Spirit Airlines (NYSE:SAVE) announced subdued revenue expectations for the second quarter on Monday, attributing the forecast to slow improvements in domestic demand and the grounding of numerous aircraft.
Among airlines, Spirit has been particularly affected by issues with RTX’s Pratt & Whitney Geared Turbofan engines, leading to the grounding of multiple planes, increased labor costs, and diminished capacity. The company anticipates an average of approximately 25 grounded aircraft throughout 2024, contrasting with competitors expanding their presence in Spirit Airlines’ key markets, notably Florida.
“While there are signs of improvement in the domestic market, the pace has been slower than anticipated,” remarked Spirit Airlines on Monday. It anticipates second-quarter revenue ranging between $1.32 billion and $1.34 billion, falling short of analysts’ expectations of $1.46 billion, according to LSEG data.
Despite a favorable demand environment and expectations for a robust summer season, the airline continues to incur losses, prompting it to implement cost-saving measures.
Recently, Spirit reached an agreement with aircraft manufacturer Airbus to defer all aircraft deliveries scheduled from the second quarter of 2025 onwards, alongside plans to furlough approximately 260 pilots.
Spirit projects that compensation for grounded aircraft, deferred jet deliveries, and cost reductions will bolster its cash reserves by $450 million to $550 million in 2024, as outlined on Monday.
“Spirit’s advisors have initiated discussions with our loyalty bondholders and convertible holders due in September 2025 and May 2026, respectively, with expectations for a resolution this summer,” stated Chief Financial Officer Scott Haralson.
Adjusted for exceptional items, the company reported a loss of $1.46 per share for the quarter ending March 31, slightly exceeding analysts’ estimates of a loss of $1.45 per share.
Total revenue for the quarter declined by 6.2% to $1.27 billion.
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