Spirit Airlines Delays Airbus Deliveries and Furloughs Pilots to Boost Balance Sheet

Spirit Airlines has announced two major changes to help shore up its balance sheet. 

Firstly, the low-cost carrier has struck a deal with Airbus to delay deliveries of some new planes. Almost all Airbus A320neo Family aircraft that were due to be delivered between Q2 2025 and the end of 2026 are being deferred. 

Spirit says the decision is expected to improve its liquidity position by approximately $340 million over the next two years. The planes will now arrive around five years later between 2030 and 2031.

The U.S. low-cost airline said the move only impacts orders within the 2025-2026 period, with those scheduled after this unaffected. 

It added that the deferrals do not include direct-lease planes due for delivery in the period, with one handover scheduled in both Q2 and Q3 of 2025.

The details were contained within an SEC filing published on Monday morning. 

Ted Christie, Spirit’s President and CEO 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. In addition, enhancing our liquidity provides us additional financial stability as we position the company for a return to profitability.”

“We would like to thank our partners at Airbus for their continued support and commitment to the long-term success of Spirit,” he added.

Spirit To Furlough Pilots

Secondly, the airline is making changes to its pilot pool.

Spirit plans to furlough around 260 pilots from September 1. It says this is “a result of grounded aircraft due to Pratt & Whitney GTF engine availability issues, along with the 2025 and 2026 aircraft deferrals.”

In July 2023, Pratt & Whitney discovered that its geared turbofan (GTF) engines manufactured between Q4 2015 and Q3 of 2021 had a contaminated powdered metal that could interfere with normal functions. 

The issues primarily affected Airbus A320neo jets. This has required carriers such as Spirit to ground planes as they undergo checks and repairs. The low-cost carrier expects to ground 25 A320neos during 2024 alone.

Last week it was revealed that Spirit is expecting to receive anywhere from $150 million to $200 million in compensation for the grounding.

On the pilot furloughs, Christie said: “I am extremely proud of our dedicated Spirit team for their focus and resilience over the last few years. Unfortunately, we had to make the difficult decision to furlough pilots given the grounded aircraft in our fleet and our deferral of future deliveries.

“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,” added the Spirit CEO.

The Air Line Pilots Association (ALPA) is the main labor union representing Spirit flight crew. In a statement provided to Skift, Capt. Ryan Muller, chair of the Spirit ALPA Master Executive Council, said: “The ramifications of [Spirit Airlines’] announced decision are deeply troubling for our entire pilot group. The Spirit ALPA Master Executive Council and Negotiating Committee are exploring voluntary measures that could mitigate the necessity for, or the number of, required furloughs and downgrades.”

“In the meantime, we will support our pilots through these challenging times through access to ALPA’s many resources, timely and factual information, and unity,” Muller added.

Spirit’s Financial Headaches

Spirit has been struggling to make a profit since the pandemic and has $1.1 billion in debt set to mature in 2025.

To further shore up its liquidity, the airline recently sold 25 aircraft and leased them back, allowing it to pay down $465 million in debt and net $419 million in cash. 

After its planned merger with JetBlue collapsed, Spirit’s future direction has not been clear. Some Wall Street analysts previously said the airline may need to file for bankruptcy or find another buyer. 

Christie called those comments a “misguided narrative” during a call with analysts in February.