Spirit Airlines, which recently entered bankruptcy court protection, has “substantial doubt” about its ability to continue operating during the next year due to steep financial losses amid difficult market conditions.
Despite that warning, revealed in Spirit’s just-released third-quarter financial filing, the Miramar, Florida-based airline has said it intends to continue operating as it restructures it finances and operation. On 19 November, chief executive Ted Christie said, “We look forward to emerging as a stronger company”.
Still, Spirit’s third-quarter report, filed on 25 November with the US Securities and Exchange Commission, warns of uncertainty.
“The company’s operations and ability to develop and execute its business plan, its financial condition, liquidity and its continuation as a going concern are subject to a high degree of risk and uncertainty,” Spirit’s filing says. “Management believes there is substantial doubt about the company’s ability to continue as a going concern.”
Spirit did not respond to a request for comment.
The airline would typically have filed its third-quarter report several weeks ago but delayed the filing due to its troubled financial condition. Spirit on 18 November filed for Chapter 11 protection in US Bankruptcy Court for the Southern District of New York.
Spirit lost $308 million in the third quarter, roughly double its loss from the same period last year. It has lost $644 million in the first three quarters of the year. The airline ended September with cash and cash equivalents valued at $424 million, less than half the $865 million it had at the start of 2024.
Spirit is working to restructure it debt and secure fresh financing.
The airline generated $1.2 billion of operating revenue in the third quarter, down 5% year on year. Its operating expenses inched up 3% year on year to $1.5 billion.
The losses reflect an “increasingly challenging pricing environment” – which many analysts attribute to Spirit adding too many aircraft into too many markets in recent years. Additionally, the airline says its recent decision to eliminate reservation change and cancellation fees, a move that aligned its policies with competitors’, left it with less revenue. Meanwhile, Spirit’s costs continue increasing.
“The company expects these trends to continue for at least the remainder of 2024, which creates uncertainty in operating results,” Spirit says.
It adds that it remains uncertain about its ability to secure sufficient financing “to meet its needs”.
Spirit ended September with 217 Airbus A320-family jets in its fleet.
