Spirit Airlines falls after slashing Q2 outlook

Spirit Airlines (SAVE) shares are falling in early trading after warning that its second quarter loss will be bigger than expected. The airline cites a few issues, including fewer customers paying for add-on charges for things such as assigned seating and printed boarding passes.

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This post was written by John Lesinski

Video Transcript

Spirit Airline shares are following after lowering its second quarter outlook, saying that it's non ticket revenue per passenger came in quote several dollars lower than anticipated.

So putting that just point blank, we are starting to see some weakness play out within the airline space similar to maybe what we heard from, uh, Delta last week.

They were the first major airline to report during during this earning season.

Now, when it comes to spirit, some of the weakness there, what we are seeing, the fact that they slashed their second outlook really just points to weakness more broadly within the space.

And we're seeing that reflected on your screen right now.

You're looking at a number of airline stocks under, uh, pretty decent amount of pressure here on the heels of this result, for exactly maybe what this would mean here for a larger part of the industry.

But again, spirit blaming a shortfall not on lower fares, something that has weighed on the entire industry this summer.

But more so they're blaming it on drop in revenue from add on so it charges separately for, such as a sign seats printed boarding passes in flight bottled water that sort of thing.

So that's what they are blaming some of this weakness for.

But again, just looking at the market's reaction to this this morning, it looks like Wall Street maybe, is fearing something a bit bigger than just that there, man.

Yeah, it's a critical kind of data point to watch that non ticket revenue, because this is a theme across a lot of major airlines like you mentioned.

And we kind of got a tease out of this in those Delta Airlines earnings as well.

The degree, of course, of a revenue shortfall that we saw from Spirit today.

But we know that for Delta, the pressure is coming from that very front of the cabin, right.

Delta is getting a lot of their profits and from the business class, first class fights, flights and tickets.

And it is challenging when you start to not get those add ons from those, uh, bigger spending ticket holders in the space just to run through a couple more numbers here.

That new guidance showing unit revenue 12% versus the second quarter of last year, showing the industry capacity, and it is outpacing the overall leader leisure travel demand.

So we got capacity on these airlines outpacing that demand.

That is what's going to lead to some pressure for the stocks.

And as we see the broader airline space starting to struggle a little bit, what does that tell us about the consumers who we've seen having this revenge?

Spending post covid Is that revenge, then starting to switch a little bit?