Spirit Airlines recently announced that they have reached an agreement with Airbus to defer aircraft deliveries. The planes that were originally scheduled to arrive between the second quarter of 2025 and the end of 2026 will now be delivered in 2030 and 2031. This strategic move is aimed at improving the liquidity of the struggling airline by $340 million over the next two years.
Impact on Operations and Workforce
As a result of the deferrals, coupled with aircraft grounding for engine inspections, Spirit Airlines will be forced to furlough 260 pilots, effective September 1st. The airline expects an average of 26 Airbus A320neo planes to be grounded this year for engine inspections, following potential metal contamination concerns. This decision comes after Spirit had previously announced a compensation agreement with Pratt & Whitney worth between $150 million and $200 million.
Spirit Airlines had $1.3 billion in liquidity as of December 31st, but with the sustained operating loss of $496 million last year, the discount carrier is actively working to shore up its financial position. In addition to the aircraft delivery deferrals, the airline is assessing options for refinancing $1.1 billion in loyalty program debt due in September 2025. CEO Ted Christie emphasized the importance of these measures in strengthening the company’s balance sheet and positioning it for profitability.
With the delivery deferrals in place, Spirit Airlines now anticipates having a fleet of 219 aircraft by the end of next year, down from the previous schedule of 234 planes. The decision to focus on an all-Airbus fleet reflects the company’s commitment to optimizing its operations and navigating the challenges of the competitive environment.
Overall, the agreement with Airbus to defer aircraft deliveries signifies Spirit Airlines’ proactive approach to addressing financial challenges and adapting to market dynamics. By prioritizing liquidity, operational efficiency, and strategic planning, the airline aims to emerge stronger and more resilient in the post-pandemic aviation industry.