Budget airline stocks are under pressure after Spirit Airlines pilots approved contract changes designed to keep the bankrupt carrier alive. JetBlue $JBLU ( ▲ 1.48% ) and Frontier $ULCC ( ▼ 1.41% ) both traded lower after the Air Line Pilots Association said Spirit pilots agreed to temporary cuts that reduce hourly pay by 8 percent and slash retirement contributions from 16 percent to 8 percent starting January 1.
Spirit filed for bankruptcy in August, and the pilot concessions are aimed at helping the airline secure financing and complete its restructuring. ALPA’s Ryan P. Muller said the decision was difficult but necessary to stabilize the company.
Investors see JetBlue and Frontier as the biggest long-term beneficiaries of Spirit’s troubles, especially after both airlines previously tried to acquire the low-cost carrier.