JetBlue, Spirit, and Frontier Delay Airbus Deliveries to Cut Costs

Several U.S. low-cost carriers, including JetBlue, Spirit Airlines, and Frontier Airlines, are deferring the delivery of dozens of new Airbus planes as they focus on preserving cash and returning to profitability. This strategic move comes despite a strong demand for fuel-efficient aircraft and ongoing shortages in plane deliveries, particularly affecting these budget airlines that have not posted annual profits since 2019.

For years, airlines have been eagerly awaiting new jets to expand their fleets. However, the financial pressures of the post-pandemic era, coupled with the need for engine repairs and an oversupply of flights in the domestic market, have prompted these carriers to reassess their growth strategies.

Airlines like Frontier are adjusting their expansion plans to align with market realities. Frontier CEO Barry Biffle explained that the airline is deferring 54 Airbus aircraft deliveries until at least 2029 to manage supply more effectively. He noted that previous delays in aircraft deliveries led to a backlog of orders, requiring the airline to “smooth out” its fleet expansion. Despite carrying 17% more passengers in the second quarter of this year, Frontier’s revenue rose by just 1%, with a significant drop in average fare revenue.

JetBlue Airways is also taking steps to cut costs, estimating a savings of $3 billion by deferring the delivery of 44 Airbus A321 aircraft until 2029. The airline, which posted a surprise profit in the second quarter, is extending some aircraft leases and exiting unprofitable routes to quickly reduce expenses. However, the deferrals present a “double-edged sword,” as the airline grapples with grounded jets due to a Pratt & Whitney engine recall. JetBlue CEO Joanna Geraghty emphasized the financial strain of taking delivery of new planes that may end up grounded, particularly given the airline’s growing debt.

Spirit Airlines, which faced a blocked acquisition attempt by JetBlue earlier this year, is also deferring all its Airbus deliveries scheduled from the second quarter of 2024 through 2026 until at least 2030. The airline, struggling to turn around its financial performance, reported an 11% drop in revenue and a $192 million loss in its most recent quarter. Spirit has been particularly impacted by the Pratt & Whitney engine recall and is planning to furlough around 240 pilots in the coming weeks.

Despite these deferrals, the demand for new, fuel-efficient aircraft remains strong globally. Lease rates for new Airbus A320 and A321 planes reached record highs in July, and Boeing 737 Max 8 aircraft leases are near record levels. Boeing and Airbus are both struggling to ramp up production due to ongoing supply chain issues and labor shortages, further complicating the situation for airlines.

Airlines like Southwest, which rely entirely on Boeing 737 aircraft, have also been forced to slow hiring and other growth plans due to delayed deliveries. Southwest CFO Tammy Romo mentioned that the airline is pursuing opportunities to mitigate cost pressures and adjust its fleet plans to align with delivery timelines.

As the industry continues to navigate these challenges, low-cost carriers are taking a cautious approach, deferring aircraft deliveries to manage cash flow and maintain flexibility in an uncertain market.

Sources: AirGuide Business airguide.info, bing.com, cnbc.com, airbus.com

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JetBlue, Spirit, and Frontier Delay Airbus Deliveries to Cut Costs

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