Spirit Airlines (NK, Fort Lauderdale International) has announced the furloughing of approximately 260 pilots, effective September 1, 2024, on the back of its decision to defer all aircraft on order that were scheduled to be delivered in the second quarter of 2025 through to the end of 2026, to 2030-2031.
The company posted a USD142.6 million net loss (a 37.2% increase year over year) on operating revenues of USD1.26 billion (a 6.2% decrease year over year) in the first quarter of 2024. Spirit was impacted by the collapse of its merger with JetBlue Airways (B6, New York JFK), the grounding of several Airbus planes due to the ongoing Pratt & Whitney engine recall, and changes in the demand and competitive environments.
The furloughs will not result in a substantial financial obligation, Spirit said in its financial results. Additionally, the carrier will close its crew base in Atlantic City. Together with the amendment of its deliveries, these initiatives are part of its plan to return to profitability and strengthen its balance sheet.
Spirit closed the quarter with a fleet of 207 Airbus A320-family aircraft comprised of fourteen A319-100s, sixty-four A320-200s, eighty-seven A320-200Ns, thirty A321-200s, and twelve A321-200NX.
Expected impact of the Pratt & Whitney groundings
Earlier this year, Spirit announced it had entered into an agreement with Pratt & Whitney affiliate International Aero Engines, in which IAE will provide the carrier with compensation of between USD150 million and USD200 million in a monthly credit.
These credits will be recognised as a reduction of the purchase price of the goods or services acquired from IAE during the period, including the purchase of maintenance, spare engines, and short-term rentals of spare engines.
Additionally, Pratt & Whitney agreed to issue Spirit USD30.6 million in credits related to the aircraft on ground (AOG) days during the first quarter. It estimates it will earn credits of approximately USD42 million during the second quarter.
However, this negotiated compensation “does not remediate all financial damages associated with the aircraft grounding,” the airline said. Spirit Airlines estimates it will have an average of 25 airframes grounded, finishing the year with up to 40 AOGs. It believes the number could grow throughout 2025 and could end next year with around 70 planes on the ground from this issue, but it added that the situation is very fluid.
The company said that the overall combination of AOG compensation, aircraft deferrals, and cost savings will improve Spirit’s cash levels by USD450 million to USD500 million in 2024.
