Spirit Airlines is deferring aircraft deliveries and will start furloughing pilots later this year, following JetBlue’s failed takeover bid.
Just over a month ago, we saw that Spirit Airways and JetBlue Airlines announced that they are giving up their efforts to appeal a ruling that put an end to their merger bid. Even before that, there were worries that Spirit could face bankruptcy as a result.
The latest news is that Spirit is trying to conserve cash by taking actions that impact its pilots and its future aircraft deliveries. Pilot furloughs will begin on the 1st of September, affecting 260 pilots.
As for aircraft, Spirit will continue to take deliveries of new jets this year and for the first half of 2025. But deliveries from the second half of next year are getting deferred to 2030 or later.
Spirit claims that by furloughing pilots and deferring aircraft deliveries, it will improve its liquidity by approximately $340 million over the next two years. It is unclear at this time how much the airline’s strategy will impact cabin crews and other employees.
Spirit and the Timing of Pilot Furloughs and Aircraft Delivery Deferrals
In previous years, Spirit had been pursuing a rapid growth, placing a number of aircraft, right up to the start of the pandemic. More recently, the airline benefited from domestic recovery and pursued a network expansion in popular leisure routes.
However, other airlines were doing the same. We have seen how the resulting overcapacity in Florida is forcing airlines like Frontier to change their strategy. But Spirit has an additional issue, in having a large fleet of grounded A320neo-family aircraft, because of Pratt & Whitney engines that need unscheduled checks.
That’s why Spirit isn’t stopping aircraft deliveries until nine months after it starts furloughing pilots. The airline needs some new jets for now, as P&W engine checks could still last for many months to come.
In the current environment, Airbus would likely have very little (if any) trouble remarketing Spirit’s aircraft delivery slots after Q2 of 2025. The events of the past few years mean that there is an aircraft shortage, so Airbus has likely already found homes for these jets.
With large numbers of existing aircraft grounded (due to engine checks), Spirit can’t fly enough to need all of its pilots. But the combination of grounded jets and no new deliveries means that its operations will shrink substantially. And given the overcapacity issue, this means that Spirit will lose a good portion of its market share in several markets.
