Spirit Airlines continues shoring up its liquidity, with the agreement signed shortly after its deal with Pratt & Whitney.
Spirit Airlines announced that it has agreed with Airbus to change the delivery schedule of aircraft that were intended to be delivered through two different periods in the upcoming decade. As a result, the airline should improve its liquidity position during the next two years.
Deferring near-term Airbus A320neo aircraft deliveries
According to the United States Securities and Exchange Commission (SEC) filing on April 8, 2024, Spirit Airlines and Airbus agreed on an amendment on April 3 for the A320neo family agreement, which was signed on December 20, 2019.
As a result of the amendment, Spirit Airlines will defer all aircraft that were scheduled to be delivered from Q2 2025 to the end of 2026 to the period between 2030 and 2031. In addition, the delivery period of option aircraft between 2027 and 2029 and 2029 and 2031 were also adjusted.
However, the amendment has not changed the number of aircraft on order and scheduled to be delivered between 2027 and 2029. As such, Spirit Airlines' liquidity should improve by around $340 million in the next two years.
Furloughing pilots due to Pratt & Whitney engine issues
At the same time, the airline will reduce its pilot headcount due to additional capacity cuts because of the reduced availability of the Pratt & Whitney PW1100G engines due to prolonged turnaround times, which power the airline’s A320neo family aircraft fleet.
When the carrier filed its Q4 2023 financial results, Spirit Airlines said that its capacity, measured in available seat miles (ASM), could remain flat or grow by mid-single digits Year-on-Year (YoY) in 2024. As such, the carrier said that it will furlough 260 pilots starting September 1, 2024, both due to engine availability issues and deferred deliveries.
Compensation from Pratt & Whitney
Still, the airline and Pratt & Whitney entered into an agreement on March 26, which was filed with the SEC three days later. Then, Spirit Airlines said that Pratt & Whitney, via its International Aero Engines (IAE) subsidiary, would provide the low-cost carrier with a monthly credit, improving the airline’s liquidity between $150 million and $200 million in 2024.
The company’s latest fleet plan, filed on February 8, which predated the aforementioned amendment, indicated that the airline planned to grow from 205 to 215 aircraft by the end of 2024. This included the retirement of 17 Airbus A319ceos, the delivery of seven A320neos, and the delivery of 20 A321neo aircraft. The fleet plan showed that the airline should grow to 234 aircraft by the end of next year, which included the retirement of the remaining A319ceos, six A320neos, and 15 A321neo deliveries.
This article originally appeared on Simple Flying
Image source: Spirit Airlines