Now, low-cost airlines are cutting back on new planes.

• Dozens of new Airbus planes will be deferred in deliveries by JetBlue, Spirit, and Frontier.
• As a result of airlines' shortage of fuel-efficient jet deliveries and high demand for new planes, deferrals are being issued.
• But low-cost airlines are trying to return to steady profitability and preserve cash.

Airlines that spent years clamoring for new jets are changing their tune.

Airlines that are short of funds, have low costs, and are deep discounts are delaying spending billions of dollars on new aircraft to save money as they attempt to regain profitability and deal with the consequences of engine repairs.

Airlines have increased the number of flights to the U.S. this year, resulting in lower fares, particularly in the domestic market, where low-cost carriers operate. This has put pressure on carriers' revenue, as costs have also risen. Despite this, smaller carriers have not posted annual profits since 2019, while larger carriers have returned to profitability.

Airfare for U.S. domestic flights in September is estimated to be a "good deal" by fare-tracker Hopper, with roundtrip tickets costing $240, which is 8% lower than last year.

Some airlines are now scaling back their expansion plans and postponing the delivery of new aircraft. The majority of an airplane's cost is paid upon delivery.

Frontier CEO Barry Biffle stated that the industry naturally reduces supply when there is an excess of it, as Frontier recently announced that it is deferring 54 Airbus aircraft to at least 2029.

Biffle stated that carriers are hesitant to add too many planes too quickly due to years of aircraft delivery delays.

""Due to the delay, the order accumulated, and we had to resolve the issue," he stated."

Despite an increase in passengers by 17%, Frontier's revenue only rose by 1% in the second quarter, with average fare revenue decreasing by 16% to just above $40.

The airline is estimating that it will save approximately $3 billion by deferring 44 Airbus A321 airplanes through 2029 and extending some aircraft leases. Despite posting a surprise profit in the second quarter, the New York carrier is struggling to reduce costs and is looking to do so quickly through deferrals and other measures, including exiting unprofitable routes.

Grounded jets due to engine recall are also a challenge for the airline and other companies.

Joanna Geraghty, JetBlue CEO, stated in a note to employees on Aug. 19 that deferring so many aircraft due to engine recall, even though the carrier is already short on planes, is a "double-edged sword."

"Acquiring planes is crucial for our growth, but when we pay for them and they remain idle, it exacerbates the issue. Furthermore, with our mounting debt, we cannot afford to purchase as many planes as we need."

JetBlue had planned to acquire the airline until a judge blocked the deal in January, and now the airline has also deferred aircraft as it fights to turn its deep losses around.

The airline, which has been severely affected by the Pratt & Whitney engine recall, reported an 11% drop in revenue and a $192 million loss earlier this month, compared to a $2 million loss the previous year. As a result, the airline plans to furlough approximately 240 pilots in the near future.

The airline announced that it has postponed all Airbus planes it has ordered for the second quarter of next year until at least 2030.

Earlier this month, AerCap, an aircraft leasing firm, announced that it will take over 36 Airbus A320neo family aircraft from Spirit's order book. According to CEO Gus Kelly, the transaction is mutually beneficial for both the airline and the leasing company.

Airbus, Boeing jets still hot items

Despite the efforts of low-cost carriers, the global airline industry remains in a scarcity mindset, with a limited supply of fuel-efficient planes.

The average monthly lease rates for new Airbus A320s and A321s hit fresh records in July, with A320s at $385,000 and A321s at $430,000, according to Eddy Pieniazek, head of advisory at aviation consulting firm Ishka. Meanwhile, leases for new 737 Max 8 aircraft, the most common model, are near a record at $375,000 a month, Pieniazek said.

Airlines can purchase aircraft directly from manufacturers or lease them from companies such as Boeing or Airbus, paying monthly rent. Some airlines, like Frontier, engage in sale-leaseback transactions, where they sell planes to raise funds and then lease them back.

The two largest providers of commercial aircraft, Boeing and Airbus, are facing challenges in increasing production due to a post-Covid hangover, including shortages of skilled workers and supply issues. Airbus has reduced its delivery target for the year, while Boeing is constrained from increasing output as it deals with a safety crisis.

Although budget airlines have delayed their purchases, Airbus is still experiencing strong demand for its A320 family planes, with over 7,000 unfilled orders. In contrast, Boeing has around 4,200 orders for its 737 Max planes.

The Airbus spokeswoman stated that their fleet offers a comprehensive selection of aircraft to cater to customers' requirements and optimize their flexibility in making fleet choices.

The strain on airlines has caused them to delay or halt their growth plans due to delayed deliveries of new planes.

CFO Tammy Romo stated on an earnings call last month that the company is actively seeking ways to reduce expenses, such as those resulting from overstaffing due to the previously reported Boeing delivery delays. The airline has introduced voluntary leave programs for some of its employees.

Romo stated that Southwest has "a lot of flexibility with our order book from Boeing." Boeing did not provide a comment for this article.

"Romo stated that the company is not yet prepared to reveal all of its plans, but it will provide more information at a Sept. 26 investor day. However, the company has the flexibility to adjust its order book as needed to meet its requirements."