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