While most airlines have been struggling with understaffing and the ability to meet post-pandemic demand for travel, Spirit Airlines (SAVE) -) has had a particularly difficult few months.
Back in June, a technical issue with the low-cost carrier's website and check-in kiosks caused the cancelation of more than 90% of its flights and left thousands stranded at different airports across the country.
DON'T MISS: Delta Airlines Just Had A Terrifying Situation Mid-Flight
Then came the engine trouble. Earlier this year, Spirit grounded seven of its planes after inspections revealed problems with the engines.
Image source: Alex Tai/SOPA Images/LightRocket via Getty
'Yet Another Frustrating and Disappointing Development'
In an Aug. 3 earnings call, Spirit CEO Ted Christie revealed that a recall of the Pratt & Whitney Geared Turbofan (GTF) engines by supplier RTX (RTX) -) has forced the airline to ground seven more Airbus (EADSF) -) A320neo jets until the end of the year.
"This new issue is yet another frustrating and disappointing development," Christie told analysts in the call.
As a result of having fewer operational planes, the Miramar, Fla.-based airline cut its carrying capacity in September by 5% and said that the decreased efficiency will likely cut into the bottom line for the month and quarter. When looked at by the number of flights that would have otherwise taken place and brought in ticket sales, a grounded plane costs an airline hundreds of thousands of dollars for every day it is out of operation.
While Spirit is dealing with the same understaffing problems as the rest of the industry, the non-operational jets will also cause the airline to keep more pilots than can be given flights on the payroll.
"With these issues as well as an acute reduction in the domestic and Latin America demand outlook, we estimate our third quarter operating margin will range between negative 5.5% and negative 7.5%," Spirit CFO Scott Haralson said in a statement.
This Is Why So Many People Have Gripes With Spirit
Spirit also said that it will need to wait until mid- to late September to know if more engines will need to be pulled later in the year. The airline has 13 planes that use the engines identified by Pratt & Whitney.
For the second quarter 2023, Spirit reported a total net loss of $2.3 million, or $0.02 per diluted share
Even though the jet engine is a supplier problem that is outside of Spirit's hands, any news of technical issues related to safety of the aircraft do not help an airline that is already suffering from bad PR and an image crisis.
In its annual North America Airline Satisfaction Study, data analytics company J.D. Power found that Spirit was the airline with the most dissatisfied customers. The difference between low-cost competitor Southwest (LUV) -) was from 827 points to 727 points out of a total 1,000.
Traffic control challenges during bad weather are another problem that arose in the first half of 2023. A lack of staff has caused ground delays and forced the airline to cut back on the number of flights it can run on a given day.
After the earnings call, Spirit stock dropped to $15.61 before rising up to $15.96 by Friday afternoon.
"Exposure to this issue is very unique and material for us and is having an impact on our margin," Christie said further in the earnings call.
