Spirit Airlines Stock Surges 16% After Announcing Job Cuts and Aircraft Sales
Spirit Airlines shares rose 16% on Friday, closing at $2.79, after the budget carrier unveiled a plan to reduce costs and increase cash flow through job cuts and the sale of 23 older Airbus aircraft. The sale is expected to generate $519 million, while the cost reductions, largely from workforce adjustments, aim to save Spirit an additional $80 million.
The struggling airline has faced significant financial pressures in the wake of the pandemic, with rising debt, shifting travel demand, and the grounding of several Pratt & Whitney-powered planes impacting operations. Spirit recently postponed a refinancing deadline on over $1 billion in debt to December, allowing some breathing room with its credit card processor.
In response to its financial challenges, Spirit began furloughing around 200 pilots in September. While the airline did not disclose the total number of job cuts, it noted that 2025 capacity would likely be reduced by mid-teen percentages compared to this year. Flight attendants are expected to be minimally affected, as many crew members had already opted for voluntary leave.
Additionally, Spirit revised its third-quarter forecast, projecting a negative operating margin of 24.5%, slightly better than its previous estimate of up to -29%.
Speculation about a merger with Frontier Airlines resurfaced earlier this week, following reports by The Wall Street Journal, further boosting Spirit’s stock. The airlines, which had previously pursued a merger before JetBlue’s acquisition attempt, have yet to comment on the revived discussions.
Sources: AirGuide Business airguide.info, bing.com, cnbc.com
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