Spirit Airlines announced on Monday that it has reached an agreement with Airbus to defer all aircraft scheduled for delivery from the second quarter of 2025 through the end of 2026, pushing those deliveries back to 2030-2031.
The move, which excludes two direct-leased aircraft due in 2025, is expected to improve Spirit’s liquidity by approximately $340 million over the next two years.
“This amendment to our agreement with Airbus is an important part of Spirit’s comprehensive plan to bolster profitability and strengthen our balance sheet,” said Ted Christie, Spirit’s President and CEO. “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.”
The deferral comes as Spirit deals with the impact of grounded aircraft due to issues with Pratt & Whitney GTF engine availability. In response, the low-cost carrier plans to furlough around 260 pilots effective September 1, 2024.
“Unfortunately, we had to make the difficult decision to furlough Pilots given the grounded aircraft in our fleet and our deferral of future deliveries,” Christie stated. “We are doing everything we can to protect Team Members, while balancing our responsibility to return to positive cash-flow and thrive as a healthy company with long-term growth prospects.”
Spirit had previously entered into a compensation agreement with Pratt & Whitney regarding the GTF engine issues, estimated to provide $150-200 million in improved liquidity. The airline also plans to evaluate using its financeable assets to raise additional liquidity.
The Airbus amendment defers by two years the exercise dates for optional aircraft in Spirit’s purchase agreement, but does not change the total number of aircraft on order or options.
Spirit has retained Perella Weinberg and Davis Polk as advisors as it explores options to refinance debt maturities and strengthen its balance sheet amidst the current challenges.
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