October 2024 has been a busy month for Florida-based Spirit Airlines. Firstly, rumors began spreading about an imminent Chapter 11 bankruptcy filing, followed by the announcement that the carrier would be retiring its dwindling fleet of Airbus A319s earlier than planned. Then came the news that a possible merger with fellow US carrier Frontier could be back on the tables, two years after the last attempt fell apart.
Now comes the news directly from the airline that it has entered a commitment to sell 23 of its older Airbus A320 family fleet to raise additional capital to shore up its financial position. The deal will see the low-cost carrier dispose of 23 A320s and A321 narrowbodies in a deal that is reportedly valued at approximately $519 million. Deliveries of the airplanes earmarked for disposal under the terms of the deal are due to begin immediately and will continue through February 2025.
The agreement has been made with GA Telesis, a company that specializes in aircraft sales, leasing, distribution, and maintenance. Spirit says that the sale would give it approximately $225 million in liquidity through the end of 2025. According to ch-aviation, the carrier currently has 64 A320ceo and 30 A321ceo in its fleet, from which the 23 aircraft due to be sold will be selected.
The deal comes just at a crucial time for the Fort Lauderdale-based budget carrier. In desperate need of cash to bolster its operating finances and ensure its survivability through the upcoming winter season, the deal represents an ideal way to dispose of excess capacity and reduce overheads in the form of aircraft lease costs.
Meanwhile, the sale sees additional aircraft assets come onto the used aircraft market at a time when airlines are struggling to get their hands on additional capacity as demand for air travel continues to soar.
While announcing the terms of the sale, the carrier said that its overall capacity for the third quarter was down 1.2% compared to the same period in 2023 and that it is anticipating its fourth-quarter capacity to be down 20%. This is partly driven by the temporary grounding of aircraft due to the ongoing issues surrounding Pratt & Whitney geared turbofan engines that require lengthy inspections.
However, the airline has been cutting routes and frequencies in recent months to avoid creating a void between capacity offered versus passenger demand. The carrier expects year-on-year capacity to be down to the “mid-teens” for 2025, it states.
”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 said in a statement.
In addition to the direct steps being taken to give its financial position a boost, the carrier has also been exploring other ways to cut costs in recent months. The company has also furloughed hundreds of its pilots and has delayed the delivery of new Airbus A320neo family aircraft to reflect the downsizing in its planned operation over the coming months.
In all, the airline has identified $80 million in annual cost reductions that it plans to implement as part of its 2025 cost-cutting program, which is due to start as soon as January 2025 once the busy festive holiday travel season in the US is over.