Spirit Is the Rare Airline Losing Money This Summer

Spirit Airlines is facing a barrage of problems this year and the effects are showing in its financial results: A net loss for the second quarter with further red ink seen in the summer, the industry’s annual peak profit period.

For Spirit, the cumulative effects of extreme weather and air-traffic delays, pilot attrition, Pratt & Whitney engine issues on its fleet of newer Airbus aircraft and a sharp dip in domestic fares starting in June have combined to pummel financial results.

“Demand for the peak summer travel period has not built as we expected, resulting in lower fare levels,” Spirit Chief Executive Ted Christie said Thursday on a call with analysts.

In the second quarter, Spirit lost $2.3 million, or 2 cents per share. On an adjusted basis, Spirit earned $32.3 million, or 29 cents per share, well below analysts’ consensus of 39 cents, according to Raymond James. Its 3.3% adjusted margin for the quarter was also well below the average 15% of the six largest U.S. carriers.

Spirit shares fell 7% Thursday to close at $15.86 on the New York Stock Exchange, part of a broad decline for the industry. Spirit stock has dropped 20% year-to-date.

Spirit expects to lose money in the third quarter on weaker revenues and the costs from grounded aircraft and operational woes executives attributed to staffing shortages at the Federal Aviation Administration. Air traffic deficiencies in New York and Florida have been particularly acute, and cited by most airlines.

Only one other U.S. airline, JetBlue Airways, has thus far predicted a likely loss for the third quarter, but said it may also break even for the period. Most of the industry is reporting robust sales, and strong pricing, for the third quarter, albeit questions remain about how much revenues may moderate in the fall when the peak season concludes.

JetBlue, of course, is trying to buy Spirit. The Justice Department sued to the block the deal on antitrust grounds in March. A trial is set for October.

Florida-based Spirit is also the most exposed U.S. airline to a new problem RTX disclosed last week on Pratt & Whitney geared turbofan engines, which power its A320neo aircraft. The carrier expects to ground seven Airbus in September to allow for inspections, with those planes likely out of operation until 2024. Spirit already had seven planes grounded for other Pratt engine issues, and is planning for at least 10 more next year for maintenance.

Beyond the ATC staffing troubles, pilot losses to larger airlines, and engine glitches, Spirit executives also speculate that widespread travel delays nationwide may be “artificially lidding” demand this summer, as people weary of the hassles. 

“I fly a lot and it can be frustrating when you’re stuck at an airport for three, four, five, six hours,” Christie said. “I think that may be making people make different buying decisions.”

UPDATED: This story was updated to include Spirit's closing stock price on Thursday.