Spirit Airlines has reached a deal with Airbus to postpone all aircraft deliveries initially planned for the second quarter of 2025 through 2026. The airline intends to defer these deliveries to 2030-2031 in order to save cash, alongside furloughing around 260 pilots effective September 1. Shares of Spirit rose about 5% in response to this news. The airline has been facing issues with Pratt & Whitney Geared Turbofan engines, leading to the grounding of some A320neo aircraft and exacerbating their cash crunch.
The agreement with Airbus is expected to improve Spirit’s liquidity by approximately $340 million over the next two years. Despite the deferrals, there have been no changes to the airline’s orders scheduled for delivery during 2027-2029. Citi Research analyst Stephen Trent views the aircraft deferrals and pilot furloughs positively in terms of cost reduction, but notes that it may also limit the carrier’s revenue generation opportunities. Spirit currently operates an all-Airbus fleet, with 205 jets in its fleet as of December 2023.
Spirit now anticipates ending 2025 with a total of 219 jets, without the addition of A320neo aircraft. Previously, the airline had planned on adding six A320neo jets in 2025 and increasing its fleet to 234 jets. The furloughs have raised concerns among the pilot group at Spirit, with the Master Executive Council at the Air Line Pilots Association expressing worry over the situation. The council and a negotiating committee are exploring voluntary measures to help mitigate the need for furloughs or reduce the number of affected pilots.
Financial struggles have been ongoing for Spirit, which has been operating at a loss despite strong travel demand. The combination of delayed aircraft deliveries, quality issues with engines, and the need for cost-saving measures has prompted these actions by the airline. The deferrals are seen as a way to navigate the current challenges and improve liquidity in the short term, although they may impact revenue potential in the future. The airline remains committed to its Airbus fleet and is making strategic adjustments to its fleet size and delivery schedule to manage its financial obligations.
