Spirit Airlines to defer Airbus deliveries, furlough pilots to boost liquidity
By Tomi Kilgore
Spirit to furlough 260 pilots starting Sept. 1
Shares of Spirit Airlines Inc. rallied Monday, after the air carrier announced an agreement to defer deliveries of Airbus SE aircraft to improve its liquidity position by $340 million over the next two years.
As a result of the deferrals, as well as because of the grounding of planes with Pratt & Whitney GTF engines, Spirit (SAVE) said it would furlough about 260 pilots starting Sept. 1, 2024.
"This amendment to our agreement with Airbus (EADSY) (FR:AIR) is an important part of Spirit's comprehensive plan to bolster profitability and strengthen our balance sheet," said Spirit Chief Executive Ted Christie.
Spirit's stock rose 4% in morning trading. But year to date, it has tumbled 71.8%, and closed at a record low of $4.10 on March 19, as Spirit's merger with JetBlue Airways Corp. (JBLU) fell apart because of regulatory pushback.
In comparison, JetBlue's stock has rallied 25.1% this year, while the U.S. Global Jets ETF JETS has gained 7.4% and the S&P 500 index SPX has advanced 9.3%.
Spirit said Monday that the delivery deferrals are for aircraft ordered to be delivered in the second quarter of 2025 through the end of 2026, and for 2030 to 2031. The company said there are no changes for deliveries scheduled for 2027 to 2029.
As a result of the deferrals, as well as because of the aircraft grounded due to Pratt & Whitney engine availability issues, Spirit said it plans to furlough about 260 pilots, starting Sept. 1, 2024.
In addition to the $340 million in improved liquidity from the delivery deferrals, the company estimates it will receive between $150 million and $200 million as part of a recently announced compensation agreement with RTX Corp.'s (RTX) Pratt & Whitney given the issues with the GTF engines.
"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," CEO Christie said. "In addition, enhancing our liquidity provides us additional financial stability as we position the company for a return to profitability."
-Tomi Kilgore
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04-08-24 1102ET
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