Monday, April 8, 2024
Spirit Airlines, Inc. has recently finalized an agreement with Airbus to defer the delivery of all aircraft scheduled for the second quarter of 2025 through the end of 2026 to the years 2030-2031. This deferral excludes the direct-lease aircraft set for delivery during this timeframe, one each in the second and third quarter of 2025. Through this arrangement with Airbus, Spirit anticipates an enhancement of approximately $340 million in its liquidity over the next two years.
Aircraft orders with Airbus slated for delivery between 2027 and 2029 remain unchanged.
Due to grounded aircraft stemming from Pratt & Whitney GTF engine availability issues, coupled with the deferrals of 2025 and 2026 aircraft, Spirit has announced its intention to furlough approximately 260 pilots effective September 1, 2024.
In a recent development, Spirit has entered into a compensation agreement with Pratt & Whitney concerning its GTF engines. This agreement is anticipated to bolster Spirit’s liquidity by an estimated $150 million to $200 million over the duration of the agreement. Furthermore, Spirit will be actively assessing the utilization of its current financeable assets to augment liquidity in the coming months.
“This amendment to our agreement with Airbus is an important part of Spirit’s comprehensive plan to bolster profitability and strengthen our balance sheet,” said Ted Christie, Spirit’s President and Chief Executive Officer. “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.”
Christie continued, “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. I thank the Spirit team for continuing to deliver affordable fares and great experiences to Guests.”
The Airbus agreement also extends by two years the deadlines for exercising options for additional aircraft outlined in Spirit’s purchase agreement. This extension does not alter the overall quantity of aircraft on order or Spirit’s options for supplementary aircraft.
As previously indicated, Spirit has engaged Perella Weinberg & Partners L.P. and Davis Polk & Wardwell LLP as advisors. The company has been implementing and will persist in taking careful measures to fortify its balance sheet and sustain its operations. This includes exploring opportunities to refinance forthcoming debt maturities and bonds.
Monday, April 29, 2024
Monday, April 29, 2024
Monday, April 29, 2024
