Spirit Airlines Plans $80 Mln In Annual Cost Reductions, Including Job Cuts, Starting In Early 2025

Spirit Airlines

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(RTTNews) - Spirit Airlines Inc. (SAVE) disclosed in regulatory filing on Thursday that it has identified approximately $80 million in annual cost reductions, set to begin in early 2025, as part of its strategy to return to profitability. These cost reductions will primarily result from a workforce reduction aligned with the company's expected flight volume.

On October 18, 2024, Spirit Airlines entered into a binding term sheet with GA Telesis, LLC for the sale of 23 A320ceo/A321ceo aircraft to GA Telesis for an expected total purchase price of approximately $519 million . The Aircraft are planned for delivery beginning in October 2024 through February 2025. The company estimates the net proceeds of the Sale, combined with discharging the Aircraft-related debt from its balance sheet, will benefit its liquidity by approximately $225 million through year-end 2025.

On Thursday, the company said it estimates its third quarter 2024 adjusted operating margin will come in approximately three hundred basis points better than the mid-point of its previous guidance range, primarily due to stronger-than-expected revenue with early results from its transformation plan exceeding initial expectations.

The company's third quarter 2024 capacity was down 1.2 percent year over year, and the company estimates its fourth quarter 2024 capacity will be down approximately 20 percent year over year.

For the full year 2025, the company estimates its capacity will be down mid-teens year over year. 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.

The company 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.

Consistent with its previously provided guidance, the company expects to end the year 2024 with over $1.0 billion of liquidity, including unrestricted cash and cash equivalents, short-term investment securities and additional liquidity initiatives, assuming that the company is able to consummate those initiatives that are currently in process.