Embattled discount airline Spirit Airlines Inc. on Thursday said it would cut staff, scale back flight coverage and sell jets as it seeks a lifeline following its failed merger with JetBlue Airways Corp. earlier this year.
Investors cheered the news in morning trading Friday, sending shares up 31.2%.
In a filing, Spirit said that as it tries to return to profitability, it had identified around $80 million worth of cost-cutting that it plans to start early next year.
“These cost reductions are driven primarily by a reduction in workforce commensurate with the company’s expected flight volume,” the company said.
Those layoffs would come after a string of losses for Spirit over the past year. Along with JetBlue’s decision in March to abandon its agreement following an effort by regulators to block the merger, Spirit has faced competition from larger airlines offering their own discounted fares, as well as issues with Pratt & Whitney aircraft engines.
The Wall Street Journal has reported that Frontier Airlines was weighing another bid to buy Spirit, and that Spirit was in talks over conditions of a possible bankruptcy filing. The carrier has also tried to rework the terms of some of its debt, and begun offering what it has called more “premium” travel options.
In the filing on Thursday, Spirit said it “remains in active and constructive discussions with holders of its senior secured notes due 2025 and convertible senior notes due 2026 with respect to their respective maturities.”
The airline also said it had entered into an agreement with GA Telesis, an aircraft-maintenance services platform, to sell 23 Airbus A320ceo and A321ceo jets to the company for around $519 million. Those planes are expected to be delivered between this month and February.
Spirit said that it expected the proceeds of the sale, along with the discharge of aircraft-related debt, would “benefit its liquidity by approximately $225 million” through the end of next year.
The company also said it expected its third-quarter adjusted operating margin would be better than the midpoint of an earlier outlook, due to “stronger-than-expected revenue with early results from its transformation plan exceeding initial expectations.”
Spirit said it expected its fourth-quarter capacity — a measure of an airline’s total available seats and flights — will be down around 20% year over year. For 2025, it expected capacity to be down by the “mid-teens.”
That decrease, it said, reflected the sale of the Airbus jets, the removal of other jets due to more limited availability of the Pratt & Whitney engines, and the retirement of its remaining A319ceo planes.
Spirit said it expects to end the year with more than $1 billion of liquidity, “assuming that the company is able to consummate those initiatives that are currently in process.”
Shares of Spirit have plummeted 85.2% so far this year.
