In a move it hopes will help end its streak of quarterly losses, Spirit Airlines has reached a deal with Airbus to delay future A320neo aircraft deliveries. Spirit will also furlough hundreds of pilots in a bid to cut expenses.
Spirit Airlines Will Fulough Pilots, Delay A320neo Deliveries
For six consecutive quarters, Spirit Airlines has reported a quarterly loss. That is all the more concerning during a period of banner profits for its full-service competitors.
Spirit thought a merger with JetBlue and the creation of a larger and more robust carrier was the answer. But the Department of Justice won its legal battle to stop the merger from happening, with a federal judge siding with the government in an eye-raising opinion.
> Read More: The Spurious Legal Reasoning Behind JetBlue-Spirit Merger Decision
Forced to go it alone, Spirit plans to defer aircraft deliveries and furlough parties in order to preserve cash flow.
First, it will delay all aircraft deliveries scheduled from Q2 2025 through 2026. Those delivery slots will be deferred to 2030-2031. Spirit was set to receive six A320neo jets during this period.
Second, it will furlough about 260 pilots. In addition to the delivery deferrals, Spirit continues to deal with quality-control issues with its Pratt & Whitney Geared Turbofan (GTF) engines. Spirit, which has a fleet of 2015 Airbus jets in its fleet, expects up to 40 of its jets to be grounded by the end of the year over the engine issue.
Analysts seem to think that Spirit must continue to cut routes and even totally exit some markets. While routine route adjustments are necessary for any carrier, cutting to growth and profitability has never struck me as a winning long-term strategy. If these cuts are not careful and short-term, the carrier will only face more pressure from its legacy peers.
CONCLUSION
With ongoing engine issues and weakened demand for budget carriers, Spirit will defer delivery of six jets and begin furloughing pilots later this year. The failure of the JetBlue merger has awakened Spirit from its lethargy as the carrier struggles to survive.
image: Spirit Airlines
Maybe next time Gazans won’t vote for terrorist leadership that excels in using its own citizens as human shields while only building underground shelters for non civilians?
@Sam,
Yes obviously the Gazans and their poor choices have led to Spirit’s current predicament…..If only Hamas hadn’t attack on Oct 7th the Spirit pilots would not be getting furloughed!
Did you hear about Delta’s new boarding process starting in May? They are changing boarding groups to zone numbers and the way they board.
Yes. Will be second story tomorrow.
“Spirit thought a merger with JetBlue and the creation of a larger and more robust carrier was the answer.” Well, that isn’t actually what Spirit thought when B6 announced their attempt. Spirit’s management thought it was a bad strategy that had a poor chance of passing legal muster, and opposed it in favor of an F9 tie up. It wasn’t until it was clear they would lose the shareholder vote after B6’s aggressive campaign promising the moon and $$$ that they lined up their talking points to parrot JetBlue.
Their zeal for cost containment probably made the GTF’s promised fuel savings attractive, but a deeper analysis would have shown that P&W’s reliability has lagged its peers for decades and that there was considerable risk in their fleet strategy. Add in the facts that the legacy carriers have segmented their fares to better compete, other carriers have deployed more capacity to leisure in the wake of COVID, the fact that Spirit doesn’t have as robust of a cobranded credit card or loyalty program revenue stream, and Spirit’s place in popular culture now as being inferior and the butt of jokes and meme fodder for those under 40, this isn’t terribly surprising.
Why? Just in time for summer travel and the yellow banana won’t fly?
I feel for Spirit:
– A large portion of its cash flow is non-reoccurring (compensation from P&W; break up fees from B6; sale lease back of a block of jets).
– Unable to break even from its routine revenue several quarters running
– Legacy carriers have mimicked the “bare fares” pricing mechanism. Why take a chance with Spirit with only one flight a day versus a legacy which might re-route you thru a different city via its frequency of flights like Southwest (plus you get 2 bags free). Word is spreading!!
– Large chuck of money given to pilots post COVID to keep them happy
– Only benefit is Airbus has already re-allocated the six slots (is that Scott Kirby on the phone?)
– If The Donald wins, it Chapter 11 with mass layoffs & airframes & slots sold. If Sleepy Joe wins, its Chapter 7 with mass layoffs & airframes & slots sold. Pick you poison!!
May I add to the above:
– NK has a huge block of debt due 2025 based on prior management decisions
Carl Icahn should be looking at Spirit, not JetBlue.
B6 has more potential as opposed to NK.