By Callum Keown
Spirit Airlines stock just can't get off the ground.
In fact, the shares were moving lower Monday after the ultra-low-cost carrier reported a wider loss and falling revenue in the first quarter.
The airline is trying to forge its future as a standalone company after its proposed merger with JetBlue Airways was blocked by a federal judge earlier this year and subsequently terminated. The prospect of the deal had been propping Spirit stock up but the shares now have tumbled 77% in 2024 through Friday's close. The shares fell 9.6% in early trading Monday.
Spirit's first-quarter earnings report suggests the shares are likely to stay grounded for some time yet. Spirit reported an adjusted loss of $1.46 a share, slightly wider than the $1.45 per share expected by analysts, according to FactSet data. Revenue fell 6.2% to $1.27 billion, also narrowly missing estimates.
The competitive environment "remains challenging" due to elevated capacity in many of Spirit's markets, CEO Ted Christie said Monday. The airline's international markets face particular pressure as both U.S. and non-U.S. carriers have increased flights to and from Latin America, Spirit added.
There were some positives, though, particularly when it comes to liquidity. Spirit expects to improve its cash levels by between $450 million and $550 million in 2024 through a combination of aircraft delivery deferrals, cost savings, and compensation due to problems with Pratt & Whitney engines, which have left a number of aircraft grounded.
Christie said that despite the loss, Spirit is making progress toward its financial goals and that phase two of its plan for life without JetBlue will roll out in the coming months. Chief Financial Officer Scott Haralson even said the company was "on the cusp" of making changes to put it on the road back to sustained profitability.
Wall Street stills need plenty of convincing. Analysts are forecasting a loss in the next seven quarters. There's not a single Buy rating on the stock, according to FactSet, and 46% of analysts covering the shares have a Sell rating.
Other airlines stocks edged higher early Monday, including JetBlue, United Airlines, Southwest Airlines, Delta Air Lines, and American Airlines.
Write to Callum Keown at callum.keown@barrons.com
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(END) Dow Jones Newswires
May 06, 2024 11:18 ET (15:18 GMT)
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