Spirit Airlines Inc. announced an extensive cost-cutting program, postponing delivery of some new aircraft to the next decade and planning pilot layoffs shortly after its proposed merger with JetBlue Airways Corp. was rejected because of antitrust concerns.
In particular, the low-cost airline announced that it has reached an agreement with Airbus to delay deliveries of some new aircraft and that it plans to lay off around 260 pilots as it attempts to boost its liquidity.
“Of course, these steps are not ones we want to take, but they are necessary to ensure a strong and profitable future for Spirit,” the airline’s chief executive, Ted Christie, said in a memo sent to staff on Monday.
Spirit said it will postpone the delivery of all Airbus aircraft it has ordered that were scheduled to be delivered from the second quarter of 2025 to the end of 2026 to 2030 and 2031.
The postponements do not include the direct lease aircraft to be delivered during this period, with one delivery scheduled for the second quarter of 2025 and one for the third quarter of 2025, nor the deliveries scheduled for the period from 2027 to 2029.
According to the budget airline, the delays in aircraft delivery will boost its liquidity by about $340 million over the next two years.
“Deferring these deliveries gives us the opportunity to restart the business and focus on the core airline while we adapt to the changing competitive environment,” Mr Christie said.
Spirit, based in Miramar, Florida, has been looking for ways to boost liquidity and convince investors it is on track as it has been plagued by the grounding of several Airbus aircraft due to the recall of Pratt & Whitney engines because of a manufacturing problem.
For the grounding of its aircraft, the airline recently reached a compensation agreement with Pratt & Whitney, which will further strengthen its liquidity by $150 to $200 million.
However, due to the prolonged grounding of aircraft to undergo engine maintenance and the decision to postpone deliveries of new aircraft, Spirit announced that it is to lay off approximately 260 pilots by September 1.
As a reminder, Spirit Airlines’ planned merger with JetBlue Airways collapsed earlier this year after a federal judge ruled that the deal would be anticompetitive.
