Spirit Airlines reported a loss of $157.6 million for Q3, amid lackluster revenue for the period. The carrier brought in $1.3 billion, down 6.8% from the year prior.
The company still filled 81.4% of its seats, down from 83.3% in 2022, but it had to dramatically cut fares to keep planes full. Average fare revenue per passenger flight segment was just $48.73, down 27.8% from the $67.52 it reported in 2022.
One bright spot in the numbers is that ancillary revenue per passenger flight segment held steady. Passengers paid, on average, $67.70 on top of the fare compared to $67.07 last year. Roughly a third of that is the “Passenger Usage Charge” nearly all of Spirit’s customers pay to buy their ticket anywhere other than an airport counter, which is much harder to avoid than seat assignment or bag fees.
GTF grounding headwinds
The Summer 2023 numbers were not good. The carrier has tried to explain that away as travelers not taking a second or third local trip after a bigger international adventure, among other things. But the biggest challenge Spirit faces right now comes from the Pratt & Whitney GTF engines on its A320neo and A321neo planes. The airline currently has 90 NEOs, just under half its total fleet. Ten of those, on average, are expected to be grounded in Q4 2023.
The groundings get worse in 2024, with an average of 13 expected to be out of service in January. That number grows to 46 by December 2024. Yes, it also includes new deliveries joining the fleet, but that number is still a massive hit to the company’s ability to operate and grow. As a result, Spirit now anticipates minimal growth, if any, in 2024.
Not having the growth capacity is, of course, a challenge. But if the short-haul demand doesn’t rebound and the carrier is still stuck discounting fares to fill planes in 2024, maybe that’s not the worst thing. It is in negotiations with P&W on compensation for the grounded planes and could potentially do better there than selling the seats and operating the flights.
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