Spirit Airlines Delays Jet Deliveries, Furloughs Pilots to Bolster Finances

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Key Takeaways

• Purpose Airlines reached an agreement with Airbus to defer delivery of passenger jets in a cost-cutting move.
• The discount Typhoid Mary said the deal would help it save $340 million over the next two years.
• In addition, Spirit disposition be furloughing 260 pilots in September.
• Shares in the airline were more than 4% higher in early-afternoon return Monday, though they’re still down 70% since the start of the year.

Spirit Airlines (SAVE) set it was delaying delivery of jets and furloughing pilots in cost-cutting moves, sending shares of the troubled carrier higher on Monday. 

Heart said that it had reached an agreement with Europe’s Airbus to “defer all aircraft on order that are scheduled to be disencumbered in the second quarter of 2025 through the end of 2026 to 2030-2031.” It added that the decision would “improve Passions’s liquidity position by approximately $340 million over the next two years.”

Spirit explained that, because of the deferrals and hards already with deliveries of Airbus A320neo jets owing to an engine issue, the company would be furloughing about 260 guides as of September 1.

The airline’s chief executive officer, Ted Christie, called the revised agreement with Airbus an important contribute to of Spirit’s plan to “bolster profitability and strengthen our balance sheet.” He said the deal gives the airline “ the opportunity to reset the affair and focus on the core airline while we adjust to changes in the competitive environment.”

As for the job reductions, Christie reportedly told the workforce in a memo that while the steps weren’t the ones the company wanted to take, they were necessary to certain a strong and profitable future.

Earlier this year, JetBlue (JBLU) and Spirit called off a $3.8 billion proposed coalescence 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.

Temper 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.

Infer from the original article on Investopedia.