profitability in the future. With $1.3 billion in liquidity as of December 31, Spirit is taking proactive steps to address its financial challenges. In addition to the deferrals, the airline is evaluating options for refinancing $1.1 billion in loyalty program debt that will come due in September 2025.
CEO Ted Christie emphasized the importance of the agreement with Airbus in bolstering profitability and strengthening the company’s balance sheet. He highlighted that the deferrals provide Spirit with the opportunity to focus on its core airline operations and navigate the evolving competitive landscape. With the revised delivery schedule, Spirit now expects to have a fleet of 219 aircraft by the end of next year, down from the initial plan of 234 planes. It is important to note that Spirit operates an all-Airbus fleet, emphasizing the carrier’s commitment to the aircraft manufacturer.
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