Spirit Airlines on Thursday reported a steep second-quarter loss due to fierce competition in the low-cost airline industry.
The disappointing earnings report came a day after Spirit Airlines, known for its incredibly cheap fares and bare-bones amenities, announced it would launch premium flight packages.
“Continued fierce competition for price-conscious leisure travelers further strengthens our belief that our transformation plan to redefine low-cost travel with new higher-value travel options is on the right track,” CEO Ted Christie said in a statement.
Spirit Airlines has failed to report a profit in five of the past six quarters despite strong post-pandemic and summer travel demand, raising concerns about its ability to manage debt maturing in 2025 and 2026.
The company’s stock has crashed this year, plummeting 83% from $16.35 per share to $2.73.
Meanwhile, the S&P 500 Airline Passenger Index is down 4% so far this year, after dropping just 0.6% on Thursday and dropping nearly 5% following Spirit Airlines’ report.
of Florida-based airline reports Adjusted operating loss was $166.9 million, adjusted net loss was $157.9 million and adjusted earnings per share loss was $1.44.
Spirit Airlines has struggled as airlines face overcapacity, reducing their ability to attract customers with ultra-low prices.
The company said it is working to adapt to the surge in demand and has withdrawn from 42 markets so far.
Spirit also hopes to renew its image and attract new customers with more upscale flight service.
The budget carrier said it would introduce four new tiers — Go Big, Go Comfy, Go Savvy and Go — as well as improve passenger benefits, including priority check-in and enhanced weight guidance for checked baggage.
Spirit Airlines is looking to cut costs by downgrading about 100 captains, putting flight attendants on unpaid voluntary leave and suspending the hiring and training of new pilots and flight attendants.
The airline had previously announced plans to lay off about 240 pilots and delay deliveries of Airbus planes.
Spirit Airlines is one of several airlines that have been forced to ground flights and face financial difficulties due to RTX engine defects.
RTX’s Pratt & Whitney said it will have to remove more than 1,000 engines from Airbus planes in 2023 to inspect them for microscopic cracks.
Spirit Airlines is expected to have about 67 aircraft on the ground by the end of 2025, compared with an average of 20.
The airline expects its adjusted operating margin for the next quarter to be negative in the range of 26% to 29%.
With post wire
