Spirit Airlines delays aircraft deliveries and furloughs 260 pilots for cost-cutting measures

Spirit Airlines has announced that they have reached an agreement with Airbus to postpone all aircraft deliveries originally planned for the second quarter of 2025 through 2026. In addition to this decision, the company also plans to temporarily lay off around 260 pilots in an effort to save money.

The low-cost airline will be rescheduling the deliveries to the years 2030-2031. This change in plans is due to both the postponed deliveries and issues related to the quality of engines provided by supplier Pratt & Whitney. Consequently, Spirit Airlines will be implementing pilot furloughs starting on September 1st.

Spirit (SAVE) saw a 5% increase in shares during early trading. Unfortunately, the company faced a setback with Pratt & Whitney Geared Turbofan engines, leading to the grounding of some A320neo aircraft. This added pressure on Spirit as they were already dealing with financial difficulties.

Spirit Airlines announced that the agreement with Airbus would boost its liquidity by approximately $340 million in the next two years. The carrier also confirmed that there were no alterations to its existing orders set for delivery between 2027 and 2029.

Citi Research analyst Stephen Trent noted that the deferrals of aircraft and pilot furloughs could have a positive impact on reducing costs for the carrier. However, he also pointed out that these actions might limit revenue-generating opportunities for Spirit Airlines.

Spirit, which has been experiencing financial losses for multiple quarters despite high travel demand, currently operates a fleet comprised solely of Airbus aircraft. As of December 2023, the company had a total of 205 Airbus jets.

Spirit now anticipates concluding the year 2025 with a total of 219 jets within its fleet, excluding any new additions of the A320neo aircraft. Previously, the company had planned to incorporate six A320neo jets in 2025, aiming to expand its fleet to 234 jets.

Ryan Muller, chair of Spirit’s Master Executive Council at the Air Line Pilots Association, expressed concern over the furloughs, stating that they are deeply troubling for the entire pilot group.

Muller mentioned that the council and a negotiating committee are actively looking into voluntary measures that could help reduce the need for furloughs or minimize the number of pilots affected.

Editor's P/S:

Spirit Airlines' decision to postpone aircraft deliveries and temporarily lay off pilots highlights the challenges faced by the low-cost carrier. While the agreement with Airbus may provide financial relief in the short term, it raises concerns about future growth and revenue generation. The issue with Pratt & Whitney engines has added to Spirit's financial woes, leading to the grounding of aircraft and further operational disruptions.

The pilot furloughs are particularly troubling, as they indicate the severity of Spirit's financial situation. The Air Line Pilots Association is actively seeking voluntary measures to mitigate the impact on its members. However, the company's long-term outlook remains uncertain, with the rescheduling of aircraft deliveries potentially limiting its ability to expand and capitalize on the ongoing travel demand.