Spirit Airlines has announced layoffs and jet sales amid financial woes.
Spirit said in a regulatory filing Thursday that it has identified roughly $80 million of cost-cutting measures that will start to be implemented in early 2025. Those measures will be mainly driven by a “reduction in workforce,” according to the Florida-based budget airline.
Spirit did not specify how many workers would be laid off or what positions would be impacted.
A Spirit spokesperson declined to comment further on the matter to The Associated Press on Friday.
A line of Spirit Airlines jets sit on the tarmac at Orlando International Airport on May 20, 2020, in Orlando, Florida. On Thursday, Spirit Airlines announced layoffs and jet sales amid financial woes.
AP Photo/Chris O’Meara
Spirit Selling Planes
The airline also said that it has agreed to sell 23 planes to aviation services company GA Telesis. The $519 million sale will see the delivery of Airbus A320ceo and A321ceo models manufactured between 2014 and 2019 to GA Telesis starting this month and through Feburary.
GA Telesis said Friday that the acquisition will significantly boost its fleet portfolio.
Meanwhile, Spirit expects the proceeds from the sale, along with discharging related debt, to benefit its liquidity by $225 million through the end of next year.
Financial Losses
Spirit failed to return to profitability when the COVID-19 pandemic eased and people began to travel again. This was largely because of increased operational costs and competition from rival airlines offering their own versions of low-cost tickets.
Since the start of 2020, Spirit lost over $2.5 billion. The airline also has a looming debt payment of over $1 billion.
Spirit estimated in Thursday’s regulatory filing that its fourth-quarter capacity will drop 20 percent from last year. A company’s capacity is the maximum output level it can sustain to provide its products or services.
The airline also expects capacity to fall by the midteens for 2025, which accounts for GA Telesis’ acquisition and the prior removal of some other planes from scheduled service because of ongoing issues with the availability of Pratt & Whitney GTF engines.
Failed Frontier and JetBlue Mergers
Fellow budget carrier Frontier Airlines tried to merge with Spirit in 2022 but was outbid by JetBlue.
This past January, a federal judge blocked JetBlue from buying Spirit after the Biden administration argued that the merger would reduce competition and increase the price of tickets.
The deal, U.S. District Judge William Young said in his ruling, “would likely place stronger competitive pressure on the larger airlines in the country. At the same time, however, the consumers that rely on Spirit’s unique, low-price model would likely be harmed.”
Meanwhile, The Wall Street Journal reported Tuesday, citing unnamed sources familiar with the matter, that Frontier was in early talks of a possible renewed bid for Spirit.
The Journal reported that if a deal is reached, it would likely be part of Spirit restructuring its debt and other liabilities in bankruptcy.
Spirit has been negotiating with bondholders over the terms of a potential bankruptcy filing, according to the Journal.
This article includes reporting from The Associated Press.
