Amid its Chapter 11 restructuring, US low-cost carrier Spirit Airlines has reached a tentative agreement with AerCap to reduce the number of its leased aircraft with the lessor, according to bankruptcy court documents released on Tuesday (September 23).
Spirit operates an all-Airbus fleet, primarily consisting of the A320 family jet. Out of 214 of the airline’s operating fleet, 166 are leased aircraft, with AerCap being its largest lessor. The filing did not detail the number of aircraft that will be reduced from the fleet.
“Spirit has 37 aircraft leased from AerCap, of which 25 are active and 12 are in storage,” said TD Cowen analysts Moshe Orenbuch and Burc Okumus in a report.
The airline said the un-leased aircraft will provide it with “significant cost savings”, and will also help to resolve claims and disputes between the two parties.
“We view this agreement as positive for AerCap,” the report said, “as it allows the company to re-lease the cancelled Spirit leases at higher rates.”
With the A320neo in high demand, and lease rates at an all-time high, the analysts said AerCap could generate around $7 million in additional revenue by re-leasing approximately 20 aircraft currently on lease to Spirit.
The deal will also see AerCap inject Spirit with a “significant” liquidity infusion. Spirit said the cash provided will allow it to continue operations while implementing its business plan and fleet rationalisation process.
AerCap will be allowed to file an unsecured claim in bankruptcy proceedings for more than $696 million.
Additionally, sale and leaseback agreements for 36 undelivered Airbus A320neo family aircraft, which were scheduled to be delivered between 2027 and 2028, have been terminated. The lessor will retain full rights to the aircraft, allowing them to be re-leased at potentially higher rates.
The deal follows Spirit furloughing 1,800 flight attendants — around a third of its workforce — and plans to cut its capacity by a quarter in its November schedule.