Spirit Airlines Big Loss Coming

Daniel Fowkes
16 Apr 2024
· Aircraft 
· Airlines 
Spirit Airlines forecasts a worse loss for Q1 as the U.S. carrier continues battling engine issues and subsequent Airbus aircraft groundings.

Major U.S. ultra-low-cost carrier Spirit Airlines expects losses to worsen as it prepares to report its first-quarter financials. The airline is battling several difficulties that are impacting the business.

Spirit Airlines Is Battling

The last few months have proved trying for the company that saw its merger plans with jetBlue collapse following a decision from a court ruling, among other internal problems.

Additionally, Spirit Airlines has long been battling the Pratt & Whitney engine crisis, which has affected GTF engines and, therefore, its fleet of Airbus-produced aircraft. The implications hurt finances, but this stems from an impact on its overall day-to-day operation.

Spirit Airlines is also facing considerable concerns about its business model, which has struggled to make money for some time. Analysts warn that the airline cannot continue without turning around its fortunes for much longer without potentially worse ramifications than just losses.

Only a week ago, the company also unveiled plans to furlough pilots and defer deliveries of all inbound Airbus next-generation aircraft as it slowed growth and attempted to focus on more core areas of the business to preserve itself as best as possible.

The Status Now

Spirit Airlines’ first-quarter loss will likely be worse than initially imagined following accounting adjustments to the compensation received from Pratt & Whitney.

The developments were disclosed in a filing with the US Securities and Exchange Commission. As part of this, it was identified that an operating loss would come in at USD 216 million, and a net loss would equate to USD 148. This represents just over a USD 10 million increase in loss over what was initially forecasted.

The persistent grounding of the aircraft, which Spirit Airlines has warned will continue throughout 2024, has negative ramifications for its network. Reaching an agreement for monthly credit was a step in the right direction. However, it doesn’t solve many of the problems faced.

While there are visible improvements, and the airline is looking to make necessary changes to secure its future, several analysts remain wary of the troubled carrier’s long-term future. Equally, some analysts have the opposite view, forecasting that Spirit will steadily improve with time.

These respective analysts see if Spirit could battle through the worst periods. It’ll work with crucial adjustments such as delivery deferrals and moving ahead more positively.

Looking ahead, Spirit Airlines needs to continue to find ways to cut costs. If the company cannot do this and, in doing so, turn a profit, further alarm bells will ring. However, the airline believes it’s well poised to shift its strategy to align with markets in which it believes it’ll perform well.

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