Spirit Airlines recently entered a binding agreement to sell 23 of its older Airbus A320-family aircraft to GA Telesis for a total purchase price of about $519 million.
Miramar, Florida-based Spirit disclosed the deal in a 24 October filing with the US Securities and Exchange Commission (SEC), adding that it would benefit the company’s liquidity by roughly $225 million.
The aircraft sale includes a mix of A320ceo and A321ceo jets, Spirit says in the filing, with deliveries to begin this month and continue through February.
Florida-based GA Telesis is an aviation aftermarket services company that specialises in component sales.
The move comes during a period of severe distress for Spirit. Following a series of unprofitable quarters, rumours of Spirit’s potential financial restructuring and possible acquisition by rival low-cost carrier Frontier Airlines are swirling.
Meanwhile, Spirit’s immediate future looks bleak as it trims unprofitable routes from its network, resulting in cratering passenger capacity in coming months.
The company discloses that its third-quarter capacity decreased 1.2% compared with the same period last year, while its is expecting a 20% year-on-year capacity decrease in the fourth quarter.
Additionally, it expects year-on-year capacity will be down in the “mid-teens” for the full year of 2025.
”This decrease takes into account the sale and removal from scheduled service of the aircraft, a year-over-year increase in the estimated number of Neo aircraft removed from scheduled service due to the reduced availability of Pratt & Whitney geared turbofan engines, the retirement of the company’s remaining A319ceo aircraft and the addition of six new A321neo aircraft scheduled for delivery in 2025,” Spirit says.
The ultra-low-cost carrier (ULCC) has further identified $80 million in annual cost reductions that it plans to implement early next year, driven “primarily by a reduction in workforce commensurate with the company’s expected flight volume”.
Spirit has been furloughing hundreds of pilots and deferring deliveries of new Airbus jets as it continues bleeding cash.
However, the SEC filing is not entirely dire, with Spirit reporting that its third-quarter adjusted operating margin will be modestly higher than its previous guidance ”primarily due to stronger-than-expected revenue with early results from its transformation plan exceeding initial expectations”.
And the company continues negotiating with creditors to ease its debt burden before senior notes become due next year and in 2026. The recent extension of Spirit’s repayment deadline – coupled with merger talks with Frontier, first reported by The Wall Street Journal – have sent its stock price soaring.
Like several other US discounters, the ULCC has been rolling out a series of changes to appeal more to “premium” customers, including new fare bundles and seating options, in addition to the elimination of some add-on fees.
Spirit says it will provide more details about its third-quarter performance during its earnings call in mid-November. It expects to end the year with more than $1 billion in liquidity, including cash and equivalents, plus short-term investment securities.
