Spirit Airlines Secures Compensation Agreement with IAE for Grounded Aircraft Due to Engine Inspections

Spirit Airlines has reached a significant monthly credit agreement with International Aero Engines (IAE), affiliated with Pratt & Whitney, to address the operational disruptions caused by necessary PW1100G engine inspections. Announced in a recent SEC filing, this agreement outlines compensation for Spirit Airlines, expected to range between USD150 million and USD200 million, reflecting the operational impact on its fleet through the end of 2024.

The compensation framework is primarily based on the cumulative days in 2024 that Spirit aircraft remain grounded and unavailable for operational service due to issues with the GTF engines. This development comes after Pratt & Whitney’s July 2023 disclosure of a manufacturing anomaly in the powdered metal used in specific engine components, prompting a fleet-wide inspection initiative impacting nearly all GTF engines within Spirit Airlines’ fleet, including those intended for future aircraft deliveries.

As of now, Spirit Airlines faces significant operational constraints, with 18 of its 87 A320-200N aircraft and one out of eleven A321-200NX aircraft currently out of service. The airline anticipates these groundings to escalate, expecting an average of approximately 40 aircraft to be affected by December, with an overall average of 25 aircraft grounded monthly throughout 2024.

Spirit Airlines operates a diverse fleet of 207 aircraft, encompassing various Airbus models, with the PW1000 engines, pivotal to the airline’s operational efficiency, constituting 47% of its total engine inventory. The comprehensive fleet includes fifteen A319-100s, sixty-four A320-200s, eighty-seven A320-200N, thirty A321-200s, and eleven A321-200NX models.

Looking ahead, Spirit Airlines and Pratt & Whitney are committed to evaluating and implementing suitable measures for any aircraft that remain operationally impacted beyond 2024, with current projections suggesting that these challenges could extend into 2026. This agreement represents a critical step in mitigating the financial and operational repercussions of the engine inspection and replacement program, ensuring that Spirit Airlines remains positioned to navigate these complexities effectively.