Spirit Plans Cost Cuts Amid Financial Challenges

Spirit Airlines has announced a strategic plan to improve its financial situation by implementing $80 million in annual cost reductions and selling 23 of its older Airbus aircraft to GA Telesis for $519 million. These measures are expected to boost liquidity by $225 million through 2025, primarily by reducing the workforce and flight capacity. The company has faced financial challenges due to a blocked merger with JetBlue and increased operational costs, leading to a stock decline of over 80% this year. Despite bankruptcy rumors, Spirit's shares surged following the announcement, indicating investor optimism about the cost-cutting strategy. The airline's capacity is expected to decrease by about 20% in the fourth quarter of 2024 and the mid-teens in 2025, partly due to the sale and ongoing issues with Pratt & Whitney engines. Discussions for a potential merger with Frontier Airlines have reportedly resumed, which could be part of Spirit's debt restructuring efforts.