Spirit Airlines stock up on cost-cutting efforts, Airbus order

Shares of Spirit Airlines (SAVE) are moving higher as the company announced it has agreed with Airbus (AIR.PA) to delay the delivery of new aircrafts until 2026. In addition, the company will furlough up to 200 pilots amid cost-cutting efforts.

Yahoo Finance Anchors Madison Mills and Seana Smith break down how these developments will boost liquidity for Spirit.

Editor's note: This article was written by Nicholas Jacobino

Video transcript

SEANA SMITH: Let's get to a trending ticker here on Yahoo Finance. Spirit Airlines' moving to the upside, up just about 2% after the airline announced that it has reached an agreement with Airbus. They're actually going to delay the delivery of new Airbus family aircrafts that were initially scheduled for the second quarter of 2025. They are going to now delay that until 2026.

Spirit is also going to furlough over 200 pilots starting in September. And this is all part of the airline's cost cutting efforts in order to save cash, and to break that down just a little bit further here, Spirit saying here, Maddie, that the airline deferrals-- or the aircraft deferrals-- Excuse me. Are going to boost liquidity by about $340 million. They estimate that over the next two years, and of course, this comes on the heels of the fact that their planned merger with JetBlue was-- fell apart after it was blocked by a federal judge not too long ago. And this one quote from the CEO stuck out to me, CEO Ted Christie saying that, of course, these steps aren't ones that we want to take, but they're necessary to ensure a strong and profitable future right now for Spirit.

MADISON MILLS: Well, and it's interesting to note that originally off the news, Spirit was up as much as 5%. So seeing a positive reaction there to that cost cutting that you mentioned, Seana. They also say they're going to furlough around 260 pilots, so some more cost cutting there. They're also going to have to ground some additional planes-- these geared turbofan engine planes. GTF's, as they're called, and due to that grounding, Spirit is going to receive anywhere from $150 million to $200 million in additional compensation.

So all of these different factors that you mentioned really beefing up this narrative that they are going to be able to handle some of their liquidity challenges a little bit more directly. Citi also noting that this could have a positive impact on their overall cost reduction but also that potential revenue generation reduction could be a risk as well moving forward. So interesting to see whether or not this is going to be enough to push Spirit up in the future.