Spirit Airlines (SAVE, Financial) has announced a strategic plan to enhance its liquidity by selling 23 Airbus aircraft, reducing flight capacity, and implementing layoffs. Following the announcement, Spirit's stock rose by 15.7% to $2.80.
The airline intends to sell 23 A320ceo/A321ceo aircraft to aviation after-service provider GA Telesis for approximately $519 million. These aircraft deliveries are set to begin this month and continue through February 2025. Spirit anticipates that by the end of 2025, these sales and the removal of related debt from its balance sheet will improve its liquidity by around $225 million.
Spirit estimates that its adjusted operating margin for the third quarter will exceed its previous forecast by about 300 basis points, driven by stronger-than-expected revenue and the initial success of its transformation plan. The company's capacity in the third quarter decreased by 1.2% year-over-year, with projections for a 20% reduction in the fourth quarter. By 2025, Spirit expects capacity to decrease by approximately 15% annually.
The airline has also identified an $80 million annual cost reduction starting in early 2025, primarily through workforce reductions aligned with anticipated flight volumes. Spirit reaffirmed its goal of having over $1 billion in liquidity by the end of the year and plans to release its third-quarter earnings in mid-November.
Recently, media reports suggested that Frontier Airlines is considering a renewed bid to acquire Spirit Airlines. If an agreement is reached, it could potentially play a role in Spirit's restructuring of bankruptcy and other debts.
