A Spirit Airlines aircraft undergoes operations in preparation for departure at the Austin-Bergstrom International Airport on February 12, 2024 in Austin, Texas.
Brandon Bell | Getty Images
Spirit Airlines said Monday that it will defer deliveries of new Airbus planes and that it plans to furlough about 260 pilots as it tries to boost liquidity.
“Of course, these steps aren’t ones we want to take but they’re necessary to ensure a strong and profitable future for Spirit,” CEO Ted Christie said in a note to staff Monday.
Spirit said it will defer all Airbus planes it has on order that were scheduled to be delivered from the second quarter of 2025 through the end of 2026. It will instead take delivery of them in 2030 and 2031. The deferrals do not include the direct-lease planes — one apiece in the second and third quarter of next year — nor scheduled deliveries for 2027 through 2029, Spirit said.
The budget airline said the deferrals would boost its liquidity by about $340 million over the next two years.
“Deferring these aircraft gives us the opportunity to reset the business and focus on the core airline while we adjust to changes in the competitive environment,” Christie said in a news release.
Miramar, Florida-based Spirit has been looking for ways to boost liquidity and convince investors that it is on track to do so as it struggles with the the grounding of many of its Airbus planes because of a Pratt & Whitney engine recall. Its planned acquisition by JetBlue Airways fell apart earlier this year after a federal judge ruled in January that the deal would be anti-competitive.
The airline said March 29 that it will receive monthly payments in compensation for the grounded Pratt & Whitney engines through the end of 2024, which would lift liquidity between $150 million and $200 million.
The pilot furloughs would take effect in September, Spirit said Monday. The airline already had leaves of absence in place for flight attendants and there is “no plan” for cabin crew furloughs, their union, the Association of Flight Attendants told members Monday. Spirit is closing its Atlantic City, New Jersey, crew base and staff will be reassigned.
Spirit’s Airbus delivery slots are likely to be in high demand. Airlines have adjusted their hiring and training in recent weeks, citing a scarcity of aircraft — a sharp change from the pilot shortage that worsened when travel demand snapped back after the worst of the pandemic.
United Airlines pilots’ union last month said the company is offering unpaid time off for pilots next month because of late-arriving planes from Boeing. The carrier said it was also removing Boeing’s Max 10 jets from its fleet plan because it was unclear when regulators would certify the planes. United declined to comment on whether it will take Spirit’s Airbus delivery slots.
An Airbus spokeswoman said the slots could be remarketed, but she declined to comment on “any conversations we may or may not be having with various customers.”
The Air Line Pilots Association, Spirit pilots’ union, said Monday it is exploring voluntary measures that could limit the number of pilot furloughs.
“Coupled with the retirement of our A319 fleet and the ongoing Pratt & Whitney GTF engine issue, the airline finds itself with more pilots than its operations require,” Ryan Muller, chairman of the Spirit ALPA chapter, said in an emailed statement. “The ramifications of the Company’s announced decision are deeply troubling for our entire pilot group.”
Spirit said in the filing that it plans to publish its next financial outlook for the quarter and full year within the next week. It is scheduled to report first-quarter results before the market opens on May 6.
This article was originally published on CNBC