Spirit Airlines (SAVE.US) "cuts off its arm to save its life": Plans to sell 23 Airbus planes and lay off staff
1min read Spirit Airlines(SAVE.US) disclosed plans to sell 23 Airbus aircraft, reduce flight capacity and cut jobs to boost liquidity. As of writing, Spirit traded 15.7% higher premarket to $2.80.
The airline plans to sell 23 A320ceo/A321ceo aircraft to aviation aftermarket service provider GA Telesis for about $519 million. Deliveries are expected to begin this month and continue through February 2025.
Spirit expects the proceeds from the sale, along with the removal of aircraft-related debt from its balance sheet, to increase its liquidity by about $225 million by the end of 2025.
The company expects its adjusted operating margin in the third quarter to be about 300 basis points higher than the midpoint of its previous guidance range, due to stronger-than-expected revenue and initial results from its transformation plan exceeding initial expectations.
Spirit's capacity in the third quarter was down 1.2% year-on-year, and it expects capacity to decline about 20% in the fourth quarter.
The company also expects capacity to be down about 15% year-on-year in 2025.
Spirit also identified an annual cost-cutting plan of about $80 million to begin in early 2025, mainly through layoffs in line with expected flight volumes.
Spirit reiterated its target of having more than $1 billion in liquidity by the end of the year. It plans to announce its third-quarter results in late November.
Moreover, according to recent media reports, Frontier Airlines is seeking to re-bid for Spirit Airlines. If a deal is reached, this could be part of Spirit's restructuring of its bankruptcy debt and other liabilities.
