Spirit Airlines lowers revenue estimates as it faces more competition, capacity challenges

By Claudia Assis

Spirit Airlines Inc. late Tuesday lowered revenue estimates for its second quarter, saying it faced more competition, and as a mismatch between domestic capacity and demand continues to plague U.S. airlines, particularly ultra low-cost, leisure travel-focused airlines such as Spirit.

Spirit (SAVE) said its second-quarter revenue will reach about $1.28 billion, lower than previously expected, mostly due to lower-than-expected non-ticket revenue, or revenue from items not included in base ticket prices such as baggage fees, food and others.

Spirit stock fell more than 5% in the extended session Tuesday, after ending the regular trading day up 3%.

The company attributed the lower revenue to "incremental pressure on ancillary pricing due to changes in the competitive marketplace." The airline estimated that its quarterly non-ticket revenue per passenger segment will be about $64, "several dollars lower than anticipated."

Read also: 'Capacity missteps' and fare promotions are hurting major U.S. airlines

Analysts polled by FactSet expected Spirit to report quarterly sales of $1.33 billion. Spirit's second-quarter 2023 sales reached $1.43 billion. The company said it expects to report second-quarter results in early August, without specifying a date.

Spirit said it detected back in early May "significant pressure on leisure-ticket yields throughout the second quarter and continuing into the third quarter due to large industry-capacity increases."

Spirit also guided for second-quarter adjusted operating margin of negative 13.5% to negative 12.5%.

Delta Air Lines Inc. (DAL) last week lowered its outlook for the third quarter, saying that as travel demand remained strong and at record levels, growth in domestic seat supply has also accelerated, which weighed on its profitability per passenger.

-Claudia Assis

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07-16-24 1752ET

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