Spirit Airlines secures agreement with Pratt & Whitney affiliate

Spirit Airlines stated on Friday it would get a monthly credit from International Aero Engines through the end of 2024 as a settlement for Spirit being unable to use airplanes with engine problems.

Spirit Airlines has announced a significant agreement with an affiliate of RTX Corp’s Pratt & Whitney, aimed at bolstering the carrier’s liquidity. 

The agreement, disclosed in a filing with the U.S. Securities and Exchange Commission, is expected to increase Spirit’s liquidity by an estimated $150 million to $200 million.

Terms of the Agreement

According to the filing, the impact on Spirit’s liquidity will be contingent on the number of days in 2024 during which Spirit aircraft experience unavailability due to engine issues. 

Under the terms of the agreement, Spirit has agreed to release IAE and its affiliates from any claims related to affected engines up until December 31, 2024.

Mitigating Engine Issues

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Spirit Airlines took proactive measures last year, including removing engines from service and grounding certain A320neo aircraft for inspection, following notification from Pratt & Whitney regarding a rare condition in the powdered metal used in certain engine parts. 

The carrier intends to address any remaining aircraft availability issues with Pratt & Whitney beyond the end of the year.

Challenges and Concerns

Spirit Airlines has been grappling with challenges beyond engine issues, including rising operating costs and persistent supply chain disruptions. 

The carrier, which is the largest operator of Pratt & Whitney’s Geared Turbofan (GTF) engines in the U.S., has faced concerns about its ability to maintain profitability and manage debt obligations due to mature next year.

Outlook

Despite these challenges, Spirit Airlines aims to navigate the current turbulence in the aviation industry and ensure its long-term sustainability. 

The agreement with Pratt & Whitney’s affiliate represents a significant step in bolstering liquidity and addressing operational hurdles faced by the carrier.