Budget airline Spirit revealed plans to reduce its workforce and sell 23 Airbus A320ceo and A321ceo aircraft to GA Telesis, LLC, a move valued at approximately $519 million, in response to continued financial challenges.
The sale, pending completion of standard conditions and documentation, is anticipated to strengthen Spirit’s liquidity, with net proceeds expected to improve cash flow by roughly $225 million by year-end 2025.
The airline is implementing these changes as part of a broader transformation initiative aimed at addressing prolonged financial difficulties and returning to profitability.
“We are thrilled to announce this significant acquisition, which adds a large number of highly sought-after Airbus A320ceo and A321ceo aircraft to our portfolio,” said Marc Cho, president of GA Telesis LIFT Group. “The A320ceo family of aircraft is renowned for its efficiency, performance, and reliability, making it an attractive option for airlines across the world. We are confident these aircraft will provide significant value to our customers as they continue their operations.”
Spirit’s recent filing indicates that along with the aircraft sale, the company has identified approximately $80 million in annualized cost savings, primarily through a workforce reduction aligned with anticipated reductions in flight volume.
Spirit Airlines did not respond to a request by The Epoch Times for more information on the possible number of job cuts expected. The restructuring is slated to begin in early 2025 as the airline adjusts its operations and fleet.
Spirit also reported an estimated improvement in its adjusted operating margin for the third quarter of 2024, with a projected increase of 300 basis points over previous guidance, largely due to stronger-than-expected revenue linked to early results of its transformation plan.
However, the airline noted that its third-quarter capacity was down by 1.2 percent year over year, with a more pronounced 20 percent capacity decline expected for the fourth quarter.
Looking ahead to 2025, Spirit anticipates a mid-teens percentage reduction in capacity, factoring in the aircraft sale, supply issues impacting Pratt & Whitney engines, and the retirement of its remaining A319ceo aircraft.
As part of its revised fleet strategy, Spirit also expects to bring six new A321neo aircraft into service next year.
Spirit is actively negotiating with creditors regarding the company’s senior secured notes due in 2025 and convertible notes due in 2026, as part of efforts to manage its debt obligations.
The airline expects to end 2024 with more than $1 billion in liquidity, a target that assumes successful completion of ongoing liquidity initiatives.
