By Rajesh Kumar Singh
CHICAGO (Reuters) - Spirit Airlines (NYSE:SAVE) will furlough about 330 pilots on Jan. 31, 2025, a company spokesperson told Reuters, as part of its efforts to cut costs and shore up its finances.
The ultra-low-cost carrier has been losing money despite strong travel demand. It has failed to report a profit in the last five out of six quarters, raising doubts about its ability to manage looming debt maturities.
Spirit furloughed 186 pilots last month. It will also downgrade 120 captains to first officers on Jan. 31, the spokesperson said.
The company has been facing an uncertain future after the collapse of its $3.8 billion merger deal with JetBlue Airways (NASDAQ:JBLU). Spirit's shares have slumped about 84% this year.
The furloughs are a result of Spirit's plans to shrink the airline. The company plans to reduce its capacity in the current quarter by 20% from a year ago. In 2025, it expects capacity to be down mid-teens year-on-year.
"We are implementing a series of cost savings initiatives throughout our business, including a reduction in workforce, as part of our comprehensive plan to return to profitability," Spirit's spokesperson said.
Spirit plans to cut costs by $80 million next year, primarily through a reduction in its workforce.
It is also selling 23 older Airbus aircraft for $519 million. The sale proceeds are estimated to provide $225 million of liquidity next year.
Ryan Muller, the head of Spirit's pilot union, said the airline's plan to operate a smaller fleet has raised concerns about job security for pilots.
"While the company may emphasize numbers, we understand that each figure represents a dedicated pilot, their career, and their family's future," said Muller, adding the pilot union was trying to mitigate the furloughs.
Spirit said last week its third-quarter adjusted operating margin would be better than its previous guidance. The company also reiterated that it was still in "active and constructive discussions" with its bondholders about the upcoming maturities.
It faces a December deadline for refinancing $1.1 billion of loyalty bonds due to mature next year.