Layoffs Bring Spirit to $80 Million Cost Reduction Target

As it pushes through the Chapter 11 bankruptcy process, Spirit Airlines has been looking for any way to cut costs and hit its $80 million reduction target. The latest development is the carrier’s decision to drop roughly 200 employees.

“We are executing on plans to rightsize our organization to align with our current fleet size and level of flying and ultimately optimize our airline,” stated Spirit. “After reviewing our organizational structure, we have made the difficult decision to eliminate approximately 200 positions from various departments across the airline.”

These staff cuts, on top of other recent pilot furloughs, allowed the ultra-low-cost carrier to hit its $80 million annualized cost reduction goal. Spirit will continue to look for methods to improve its spending habits with hopes to complete the bankruptcy process by the end of 2025’s first quarter.

Spirit, which previously held the title of 7th biggest American carrier, has been in a state of financial panic for the last four or so years. It has not produced an annual profit since 2019, resulting in over $2.5 billion in losses and more than $1 billion in debt payments.

The low-cost carrier has had two major deals fall through in the last couple of years. In 2022, Spirit and Frontier announced a plan to merge. However, only two months after the reveal, JetBlue sweetened the deal with a $3.8 billion offer. This led Spirit to shut down talks with Frontier and proceed to organize a tie-up with JetBlue.

Things were looking up for the airline until the US Department of Justice blocked the deal in March 2024 on claims of antitrust. This moment sparked speculation of Spirit filing for bankruptcy, though the carrier decided to hold off and attempt to recover. In October, Spirit announced that it was planning to sell multiple jets and issue an unspecified number of layoffs. It then revived talks with Frontier in hopes of finally getting a merger to go through.

It didn’t take long for Frontier to ditch the acquisition efforts and leave Spirit to fend for itself. Within a week, on November 18, Spirit announced that it would be filing for Chapter 11 bankruptcy and entering a deal with bondholders to reduce debt.

FMI: www.spirit.com