Spirit Airlines cuts jobs and sells off jets to survive

SPIRIT AIRLINES AIRBUS A319-214  N505NK (CN 2485)       

Spirit Airlines is cutting jobs and selling off some jets worth millions of dollars as the budget carrier aims to cut costs amid looming financial struggles and an uncertain future. In a Thursday regulatory filing, Spirit said it has identified about $80 million of cost-cutting measures set to begin early next year. Those cuts will be driven primarily by a "reduction in workforce," the Florida-based airline noted.

Spirit did not specify a number for the layoffs or what positions would be impacted. A spokesperson for the company declined to comment further when reached by The Associated Press Friday. The budget airline also disclosed that it's agreed to sell 23 airplanes to GA Telesis, an aviation services company, for about $519 million. The Airbus A320ceo and A321ceo models, which were manufactured between 2014 and 2019, are expected to be delivered starting this month and through February.

GA Telesis celebrated the acquisition last Friday, highlighting that it will significantly enhance its fleet portfolio. Spirit anticipates that the sale's proceeds, along with the elimination of related debt, will improve its liquidity by $225 million by the end of 2025. Spirit's shares surged 25% to $3.01 by midday trading on Friday. However, the stock has plummeted more than 80% in the past year.

The recent years have been challenging for Spirit. The airline struggled to achieve profitability post-COVID-19 pandemic, as travel resumed, mainly due to escalating operational costs and heightened competition. Competing airlines have captured some of Spirit's cost-conscious clientele by offering their own low-cost, no-frills tickets.

The company has been accruing losses, with more than $2.5 billion lost since the beginning of 2020. Spirit is also grappling with increasing debt, facing imminent payments exceeding $1 billion.

Speculation about bankruptcy has been surrounding Spirit, making it a compelling candidate for acquisition, though a merger has not yet materialized. JetBlue's recent attempt to purchase Spirit was abandoned after a federal judge halted the acquisition due to antitrust concerns in January.

Frontier Airlines had previously sought to merge with Spirit but was outbid by JetBlue. However, The Wall Street Journal reported this week that Frontier is considering a renewed bid, according to unnamed sources. Should the deal materialize, it may involve Spirit restructuring its debt and other liabilities through bankruptcy, as reported by The Journal, which also noted that the airline is in talks with bondholders regarding a potential bankruptcy filing. Spirit's spokesperson has declined to comment.