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Airline plans to become smaller, more efficient carrier with reduced fleet and focused operations nationwide slowly.
Spirit Airlines has reached a deal with most of its lenders paving the way for the airline to emerge from bankruptcy early this summer. As part of its restructuring plan Spirit aims to become a smaller airline with focused operations at four airports including its home base at Fort Lauderdale Hollywood International Airport.
Spirit airlines filed for bankruptcy last August for the second time in under a year but has continued to operate during its reorganization. To reduce costs Spirit has been auctioning off planes and not renewing leases resulting in a significantly smaller fleet. The airline expects to have about a third of the number of planes it had a year earlier, with no more than 80 planes, down from 131 at the end of last year.
As part of its cost-cutting measures, Spirit reduced its network by cutting 200 routes last year and furloughed employees. However, the airline has called back hundreds of pilots and flight attendants it had previously furloughed to replace employees who have left during its bankruptcy. Spirit currently has 9,700 employees, down almost 20% from the previous year.
The airline's financial performance has been impacted by the high cost of jet fuel, one of its largest expenses after labor costs. Spirit's financial forecast assumes that fuel costs will drop throughout this year and remain stable next year. Recent events in Iran have pushed crude oil prices up to around $100 a barrel causing jet fuel prices to spike.
Despite these challenges, Spirit expects to return to an operating profit next year with a projected net income of $55 million in 2027. The airline anticipates carrying around $2 billion in debt when it emerges from bankruptcy significantly down from over $7 billion before it filed for protection.
Business Honor is of the view that this transition could help stabilize Spirit’s position in a competitive market.
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