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Spirit Airlines Does Complete 180, Freezes Hiring Amid Tough Quarter, P&W Engine Woes

Spirit Airlines, one of the country’s largest ultra-low-cost carriers, finds itself in a tight spot as it navigates through the final quarter of 2023. The airline Friday announced a hiring freeze for new pilots and flight attendants, a stark contrast to their grand plans earlier this year. So, what’s causing this complete 180? Let’s take a closer look.

What’s Behind the Hiring Freeze?

In just a few short months, the airline industry has witnessed a significant shift in fortunes. Back in April, Spirit Airlines was riding high on the unstoppable wave of post-COVID revenge travel demand, which seemed like it had no intentions of slowing down. The airline had announced ambitious plans to hire a whopping 4,000 new employees in 2023 alone. And as recently as last month, the airline partnered with Liberty University to expand its hiring pipeline. Fast forward to today, and we find the airline slamming on the brakes with recruiting (hopefully they didn’t overheat said brakes as big as this 180 was).

A320neo Engine Issues

One major factor contributing to this hiring freeze is the unforeseen trouble with Pratt & Whitney engines, affecting Spirit’s Airbus A320neo aircraft. The Miramar, Florida-based airline expects to ground an average of 26 of these planes for inspections, all due to a manufacturing defect disclosed by Pratt & Whitney in August. The numbers are alarming, with 13 grounded planes expected in January, increasing to a staggering 41 by December next year.

Spirit’s fleet, as of September 30, stood at 202 Airbus planes, making these grounding measures a significant setback. In their own words, “This expectation drives a dramatic decrease in the Company‚Äôs near-term growth projections.” Naturally, this has thrown a wrench into their plans for expansion and hiring.

Spirit Airlines is in talks with Pratt & Whitney’s parent company, RTX, regarding compensation for the engine issue. RTX had previously mentioned that repairs would take 250 to 300 days, and approximately 350 planes powered by these geared turbofan engines would be grounded worldwide between 2024 and 2026.

Economic Headwinds for LCCs

While this hiring freeze by Spirit is the most dramatic action taken so far by an airline in response to the gathering economic storm clouds, Spirit is not the only low-cost carrier having a rough Q3. It appears that LCCs, which largely serve domestic leisure travelers, are taking the hardest hits from the economic headwinds currently sweeping through the country.

Revenge travel demand, which appeared unstoppable until a few months ago, has suddenly dried up. Rising inflation, soaring interest rates, and widespread layoffs and hiring freezes across the economy have all played their part. Many who are fortunate enough to secure jobs in these conditions often have to accept lower salaries, return-to-office mandates, or roles with little to no paid time off.

Domestic travel demand, which was breaking records just this summer, has done a complete 180 and largely evaporated. Demand to and from Europe still remains stronger than ever, but LCCs don’t serve Europe, and aren’t in a position to capitalize on that demand.

This sudden shift in the travel landscape marks the first time we’ve seen any significant airline hiring freezes and layoffs since the early days of the COVID-19 pandemic. Other airlines, such as Breeze Airways, have been forced to make tough decisions, including slashing underperforming routes, in some cases just a month after launching them. Even Southwest Airlines recently made positive changes to its Rapid Rewards program – which while we always welcome customer-friendly changes, we usually only see loyalty programs change for the better when times are bad. At the end of the day, a loyalty program is a marketing tool – and if people are buying tickets anyway, there’s no need to spend money on marketing.

It’s a challenging time for low-cost airlines like Spirit, but they are not alone in facing these economic headwinds. Only time will tell if this is a temporary bump in the road for airlines, or if we’ll eventually see a couple B and C players fold altogether.

H/T CNBC

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