Spirit Airlines is booking a $33 million loss on sale and leasebacks covering seven new Airbus A320s to be delivered over the next 12 months.
The 'ultra-low-cost' carrier says it has entered into non-binding letters of intent to sell and leaseback the next seven A320 deliveries from its existing order with Airbus. Deliveries are scheduled between November 2011 and June 2012.
"These transactions, assuming they are completed on the terms reflected in the letters of intent, will result in an estimated $33 million in sale and leaseback losses of which we estimate $2 million will be recognized in connection with the delivery of the aircraft, and the remaining $31 million will be deferred over the life of the respective leases as an increase to rent expense in accordance with our sale and leaseback policy," comments Spirit.
The carrier operates a 35-aircraft fleet on operating leases expriring between 2017 to 2022, with seven aircraft being sold as part of sale and lease-back transactions.
According to Flighglobal's ACAS database, the 26 A319s are leased from ILFC (14 aircraft), GECAS (six), BOC Aviation (four), DAE Capital (one) and Macquarie AirFinance (one). Another two A321s are leased from ILFC. Spirit added two new A320s this year from CIT Group and one from BOC Aviation and has another for aircraft of the type on lease from AerVenture. The carrier has the option to renew 17 aircraft leases for three-year periods with contractual notice required in the 10th year.
Its contractual purchase commitments consist of 13 A319s, which we are permitted to convert to the A320 model, and 20 A320s. Committed expenditures for these aircraft and related flight equipment, including estimated amounts for contractual price escalations and PDPs, will be approximately $117 million this year, $313 million in 2012, $322 million in 2013, $301 million in 2014, $354 million in 2015 and $19 million in 2016 and beyond.
Spirit Airlines says it does not have financing commitments in place for the remaining 26 aircraft currently on order, which are scheduled over a three-year period through 2015.