The company is trying to buy itself time as debt comes due after its failed JetBlue merger
Spirit Airlines is looking to buy itself a bit more time to figure things out after its failed JetBlue Airways merger. The company announced Monday that it would be furloughing 260 pilots and deferring deliveries for some of the Airbus planes it has on order.
“Unfortunately, we had to make the difficult decision to furlough Pilots given the grounded aircraft in our fleet and our deferral of future deliveries,” said CEO Ted Christie in a statement. “We are doing everything we can to protect Team Members, while balancing our responsibility to return to positive cash-flow and thrive as a healthy company with long-term growth prospects.”
That roughly translates to: Sorry, we have to save money any way we can right now. The furloughs start in September, and the planes that were supposed to get delivered next year and in 2026 will now be set to arrive in 2030 and 2031, respectively. The move is expected save about $340 million over the next couple years.
That might make negotiations awkward for the union contract that Spirit will soon be negotiating with the Air Line Pilots Association. Plus, the interim plan is to lease the planes it needs. Currently, the company already leases more than half the 200 planes that it flies, and those costs were already pegged at more than $400 million a year for 2023 and 2024 according to the company’s latest annual report.
Spirit and JetBlue have mutually agreed to call off their $3.8 billion merger last month after a federal judge blocked the tie-up on antitrust grounds in January, suggesting that two airlines becoming one would offer fliers too few choices.
Since then, Spirit has been scrambling to secure its future, especially as it has more than $1 billion in debt coming due through 2026. The airline has hired advisers who might walk it through a bankruptcy process, and some creditors are under the belief that a bankruptcy may indeed be coming.
Spirit shares were up about 4% in early Monday trading. For the year, though, they’re down more than 71%. Its publicly traded debt due next year is changing hands for about 71 cents on the dollar.
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