Why Spirit Airlines Stock Is Descending Today

Core Viewpoint - Spirit Airlines is facing significant challenges due to softening demand trends in the airline industry, leading to a downward revision of its financial outlook and concerns about its long-term viability [1][2][3]. Financial Outlook - Spirit Airlines expects to report $1.28 billion in revenue for the second quarter, a decrease from previous guidance of $1.32 billion to $1.34 billion [4]. - The airline anticipates an adjusted loss of $173 million to $160 million, which is a significant increase from the earlier loss estimate of $145 million to $120 million [4]. - The company ended the first quarter with $1.2 billion in cash, but projections indicate this amount will likely decrease in the second quarter [10]. Market Reaction - Following the negative outlook and analyst downgrade, Spirit's shares dropped by 11% in late afternoon trading [8]. - There is a heavy short interest in Spirit's stock, indicating potential volatility in the near term [6]. Company-Specific Issues - Spirit Airlines is dealing with the aftermath of its proposed sale to JetBlue Airways being blocked by regulators, which has created additional operational challenges [9]. - The airline is also affected by an RTX engine issue that has grounded part of its fleet, further complicating its recovery efforts [9]. Analyst Insights - TD Cowen analyst Thomas Fitzgerald downgraded Spirit to a sell from a hold, expressing skepticism about the company's path to profitability through 2026 and highlighting the risk of restructuring or bankruptcy [10].