$308 million Q3 net loss as Spirit Airlines questions ability to continue as “going concern”
November 27, 2024
Spirit Airlines has reported a $308 million net loss for Q3 2024, up from a net loss of $157.55 million a year ago, as the ultra-low-cost carrier continues to grabble with ongoing bankruptcy proceedings. The basic loss per share from continuing operations during the quarter also nearly doubled to $2.81 compared to $1.44 a year ago.
Presenting its unaudited results a week later than previously anticipated, Spirit confirmed it had been “impacted by an increasingly challenging pricing environment”; adding that “the expected short-term impact of certain policy changes, such as the removal of change and cancel fees, have negatively affected revenue performance”.
The quarterly loss continues to build on a total net loss of $192.9 million reported in Q2 2024, with Spirit Airlines president and CEO Ted Christie explaining in August that “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 nine months ended 30 September 2024, Spirit’s net income stood at -$6.4 million, more than double the -$2.6 million reported for the same period in 2023.
Following the failure of its merger aspirations and amid mounting losses, Spirit voluntarily filed for Chapter 11 bankruptcy protection on 18 November – with Christie stating: “This set of transactions will materially strengthen our balance sheet and position Spirit for the future while we continue executing on our strategic initiatives to transform our guest experience”. At the time, Spirit confirmed it expects to emerge from “a streamlined Chapter 11 process” in the first quarter of 2025.
However, in its recent SEC filing, Spirit highlighted that the outcome of the Chapter 11 restructuring remains unclear – with the company able to “give no assurances that it will be able to secure additional sources of funds to support its operations, or, if such funds are available to the company, that such financing will be sufficient to meet its needs.” As such, “management believes there is substantial doubt about the Company’s ability to continue as a growing concern”.
The filing added that management’s current plans (which are subject to change) could include “implementation of discretionary cost reduction strategies and the sale of certain of its owned aircraft”. As of 30 September 2024, Spirit has 217 A320-family aircraft in its fleet, with a further 97 scheduled for delivery until 2031.
