Spirit Airlines has revised terms with aircraft lessor AerCap by tentatively agreeing to reject the leases of 27 Airbus jets.
It is the US discounter’s latest cost-cutting measure amid Chapter 11 bankruptcy proceedings.
“The proposed agreement also resolves all claims and disputes between AerCap and Spirit and provides for the future delivery of 30 aircraft,” Spirit said on 30 September.
Spirit and AerCap’s new agreement would save the carrier hundreds of millions of dollars in voided lease obligations. But it still requires court approval, which it will seek during a hearing on 10 October.
Additionally, Ireland’s AerCap has agreed to pay Spirit $150 million under the agreement.
It is unclear whether all 27 jets will be removed from Spirit’s active fleet and returned to AerCap; Spirit declines to comment. It is likely at least some of the aircraft are currently grounded with Pratt & Whitney engine issues, or will be in coming months.
Spirit reported operating a fleet of 215 Airbus aircraft on 30 June. At the time, 148 of Spirit’s aircraft were operating on long-term leases, according to financial filings.
But Spirit’s intention to take 30 aircraft deliveries from AerCap suggests that the ultra-low-cost carrier (ULCC) is planning for a future beyond this difficult period of contraction across its fleet, network and workforce.
Spirit says it has made “significant progress” on restructuring its business, recently securing from debtors a $475 million multi-tranche financing facility to support ongoing airline operations. Of that total, $200 million is expected to be available immediately upon court approval.
The Florida-based ULCC disclosed in September that problems with the Pratt & Whitney engines that power its Airbus A320neos and A321neos, as well as the termination of leases for dozens of those jets, were major factors behind the company’s second Chapter 11 filing in less than a year.
Specifically, AerCap unexpectedly terminated lease agreements for 36 Airbus aircraft due to be delivered to Spirit between 2027 and 2028, according to Spirit.
The ULCC also received a notice of default from AerCap on leases for all 37 AerCap-owned aircraft in the company’s existing fleet.
“Spirit disagrees that any termination right or event of default existed under any of these leases, and disputes the validity of the notices,” chief financial officer Fred Cromer said at the time.
The ULCC previously said it was considering litigation to settle the dispute, though that path appears to have been avoided.
Rejecting the leases of 27 Airbus jets is part of a broader effort to right-size Spirit’s business to current demand for low-cost airline seats in the USA.
Earlier this month, Spirit said it plans to furlough 1,800 flight attendants amid drastic capacity cuts. It is looking to trim passenger capacity by roughly 25% of equivalent-period 2024 levels, suggesting further cuts are to come.
Notably, Spirit says it has recently engaged with its union-represented labour groups to identify more potential cost-savings measures.
