Spirit Airlines plans to cut jobs, sell planes amid looming financial woes
NEW YORK - Spirit Airlines is cutting jobs and selling off some jets worth millions of dollars as the budget carrier aims to cut costs amid looming financial struggles and an uncertain future.
In a Thursday regulatory filing, Spirit said it has identified about $80 million of cost-cutting measures set to begin early next year. Those cuts will be driven primarily by a "reduction in workforce," the Florida-based airline noted.
Spirit did not specify a number for the layoffs or what positions would be impacted. A spokesperson for the company declined to comment further when reached by The Associated Press Friday.
The budget airline also disclosed that it's agreed to sell 23 airplanes to GA Telesis, an aviation services company, for about $519 million. The Airbus A320ceo and A321ceo models, which were manufactured between 2014 and 2019, are expected to be delivered starting this month and through February.
GA Telesis celebrated the acquisition on Friday, noting that it will significantly boost its fleet portfolio. And Spirit expects the sale's proceeds, combined with discharging related debt, to benefit its liquidity by $225 million through the end of 2025.
Shares for Spirit climbed 25%, to $3.01, by midday trading Friday. But the stock is down more than 80% over the last year.
The last few years have been far from smooth sailing for Spirit. The airline failed to return to profitability when the COVID-19 pandemic eased and travel rebounded — largely due to rising operational costs and increased competition. Rival carriers have snagged some of Spirit's budget-conscious customers by offering their own versions of low cost, no-frills tickets.
Loss after loss has continued to pile up in the meantime — with the company losing more than $2.5 billion since the start of 2020. Spirit also faces mounting debt, with looming payments totaling more than $1 billion.
Spirit now estimates its fourth-quarter capacity to drop 20% from last year, according to Thursday's regulatory filing. And the company expects capacity to fall by the midteens for 2025, which accounts for this month's sale and prior removal of some other planes from scheduled service due to ongoing problems with the availability of Pratt & Whitney GTF engines.
Bankruptcy speculation has also been hovering over Spirit, which has become an attractive takeover target. Although a merger has yet to be successful. JetBlue recently attempted to buy Spirit, but to two airlines dropped the deal after a federal judge blocked the acquisition over antitrust concerns in January.
Previously, Frontier Airlines also tried to merge with Spirit, but was outbid by JetBlue at the time. Earlier this week, however, The Wall Street Journal reported that Frontier was in early talks of exploring a renewed bid, citing unnamed sources familiar with the matter.
The deal, if reached, could include Spirit restructuring its debt and other liabilities in bankruptcy, per The Journal — which also reported that the airline continues to be in discussions with bondholders over a potential bankruptcy filing. Spirit's spokesperson declined to comment.
