Spirit Airlines lost $143 million in the first quarter of 2024 amid heightened competitive pressures and other factors that have prompted the airline to shrink its operation and to seek out cost savings.
Released on 6 May, the financial results come as the Miramar, Florida-based airline plots a standalone course followed a failed plan to be acquired by JetBlue Airways. Spirit is also coping with a Pratt & Whitney PW1100G engine issue that has left many of its Airbus A320neo-family jets grounded.
“The competitive environment remains challenging due to elevated capacity in many of the markets we serve,” says Spirit chief executive Ted Christie. “Nevertheless, we are confident that the strategic changes we are implementing, together with our cost-saving initiatives, will allow Spirit to compete effectively in today’s marketplace and drive continuous improvement in the years ahead.”
“While we were hopeful for a successful merger with JetBlue, over the last year we have been working in the background to prepare for the possibility that the merger would not be allowed to proceed,” Christie adds. Spirit has been “working on the first phase of our new standalone business plan”, and intends to reveal details “over the coming months”.
The plan involves “reducing near-term capacity” and “right-sizing the resources in the business to our expected lower level of capacity”, says Spirit chief financial officer Scott Haralson.
The company has also “started discussions” with bondholders and aims to reach a “resolution at some point this summer”, according to Christie. He does not elaborate, but Spirit has been seeking to restructure debt obligations, which include near-term repayment of $157 million in debt.
Spirit’s $143 million first-quarter loss compares to its $104 million loss in the same period last year. The company generated revenue in the first quarter of $1.3 billion, down 6.2% year on year, while its first-quarter costs inched up 0.7% in one year to $1.5 billion.
The ultra-low-cost airline, which only operates A320-family jets, is among numerous airlines globally that have needed to ground PW1100G-powered A320neos and A321neos due to an issue involving defective components. That issue stems from errors during a manufacturing process using powder metal, P&W has said.
As a result, Spirit said on 6 May that about 25 of its A320neo-family jets will be out of service at any given time this year.
Spirit in March said it reached a compensation agreement with P&W worth $150-200 million this year. On 6 May, Spirit said that as part of that agreement it expects to receive credits worth $30.6 million attributed to the first quarter.
