(Reuters) – Spirit Airlines Inc forecast weak second-quarter revenue on Monday due to a slowing improvement in domestic demand and the grounding of dozens of its planes, sending the company’s shares down about 9% in early trading.
The airline is among those most affected by issues with RTX’s Pratt & Whitney Geared Turbofan engines, which have forced it to ground multiple planes and led to higher labor costs and reduced capacity.
The carrier estimates it will average 25 aircraft grounded throughout 2024, while competitors expand capacity in Spirit Airlines’ core markets such as Florida.
Spirit said Monday that while the local environment is improving, it has so far improved at a slower rate than the company expected.
It expects second-quarter revenue to range between $1.32 billion and $1.34 billion, compared to analyst estimates of $1.46 billion, according to LSEG data.
The airline is incurring financial losses despite the strong demand environment and expectations of a strong summer season, forcing it to take measures to control costs.
Last month, it reached an agreement with planemaker Airbus to postpone all scheduled aircraft deliveries from the second quarter of 2025 and plans to furlough about 260 pilots.
Spirit said Monday that the airline believes that along with compensation for its grounded aircraft, deferring aircraft deliveries and cost savings will improve its cash levels by $450 million to $550 million in 2024.
“Spirit Advisors has begun discussions with holders of our Loyalty Notes and holders of our Conversion Notes that mature in September 2025 and May 2026, respectively, and expect to reach a resolution sometime this summer,” said Scott Haralson, Chief Financial Officer.
On an adjusted basis, the company lost $1.46 per share during the quarter ended March 31, compared to analyst estimates of a loss of $1.45.
Total revenue fell 6.2% to $1.27 billion.
(Reporting by Shivansh Tiwari in Bengaluru; Editing by Shaunak Dasgupta)
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