Key Takeaways
- Spirit Airlines reached an agreement with Airbus to defer delivery of passenger jets in a cost-cutting move.
- The discount carrier said the deal would help it save $340 million over the next two years.
- In addition, Spirit will be furloughing 260 pilots in September.
- Shares in the airline were more than 4% higher in early-afternoon trading Monday, though they’re still down 70% since the start of the year.
Spirit Airlines (SAVE) announced it was delaying delivery of jets and furloughing pilots in cost-cutting moves, sending shares of the troubled carrier higher on Monday.
Spirit said that it had reached an agreement with Europe’s Airbus to “defer all aircraft on order that are scheduled to be delivered in the second quarter of 2025 through the end of 2026 to 2030-2031.” It added that the decision would “improve Spirit’s liquidity position by approximately $340 million over the next two years.”
Spirit explained that, because of the deferrals and problems already with deliveries of Airbus A320neo jets owing to an engine issue, the company would be furloughing about 260 pilots as of September 1.
The airline’s chief executive officer, Ted Christie, called the revised agreement with Airbus an important part of Spirit’s plan to “bolster profitability and strengthen our balance sheet.” He said the deal gives the airline “ the opportunity to reset the business and focus on the core airline while we adjust to changes in the competitive environment.”
As for the job reductions, Christie reportedly told the staff in a memo that while the steps weren’t the ones the company wanted to take, they were necessary to ensure a strong and profitable future.
Earlier this year, JetBlue (JBLU) and Spirit called off a $3.8 billion proposed merger after regulators blocked the deal. The deal, sealed between the carriers in mid-2022, would have created the 5th-largest airline in the U.S.
Spirit shares were up 4.5% at $4.63 at around 1:00 p.m. ET. Despite today’s gains, the stock has lost 70% of its value so far in 2024.