After Failed Merger, Spirit Takes Measures to Preserve Cash
Joe Cortez April 09, 2024
Reuters reports the ultra-low-cost-carrier is looking for ways to keep their finances balanced after a planned merger with JetBlue was denied by a federal court.
New Deliveries Pushed Back to 2030, Furloughs Begin in September
Even though travel demand is reaching new heights after the pandemic, Spirit Airlines has not had a profitable quarter since 2022. To retain cash and get back to profitability, the airline says they will take several moves improve their balance sheet.
The first is to delay new deliveries of Airbus airframes from a planned delivery date between the second quarter of 2025 and into 2026, until at least 2030 and 2031. Spirit still plans to take new aircraft deliveries between 2027 and 2029. The delay coincides with quality control issues at engine manufacturer Pratt & Whitney. The move will save the airline around $340 million in liquidity.
In addition to the delays, the airline is expected to furlough 260 pilots, as there are more aviators than aircraft available. The pilot’s union is currently working with Spirit to explore other measures to prevent furloughs or pilot downgrades this year. Cabin crews are not expected to see any workforce reductions, though the carrier is closing their Atlantic City, New Jersey crew base and will offer transfers to affected personnel.
Spirit is planning to give shareholders a more comprehensive update by April 15, 2024. Analysts see the move as both a positive and a negative. Citi analysts cite the furloughs and delays as a good way to “reduce or defer costs,” while hurting the carrier by hindering revenue generation opportunities.
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That's unfortunate to hear. We just spent $1,200 for two returns next month. BFS is the best deal in the skies. Cheaper than Y class on all other airlines for those dates. I'd hate to see them go out of business...
Of course, the executives responsible for the situation (admittedly exacerbated by the pandemic) will be given raises and bonuses for taking care of it...