Justin Sullivan
The US low-cost airline Spirit Airlines (NYSE: SAVE) said on Friday it expects to get between $150 million and $200 million in compensation for the grounding of some of its planes due to a defect in Pratt & Whitney engines.
Spirit (SAVE) said had entered into an agreement on March 26 with International Aero Engines, a subsidiary of RTX (NYSE:RTX) Pratt & Whitney unit, for a monthly credit through the end of 2024 as compensation for each grounded SAVE aircraft.
Last July, Pratt & Whitney said it had found a “rare condition” in the powdered metal used to make some engine parts that would require “expedited inspection” of the PW1100G-JM geared turbo blower (GTF) fleet, which powers the A320neo aircraft.
Spirit (SAVE) in October last year said the issue would ground an average of 26 of its Airbus (OTCPK:EADSF) (OTCPK:EADSY) A320neo planes for the full year 2024.
“The estimated impact of the settlement on Spirit (SAVE) liquidity is currently projected to be between $150 million and $200 million, driven primarily by the number of days accrued in 2024 that Spirit (SAVE) aircraft are unavailable for operational service due to GTF engine problems,” the budget airline said in regulatory filings on Friday.
“Spirit (SAVE) intends to discuss appropriate arrangements with Pratt & Whitney in due course for any Spirit (SAVE) aircraft that remain unavailable for operational service after December 31, 2024,” the airline added.
Spirit’s (SAVE) clearing and increased liquidity will likely please investors, as the company has struggled to turn a profit since the pandemic and is saddled with debt. Additionally, the future of Spirit (SAVE) is unclear after its failed merger attempt with JetBlue Airways (JBLU).