Spirit Airlines
has disclosed that to improve its liquidity, it sold 23 Airbus A320ceo and A231ceo aircraft to GA Telesis, a United States-based aerospace asset manager.

Adding $225 million to its balance sheet

In a US Securities and Exchange Commission (SEC) filing on October 24, Spirit Airlines said that it had entered into a binding term sheet agreement with GA Telesis on October 18. The sale was still subject to, among other things, “definitive documentation and other customary conditions precedent,” Spirit Airlines said.

N682NK Spirit Airlines Airbus A321-231 (1)

Photo: Vincenzo Pace | Simple Flying

The agreement should result in the sale of the airline’s 23 A320ceo
and A321ceo aircraft to GA Telesis for $519 million. According to the carrier, the asset manager should take delivery of the aircraft between October 2024 and February 2025.

“The Company estimates the net proceeds of the Sale, combined with discharging the Aircraft-related debt from its balance sheet, will benefit its liquidity by approximately $225 million through year-end 2025.”

GA Telesis disclosed that the 23 aircraft had been delivered between 2014 and 2019, marking its “largest-ever acquisition of non-leased aircraft of similar vintages.”

“This strategic acquisition significantly bolsters GA Telesis’ fleet portfolio, enhancing its ability to meet increasing global demand for narrowbody aircraft. The company will market these aircraft to its extensive global customer base for continued commercial airline operations.”

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Transformation plan exceeding expectations

Seemingly, the sale of the 23 aircraft was not planned by the airline and its executives. When Spirit Airlines announced its Q2 results on August 1, it disclosed its fleet plan for the remainder of 2024, 2025, and 2026.

At the end of 2025 and 2026, the airline planned to operate 64 A320ceo and 30 A321ceo
aircraft, which was the same number of aircraft of the type as it ended in 2023. The carrier added a note that the fleet plan did not include aircraft lease expirations.

Spirit A321neo (2)-2

Photo: Spirit Airlines

Ch-aviation data showed that Airbus
delivered 39 A320ceo and 30 A321ceo aircraft to Spirit Airlines during the 2014 to 2019 timeframe. The site’s data also showed that so far, six A321ceos have left its fleet: four in 2008 and two in 2017.

On October 24, Spirit Airlines also provided guidance about its Q3, Q4, and 2025 financial performance.

While the airline said that it will present the results of the former in mid-November, it estimated that its Q3 adjusted operating margin would be 0.3 points higher than the mid-point of its previous guidance – -29% to -26% – primarily due to the stronger-than-expected revenue from its transformation plan, which has exceeded initial expectations.

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“The Company’s third quarter 2024 capacity was down 1.2 percent year over year, and the Company estimates its fourth quarter 2024 capacity will be down approximately 20 percent year over year.”

According to data from the aviation analytics company Cirium, the largest cuts of weekly flights year-on-year (YoY) in November will be from Orlando International Airport
(MCO, 215 weekly departures axed), Las Vegas Harry Reid International Airport (LAS, 102), and Fort Lauderdale-Hollywood International Airport
(FLL, 93).

In general, Spirit Airlines will eliminate up to 481 weekly departures from seven airports in Florida in November.

n930nk-spirit-airlines-airbus-a320-271n-1-1

Photo: Vincenzo Pace I Simple Flying

In 2025, the airline plans to reduce its capacity in the mid-teens YoY, which will be underpinned by aircraft sales, an increase of A320neo aircraft family grounded YoY due to the Pratt & Whitney PW1100G accelerated inspections and removals, and the retirement of the remaining A319ceo
aircraft.

In 2025, Spirit Airlines plans to welcome six A321neo aircraft. Previously, the airline disclosed that it would defer all deliveries planned between Q2 2025 and 2026 to 2030 and 2031, as well as delivery dates of option aircraft, which were scheduled to be handed over between 2027 and 2031 if the carrier firmed up its orders.

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Boston will be hit hardest, followed by Dallas/Fort Worth, Charleston, and Las Vegas.

Prospective merger

Spirit Airlines concluded that it expected to end 2024 with over $1 billion in liquidity, “assuming that the Company is able to consummate those initiatives that are currently in process.”

It has been in discussions with holders of senior secured notes due in 2025 and 2026 to delay the notes’ maturity dates, which, if successful, would further improve its short-term liquidity position.

Spirit Airlines Airbus A320neo taking off.

Photo: Spirit Airlines

Nevertheless, The Wall Street Journal (WSJ) previously reported that Frontier Airlines
and Spirit Airlines have gone back to the negotiating table regarding a potential merger.

In 2022, the former had already agreed to purchase the latter, yet JetBlue swooped in to attempt to improve its own competitive position. A district judge ruled against the merger with JetBlue
, citing concerns about potential harm to consumers, including those flying on low-cost airlines.

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