Spirit Airlines is cutting jobs and selling off some jets worth millions of dollars as it seeks to cut costs amid financial difficulties and an uncertain outlook.
As reported by the Associated Press, Spirit identified about $80 million in cost-cutting measures scheduled to begin early next year in a regulatory filing Thursday, according to the Florida-based airline. The company announced that the majority of the increase was due to layoffs.
Spirit did not say how many people would be cut or which positions would be affected. A company spokesperson declined further comment when contacted by The Associated Press on Friday.
The low-cost airline also announced that it has agreed to sell 23 aircraft to aviation services company GA Telesis for approximately $519 million. Deliveries of Airbus A320ceo and A321ceo models built between 2014 and 2019 are expected to begin this month and continue until February, the report said.
Also read: Spirit Airlines struggles to reach rescue deal to avoid bankruptcy
GA Telesis celebrated the acquisition on Friday, highlighting that it will significantly strengthen its fleet portfolio. According to the Associated Press, Spirit expects to improve its liquidity by $225 million by the end of 2025 from proceeds from the sale and related debt repayments.
The past few years have been difficult for Spirit Airlines. Even as the COVID-19 pandemic subsided and travel began to recover, the company struggled to achieve profitability, primarily due to rising operating costs and increased competition. . Competing airlines are attracting some customers with a budget-conscious spirit by introducing their own low-cost, no-frills ticket options.
During this time, Spirit has faced significant financial losses totaling more than $2.5 billion since the beginning of 2020. Additionally, the company faces increasing debt, with future payments expected to exceed $1 billion.
Spirit expects its fourth-quarter production capacity to be down 20% from a year ago, according to a regulatory filing Thursday. The company expects its production capacity to decline by a mid-tenth in 2025, compared to earlier levels due to this month’s sale and ongoing issues with the availability of Pratt & Whitney GTF engines. This takes into account that some other aircraft have been removed from scheduled service.
Also read: Spirit Aero’s losses more than double as 737 power declines, A220 woes prolong
The Associated Press also reported that Spirit Airlines has been surrounded by bankruptcy speculation, making it an attractive takeover target. Although the merger has not yet been finalized, JetBlue recently attempted to buy Spirit, but abandoned the deal in January after a federal judge blocked the deal citing antitrust concerns.
Frontier Airlines also sought to merge with Spirit, but lost out to JetBlue at the time.
But the Wall Street Journal reported earlier this week that Frontier was in early talks to consider a new bid, according to anonymous sources familiar with the situation.
Also read: Boeing reportedly in talks to buy Spirit AeroSystems, a major supplier of the troubled 737 Max
If a deal is reached, Spirit could restructure its debt and other obligations during bankruptcy proceedings, the paper said. The report also said the company is in ongoing discussions with bondholders regarding a potential bankruptcy filing.
(Information provided by Associated Press)
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