Spirit Airlines on Thursday reported steep second-quarter losses, blaming strong competition in the budget-friendly airline industry.
The disappointing earnings report came a day after Spirit, known for incredibly cheap flight tickets and sparse amenities, announced it would be launching premium flight packages.
“The continued intense competitive battle for the price-sensitive leisure traveler further reinforces our belief that we are on the right path with our transformation plan to redefine low-fare travel with new, high-value travel options,” CEO Ted Christie said in a statement.
Spirit has failed to report a profit in the last five out of six quarters, despite strong post-pandemic and summer travel demand – prompting concerns over its ability to manage debt due to mature in 2025 and 2026.
Its shares have tanked this year, plummeting 83% from $16.35 a share to $2.73 a share.
Meanwhile, the S&P 500 airline passengers index is down 4% so far this year. It was down just 0.6% on Thursday before a nearly 5% drop following Spirit’s report.
The Florida-based airline reported an adjusted operating income loss of $166.9 million, an adjusted net income loss of $157.9 million and an adjusted earnings per share loss of $1.44.
Spirit has struggled due to excess airline capacity, which has put a damper on its ability to draw in customers with ultra low prices.
The airline said it was working to better match waves in demand and has exited 42 markets so far.
Spirit is also hoping to turn around its image and attract new customers with high-end flight offerings.
The budget airline said it will introduce four new tiers – Go Big, Go Comfy, Go Savvy and Go – as well as improved passenger benefits, like priority check-in and increased check bag weight guidance.
Spirit has set its sights on cutting costs by downgrading about 100 captains, offering unpaid voluntary leave to flight attendants and pausing its hiring and training of new pilots and flight attendants.
The airline previously announced its plans to furlough about 240 pilots and postpone Airbus deliveries.
Spirit was one of the airlines hit hardest by an RTX engine defect that forced it to ground flights, adding to its financial woes.
RTX’s Pratt & Whitney announced in 2023 that more than 1,000 of its engines had to be removed from Airbus planes and checked for microscopic cracks.
Spirit is expected to end 2025 with about 67 planes on the ground, compared to the average 20.
The airline forecast a negative adjusted operating margin in the range of 26% to 29% in the next quarter.
With Post wires