A Spirit Airlines aircraft undergoes operations in preparation for departure at the Austin-Bergstrom International Airport on February 12, 2024 in Austin, Texas.
Brandon Bell | Getty Images
Spirit Airlines said on Friday it will get a monthly credit from International Aero Engines through the end of 2024 as compensation for Spirit being unable to use aircraft with engine issues.
The carrier said in a filing with the U.S. Securities and Exchange Commission the agreement would boost liquidity by between $150 million and $200 million. The engine maker is an affiliate of RTX Corp’s Pratt & Whitney.
The impact to Spirit’s liquidity will be determined by the number of days in 2024 in which Spirit aircraft are unavailable due to engine issues, according to the filing.
Under the agreement, Spirit agreed to release IAE and its affiliates from claims related to the impacted engines that have accrued or may accrue prior to Dec. 31, 2024.
Spirit intends to discuss arrangements with Pratt & Whitney for any Spirit aircraft that remain unavailable after the end of the year, the company said in the filing.
Spirit removed engines from service and grounded some of its A320neo aircraft for inspection after Pratt & Whitney notified it of a rare condition in the powdered metal used to manufacture certain engine parts in July last year that would require removal, replacement or further inspection.
Rising operating costs and persistent supply chain problems have the ultra low-cost carrier grappling with liquidity issues and struggling to return to sustainable profitability. That has raised concerns about the company’s ability to repay debt due to mature next year.
Spirit’s survival was jeopardized after regulators scrapped a $3.8 billion merger agreement with JetBlue Airways that would have created the fifth-largest carrier in the U.S. The deal could have ensured Spirit’s survival as the carrier burns through cash and struggles with debt.