Spirit Airlines, the South Florida based discount carrier, is wrestling with a series of troubles that include steep financial losses, a need to ground planes for inspections, and a resulting suspension of training for new pilots and flight attendants.
The events come as the Miramar-based airline girds for a U.S. Justice Department-driven antitrust trial scheduled to start Tuesday that is likely to determine the fate of its proposed $3.8 billion takeover by JetBlue Airways of New York.
In seemingly short order, Spirit has seen an encouraging rebound and expansion from COVID-19 turn sour amid decreased consumer demand and an unexpected potential problem with Pratt & Whitney engines that power a number of its Airbus jetliners.
On Thursday, the company announced a $157.6 million net loss for its fiscal third quarter, more than quadruple the net loss in the same period of 2022. The results prompted management to slow the pace of new aircraft deliveries “through the end of the decade” and ease capacity growth “in the near term,” CEO Ted Christie said in a statement.
“Softer demand for our product and discounted fares in our markets led to a disappointing outcome for the third quarter 2023,” Christie said. “We continue to see discounted fares for travel booked through the pre-Thanksgiving period. And, unfortunately, we have not seen the anticipated return to a normal demand and pricing environment for the peak holiday periods. Given these continued trends, we are evaluating our growth profile and our competitive position.”
Inspection disruptions
In the meantime, the airline is preparing to deal with an expensive and time-consuming inspection regimen that lies ahead for a number of Airbusneo jetliners it operates, a process that is expected to last through the end of next year.
Spirit said in its financial announcement that engine maker Pratt & Whitney notified the airline “that all the geared turbofan (GTF) neo engines in Spirit’s fleet, including the engines slotted for future aircraft deliveries, for a yet undetermined period, are in the potential pool of engines subject to the inspection and possible replacement, of powdered metal high-pressure turbine and compressor discs.”
Based on an analysis from Pratt & Whitney, the company said, an average of 10 planes in the fourth quarter of this year will be grounded to accommodate engine removals and inspections.
“For 2024, Spirit assumes the average number of grounded neo aircraft will climb steadily from 13 in January to 41 in December, averaging 26 grounded for the full year 2024,” the statement said. “This expectation drives a dramatic decrease in the company’s near-term growth projections. For the full year 2024, Spirit estimates capacity will range between about flat to up mid-single digits compared to the full year 2023.”
Spirit said it has started discussing financial damages with Pratt & Whitney, but the timing and form of the compensation has yet to be determined.
Spokesman Thomas Fletcher confirmed a Friday report by CNBC that the airline will soon suspend training for new-hire flight crew members because it will not be operating as many planes.
“Since we won’t be growing as quickly, we have made the decision to suspend new-hire training efforts for pilots and flight attendants beginning in November until further notice,” he said in an email to the South Florida Sun Sentinel. “This is not a decision we’ve taken lightly, but it’s necessary to ensure our crew staffing levels match our operational need given the number of aircraft we can fly.”
An unrelated problem involving aircraft last week required the reported grounding of 25 Spirit jetliners for what the FAA called “mandatory” inspections of an unidentified section of the planes. That exercise forced the carrier to cancel up to 100 flights, a number of them that were scheduled to fly to and from Orlando International Airport, according to the tracking site FlightAware.
Fletcher said that the airline has returned “to normal operations after those cancellations related to inspections. The aircraft were cleared to return to service and we’ve minimized any impact to our guests.”
Antitrust trial about to start
But the most critical event likely to steer Spirit’s long-term future is a trial now scheduled to start in Boston on Tuesday that will decide a federal government’s lawsuit that seeks to block the takeover deal with JetBlue.
Both carriers are predominant operators at Fort Lauderdale-Hollywood International Airport in terms of flights and passengers served. And JetBlue is managing the construction of a new terminal at the airport that is expected to be completed in 2026..
The federal government, which has been joined in its suit by several states and the District of Columbia, asserts that the disappearance of Spirit would leave consumers with higher fares and fewer low-cost options.
JetBlue has countered that its buyout of Spirit would create a stronger platform for competing with the so-called “Big Four” airlines — American Airlines, Delta Air Lines, Southwest Airlines and United Airlines — which collectively control 80% of the market. In a bid to soften the government’s argument, JetBlue has arranged to offload some of the routes operated by Spirit to other discount airlines.
The non-jury trial, which will be conducted before U.S. District Judge William Young, is expected to run into the first week of December, according to the court docket.
