Financial Performance

Spirit Slashes Guidance After Flight Disruptions

The carrier took a $50 million hit from the disruptions and expects an "additional $80 to $100 million of negative revenue impact" in Q3.
Matthew HellerAugust 17, 2021

Spirit Airlines has lowered its guidance for the third quarter, citing the negative impact of its massive flight disruptions in recent weeks.

The discount carrier said Monday the disruptions cost it about $50 million and that it was continuing to experience “some amount of short-term brand impact from the irregular operations.”

“This behavior, together with the company’s tactical cancellations, is expected to drive an additional $80 to $100 million of negative revenue impact during the third quarter,” Spirit said in a regulatory filing.

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As a result, Spirit is revising its third-quarter guidance for adjusted EBITDA margin from positive 10% to 15% to negative 8.0% to negative 1.0%.

“We believe the interruption was a singular event driven by an unprecedented confluence of factors and does not reflect systemic issues,” CEO Ted Christie said. “Over the past few years, we have made investments to be one of the most efficient and reliable airlines in the U.S. industry, and we are committed to taking the steps necessary to make sure we maintain that standard.”

The disruptions also caused additional expenses, including the costs of purchasing tickets on other airlines for stranded passengers and covering hotel costs.

Spirit now expects adjusted operating expenses for the third quarter of between $1.03 billion to $1.04 billion, up from its previous forecast of $1 billion to $1.01 billion.

Between July 30 and Aug. 9, adverse weather and staffing shortages forced Spirit to cancel 2,826 flights, affecting tens of thousands of customers and causing chaos at airports around the country.

“After laying off or furloughing staff during the height of the pandemic last year, several U.S. airlines are now reporting workforce shortages, flight cancellations, and delays despite receiving billions in government bailouts,” Reuters reported.

Spirit said it will make “tactical schedule reductions throughout the remainder of the third quarter” to “enhance network stability in light of continuing airport staffing shortages” and that it is experiencing guest cancellations and softer-than-expected booking trends that are believed to be related to rising COVID-19 cases and the impact of the flight disruptions.

In extended trading Monday, Spirit shares fell 2.6% to $23.64.

Joe Raedle via Getty Images