Spirit Airlines has reached an agreement with Airbus to defer deliveries of A320 aircraft scheduled for the second quarter of 2025 through 2026 by five years, from 2030-2031. This deferral is expected to improve the airline’s liquidity by approximately $340 million over the next two years. This decision also benefits Airbus by allowing the manufacturer to sell planes to other airlines sooner, potentially impacting Boeing, as one prime interested party could be United Airlines, which has been let down by Boeing delivery delays.
By deferring these planes, Spirit Airlines gains some time to strengthen its finances after the merger with JetBlue fell through. The decision to postpone deliveries will impact the airline’s capacity growth over the next two years, as it would have 219 planes in its fleet by 2025 instead of the 234 originally intended. However, the airline is ready to reset priorities and focus on the core airline while adjusting to changes in the competitive environment. Ted Christie, Spirit’s President and Chief Executive Officer, stated that the enhanced liquidity provides additional financial stability as the company positions itself for a return to profitability.
While Spirit will still take delivery of two direct-lease aircraft scheduled for the second and third quarter of 2025, it has kept its aircraft on order scheduled for delivery between 2027 and 2029. The amended agreement also defers the dates by which Spirit must act on its aircraft options in the original order, with no change in the total number of aircraft on order or option with Airbus. This move is seen positively by senior aviation analyst Addison Schonland, who believes it gives Airbus the delivery flexibility it wants, particularly for its best-selling model, the A321neo. Schonland also suggests that United Airlines could be at the front of the line to take the planes deferred by Spirit, as the airline is eager for A321neos to address capacity needs after delays in Boeing’s 737 MAX 10 deliveries.
Spirit Airlines has been affected by a manufacturing fault in the Pratt & Whitney GTF Engines powering its Airbus aircraft, leading to extended grounding and maintenance requirements. The airline recently reached a compensation agreement with Pratt & Whitney for the fault, further boosting its liquidity by an estimated $150 million to $200 million. However, as a result of the extended grounding of planes for engine maintenance and the decision to defer deliveries of new aircraft, Spirit announced that it would furlough around 260 pilots by September 1. Ryan Muller, chair of Spirit Airline’s Master Executive Council at the Air Line Pilots Association, described the furloughs as deeply troubling for the pilot group, while the union explores voluntary measures to keep more Spirit pilots flying. The company’s CEO, Ted Christie, emphasized the importance of protecting team members while aiming to return to positive cash flow and thrive as a healthy company with long-term growth prospects.
