(Reuters) – Spirit Airlines forecast weak second-quarter revenue on Monday due to sluggish improvement in domestic demand and grounding of dozens of its aircraft.
The airline is among the most heavily impacted by issues with RTX’s Pratt & Whitney Geared Turbofan engines, which have forced it to ground multiple aircraft and resulted in high labor expenses and reduced capacity.
The carrier estimates it will average about 25 grounded aircraft throughout 2024, while competitors expand their capacity in Spirit Airlines’ core markets such as Florida.
“While the domestic environment is improving, to date it has improved at a slower rate than the company had anticipated,” Spirit said on Monday.
It forecast second-quarter revenue between $1.32 billion and $1.34 billion, compared with analysts’ estimates of $1.46 billion, according to LSEG data.
The airline has been losing money despite a robust demand environment and expectations for a strong summer season, which has forced it to take cost-control measures.
Last month, it reached a deal with planemaker Airbus to postpone all aircraft deliveries scheduled from the second quarter of 2025 and planned to furlough about 260 pilots.
The airline believes along with compensation for its grounded aircraft, deferred jet deliveries and cost savings will improve its cash levels by $450 million to $550 million in 2024, Spirit said on Monday.
“Spirit’s advisers have started discussions with our loyalty bondholders and convert holders that come due in September 2025 and May 2026, respectively, and expect a resolution at some point this summer,” Chief Financial Officer Scott Haralson said.
On an adjusted basis, the company lost $1.46 per share for the quarter ended March 31, compared with analysts’ estimates of a loss of $1.45.
Total revenue in the quarter fell 6.2% to $1.27 billion.
(Reporting by Shivansh Tiwary in Bengaluru; Editing by Shounak Dasgupta)
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