Spirit Airlines has secured a compensation deal with International Aero Engines (IAE) to receive a monthly credit through the end of 2024.
The settlement will compensate the carrier for the costly grounding of its Airbus aircraft due to on-going engine issues.
The agreement will throw Spirit a necessary financial lifeline estimated to be between $150 million and $200 million in the short term.
Spirit Airlines’ filing:
As previously disclosed, in July 2023, Pratt & Whitney announced that it had determined that a rare condition in the powdered metal used to manufacture certain engine parts would require accelerated inspection of the PW1100G-JM geared turbo fan (“GTF”) fleet, which powers the A320neo aircraft. Pratt & Whitney notified Spirit Airlines, Inc. (“Spirit”) that nearly all GTF engines in its fleet, including potentially the engines slotted for near term future aircraft deliveries would be subject to the removal and inspection, or replacement, of the powdered metal impacted parts. As a result, Spirit has removed engines from service and grounded some of its A320neo aircraft for inspection requirements.
On March 26, 2024, Spirit entered into an agreement with International Aero Engines, LLC (“IAE”), an affiliate of Pratt & Whitney (the “Agreement”) pursuant to which IAE will provide Spirit with a monthly credit through the end of 2024, subject to certain conditions, as compensation for each Spirit aircraft unavailable for operational service due to GTF engine issues. The estimated impact of the Agreement on Spirit’s liquidity is currently expected to be between $150 million and $200 million, primarily determined by the number of days accumulated in 2024 in which Spirit aircraft are unavailable for operational service due to GTF engine issues. Pursuant to 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 December 31, 2024.
Spirit intends to discuss appropriate arrangements with Pratt & Whitney in due course for any Spirit aircraft that remain unavailable for operational service after December 31, 2024.
Spirit Airlines aircraft photo gallery:
