OM DENNE EPISODE
Spirit Airlines’ financial woes could provide an opportunity for United Airlines to solve its problems with Boeing.
Spirit, a discount carrier, said Monday it plans to defer deliveries of Airbus A320s that were due to be delivered in the next two years. It’s part of Spirit’s broader plan to save money as it plots its next moves after a planned merger with JetBlue fell apart.
United has been trying to get more planes from Airbus to deal with the delay it’s experiencing in getting new 737s from Boeing. New aircraft are key to United’s plans to grow the airline by adding new routes and to be more cost-competitive with discounters such as Spirit by flying more passengers with fewer, larger aircraft.
Spirit’s deferral, which will save the discount carrier $340 million, could give United an opportunity get more aircraft, analysts say.
“It will certainly be an opportunity for United to talk to Airbus about it,” said Helane Becker, an analyst at Cowen.
Savanthi Syth, an analyst at Raymond James, estimates Spirit could free up production slots for as many as 27 aircraft over the next two years.
JetBlue also said earlier this year it would defer some aircraft purchases.
“Both JetBlue and Spirit could be part of Airbus trying to pull together airplanes for United,” said George Ferguson, an analyst at Bloomberg Intelligence.
United and Airbus declined to comment.
Even if United can’t get the aircraft that its rivals defer, Spirit's woes could end up benefiting United and other carriers, such as Southwest, in another way. The cash squeeze means fewer low-priced seats coming into the market. Syth estimates Spirit, which serves O’Hare, will have 7% fewer seats available next year and 16% fewer in 2026.
This article originally appeared in Crain's Chicago Business.
