Low-cost carrier Spirit Airlines is pushing back the delivery of some of its planes and taking cost-cutting steps to boost cash, following its failed merger with JetBlue.
The Miramar, Fla.–based company reached an agreement with Airbus to delay delivery of previously ordered planes meant to be dispatched in 2025 and 2026 by about five years, it said in a press release Monday. The move will increase the company’s liquidity by $340 million over the next two years, Spirit said.
“This amendment to our agreement with Airbus is an important part of Spirit’s comprehensive plan to bolster profitability and strengthen our balance sheet,” Ted Christie, Spirit’s president and CEO, said in a statement.
The company also said it would furlough 260 pilots starting in September because of the deferrals and because of groundings prompted by issues with engine availability for some of its aircraft. Spirit will get another $150 million to $200 million in compensation from the maker of the engines, Pratt & Whitney, which will also increase the airline’s liquidity. Spirit will evaluate options to refinance its debt, it added.
Spirit Airlines reported a net loss of $447.5 million in 2023, an improvement over the $554.1 million it lost the year prior. The carrier chalked up the better performance to a year-over-year decrease in special charges and cheaper fuel prices. The end of 2023 marked the fourth straight year that the company recorded a net loss.
Spirit has struggled to recover since the pandemic took a toll on global travel. Still, the company said its traffic increased 13.7% year over year in 2023, and its capacity grew by 14.6%.
The stock is down 71% year to date but surged 6.8% on the news as of market close Monday.
A spokesperson for Spirit declined to comment on Monday’s announcement and redirected Fortune to the company’s press release.
The Monday news comes after JetBlue abandoned a $3.8 billion merger with Spirit after the Biden administration sued to block the deal. In January, a federal judge ruled that the linkup violated antitrust law. The judge said Spirit could look for another buyer or remain an independent company.
JetBlue later declined to appeal the ruling, instead opting to pay a $69 million breakup fee plus hundreds of millions to its shareholders to back out of the deal.
After the merger fell through, some Wall Street analysts predicted the carrier might declare bankruptcy. Christie in February pushed back on such speculation, saying in a call with analysts that the “misguided narrative has been advanced by an assortment of pundits.”
The carrier had previously explored a merger with Frontier Airlines before JetBlue ultimately won a bidding war between the two companies.
Christie said in the Monday statement that deferring its aircraft delivery and furloughing pilots will help it come back stronger.
“Deferring these aircraft gives us the opportunity to reset the business and focus on the core airline while we adjust to changes in the competitive environment. In addition, enhancing our liquidity provides us additional financial stability as we position the company for a return to profitability,” Christie said.
