Spirit Airlines' stock falls after disappointing earnings, plans to cut jobs

By Tomi Kilgore

Air carrier is furloughing 240 pilots, downgrading 100 captains and offering unpaid leave to flight attendants

Shares of Spirit Airlines Inc. slipped Thursday, after the discount air carrier reported a wider-than-expected second-quarter loss, while also detailing some cost cutting measures including pilot furloughs and capacity cuts.

The results follow the carrier's announcement earlier this week of its transformation plan, which includes premium seating selections, snacks and drinks and a choice of either a carry-on bag or checked bag.

"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 that will allow guests to choose an elevated experience at an affordable price," said Chief Executive Ted Christie.

The stock (SAVE) initially knee-jerked to a 2% loss after the results were released, but bounced to be up 1% in premarket trading. The stock had rallied 4.9% over the past two days, to close Wednesday 9.1% above its July 24 record-low close of $2.76.

Net losses widened to $192.9 million, or $1.76 a share, from $2.3 million, or 2 cents a share, in the year-ago period.

Excluding nonrecurring items, adjusted per-share losses of $1.44 compared with the FactSet loss consensus of $1.36.

Revenue dropped 10.6% to $1.281 billion, in line with the lowered estimate provided by Spirit in mid-July but below the current FactSet consensus of $1.298 billion.

Load factor rose to 83.2% from 82.9%, to beat the FactSet consensus of 82.4%, as traffic rose 2% to 11.77 billion revenue passenger miles while capacity increased 1.7% to 14.15 billion available seat miles.

Revenue per ASM fell 12.1% to 9.05 cents, fare revenue per segment dropped 22.2% to $45.02 and non-ticket revenue per segment was down 9.6% to $63.44.

"Summer demand remains robust and load factors have been strong; however, significant industry capacity increases together with ancillary pricing changes in the competitive environment have made it difficult to increase yields, resulting in disappointing revenue results for the second quarter of 2024," said Chief Executive Ted Christie.

Spirit said it was on track to achieve $100 million in annual savings with its cost-cutting plan, which includes furloughing 240 pilots, downgrading 100 captains, offering voluntary unpaid leaves of absences to flight attendants and "right-sizing overhead and non-crew operational jobs.

Spirit had said in April, about a month after the merger with JetBlue Airways Corp. (JBLU) was called off after regulatory pushback, that it would furlough about 260 pilots starting Sept. 1.

The company's plan to realign its network includes exiting 42 market while adding 77 new ones, aggressively managing capacity to match seasonal and daily demand changes and offering more "day of week" routes.

The company said it ended the quarter with liquidity of $1.1 billion.

The stock has plunged 81.6% year to date through Wednesday, while U.S. Global Jets ETF JETS has ticked up 0.2% and the S&P 500 has rallied 15.8%.

-Tomi Kilgore

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08-01-24 0709ET

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