Monday, May 27, 2024

Spirit Airlines to furlough 260 pilots, defer Airbus plane deliveries to help liquidity

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Spirit Airlines announced on Monday that pilots would be furloughed and that deliveries of Airbus planes scheduled for 2025 and 2026 until 2030 and 2031 will be delayed to be more profitable.

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Spirit Airlines said they will furlough pilots and delay deliveries of new Airbus planes to improve its liquidity.

The budget airline announced on Monday that it reached an agreement with Airbus to defer all aircraft on order scheduled to be delivered in the second quarter of 2025 through the end of 2026 to 2030 and 2031.

The move is projected to improve the airline’s liquidity by approximately $340 million over the next two years, according to the press release.

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Spirit Airlines set to furlough pilots

The airline said it will also furlough approximately 260 pilots effective September 1, 2024, due to the aircraft deferrals and Pratt & Whitney Geared Turbofan (GTF) engine availability issues.

Ryan Muller, head of Spirit’s pilot union, said the airline has more pilots than its operations require. The union is exploring voluntary measures to reduce the need for furloughs and downgrades, he said.

Spirit Airlines to delay delivery of new Airbus planes

A snag with Pratt & Whitney GTF engines has forced Spirit to ground some of its A320neo aircraft. It has said the number of grounded jets would climb steadily to an average of about 40 in December 2024.

According to the airline, a recent agreement with Pratt & Whitney on compensation over their GTF engines would improve Spirits’ liquidity by between $150 million and $200 million.

“This amendment to our agreement with Airbus is an important part of Spirit’s comprehensive plan to bolster profitability and strengthen our balance sheet,” Ted Christie, Spirit’s President and Chief Executive Officer said. “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 does not impact planes scheduled for delivery in 2027 through 2029, Spirit said.

The ultra-low-cost airline has been facing questions about its future after losing money in the past six quarters despite booming travel demand.

Analysts and industry officials say the airline will have to make drastic changes, including cutting flights and exiting some markets to become profitable, which is still not likely to happen this year.

Contributing: Reuters

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