By Deborah Mary Sophia and Rajesh Kumar Singh
(Reuters) -Spirit Airlines said on Monday it has reached a deal with Airbus to delay all aircraft deliveries scheduled from the second quarter of 2025 through 2026 and intends to furlough about 260 pilots, as the U.S. carrier looks to save cash.
The ultra-low-cost airline has been facing questions about its future after losing money in the past six quarters despite booming travel demand.
Analysts and industry officials say the airline will have to make drastic changes, including cutting flights and exiting some markets to become profitable, which is still not likely to happen this year.
The airline said it would defer the scheduled jet deliveries to 2030-2031. As a result of the deferrals, along with quality issues with engines made by supplier Pratt & Whitney, it plans to furlough pilots effective Sept. 1.
Shares of Spirit were up about 5% in afternoon trade.
The agreement with Airbus would improve Spirit's liquidity by about $340 million over the next two years, the carrier said, adding that there were no changes to its orders scheduled to be delivered during 2027-2029.
"(The) aircraft deferrals and pilot furloughs look positive, in terms of helping the carrier to reduce (or) defer some costs. However, among other factors, the carrier now potentially also reduces its revenue generation opportunities," Citi Research analyst Stephen Trent wrote in a note.
Spirit said it plans to issue an investor update by April 15.
The discount carrier operates an all-Airbus fleet. As of December 2023, the company had a total of 205 Airbus jets.
Spirit now expects to end 2025 with a total of 219 jets in its fleet, with no additions of the A320neo aircraft. It had previously expected to add six A320neo jets in 2025 and increase its fleet to 234 jets.
Analysts at Raymond James said the revised fleet plan would reduce its capacity by 7% in 2025 and 16% in 2026.
Excess capacity in key markets is hurting Spirit's pricing power, forcing the airline to discount heavily to fill planes. Average fare per passenger was down 25% in the fourth quarter from a year earlier.
A snag with Pratt & Whitney Geared Turbofan (GTF) engines has already forced Spirit to ground some of its A320neo aircraft. It has said the number of grounded jets would climb steadily to an average of about 40 in December 2024.
Ryan Muller, head of Spirit's pilot union, said the airline has more pilots than its operations require. The union is exploring voluntary measures to reduce the need for furloughs and downgrades, he said.
Spirit's flight attendants union told its members while there was no plan to furlough cabin crew, the airline was expected to offer them more extended voluntary time-off programs this summer.
The airline will also close its crew base in Atlantic City, New Jersey and offer reassignments to affected flight attendants, the union said.