Spirit Airlines on Thursday warned of a steeper loss in the current quarter, citing an "intense competitive battle" for the price-sensitive leisure travelers as well as an oversupply of airline seats in the domestic market. The airline has failed to report a profit in the last five out of six quarters despite strong travel demand, raising questions about its ability to manage debt that is due to mature in 2025 and 2026. CEO Ted Christie said Spirit is engaged in "productive conversations" with bondholders to address the upcoming debt maturity, calling it a "priority" for the company. "We are focused on refinancing our debt, improving our overall liquidity position," he said. Spirit's shares have fallen more than 82% this year, compared with a 0.06% decline in S&P 500 passenger airlines index. Its shares were down about 7% at $2.80 in afternoon trade. The Florida-based ultra-low-cost carrier's troubles, along with those at some of its rival budget carriers, are making some analysts and industry officials wonder if their business models are broken. Christie said while the low-fare business model is not broken, excess industry capacity is hurting pricing power. The company said it is aggressively managing capacity to better match seasonal and daily demand variances, and has exited 42 markets.<br/>
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Spirit Airlines became the latest airline on 1 August to say it had deferred deliveries of new Airbus A320neo-family jets, a move coming amid competitive pressure and operational upheavals caused by Pratt & Whitney (P&W) engine problems. The US discount airline also revealed it is furloughing some 240 pilots as it works to whittle down its operation in response to what executives call a situation of over capacity. Spirit has deferred until 2030 and 2031 deliveries of A320neo-family jets previously scheduled to arrive between July 2025 and end-2026, the carrier said in disclosing its second-quarter financial results on 1 August. Cirium data shows Miramar, Florida-based Spirit had planned to acquire six jets during that period. The moves respond to what Spirit chief commercial officer Matt Klein calls “over supply of industry capacity for the existing level of leisure demand”. Spirit lost $193m in the second quarter, brining its first-half 2024 losses to $336m. News of Spirit’s deferrals come after JetBlue Airways on 30 July said it had delayed delivery of 44 A321neos from Airbus until 2030 and later. The New York-based airline now expects to receive no A321neos between 2026 and 2029. The deferrals come as both carriers’ operations remain hobbled by P&W’s recall of PW1100G geared turbofans (GTFs), which power the A320neo-family jets. Those engines need early inspections and replacement parts due to manufacturing problems involving powdered metal.<br/>
British Airways owner IAG terminated its proposed takeover of Spain's Air Europa on Thursday, citing regulatory environment concerns, less than two months after it offered remedies to antitrust regulators to secure approval for the deal. IAG had offered concessions to the European Commission in June, after the watchdog warned the deal could reduce competition. EU antitrust regulators had been poised to block the deal after IAG declined to offer additional remedies to address their concerns, people with direct knowledge of the matter said. "It doesn't make sense for our shareholders and that's the reason we are abandoning the operation," IAG Chief Executive Luis Gallego told a press call on Thursday. Gallego confirmed that the European Commission said the concessions offered by the group were not enough. Analysts said IAG's decision was unsurprising, but prompted questions about where IAG may turn its acquisition interests in the future. Portugal's TAPis seen as a potential target for acquisition. "The shares appeared to give no premium for this getting approved," said Alex Irving, an analyst at Bernstein. IAG said it would pay Air Europa E50m as termination fee. Air Europa officials were not immediately available for comment. Air Europa owner Globalia was also not immediately available.<br/>IAG had announced last year that it would buy out the 80% of Air Europa it did not already own for E400m. The company would retain its 20% stake in Air Europa.<br/>
One of Europe’s largest budget airlines has cut its profit forecast as it grapples with the grounding of its aircraft owing to long-running engine problems, sending shares down by as much as 15% on Thursday. Wizz Air reported a sharp fall in profits in the three months to the end of June as it was hit with higher leasing costs for planes, triggering a drop in shares to their lowest levels since October. The company has been forced to lower its growth ambitions as it pays to hire spare planes to fill gaps in its flight schedules, with about a fifth of its aircraft grounded because of potential problems with their Pratt & Whitney engines. Airbus engine supplier Pratt & Whitney began recalling planes for inspections last year, amid concerns over contaminants in the powdered metal used to make their turbofan engines. Wizz was the worst-hit airline in Europe, with 46 of its 218 aircraft grounded by the end of June. On Thursday, CE József Váradi said the airline decided to lease eight aircraft to preserve its flight schedules and not cede ground to rivals during the peak summer travel months. “In March we had a miserable forecast coming out of Pratt & Whitney, showing a significant capacity decline for this summer. We took a decision to strategically protect capacity, and not to hand over markets to competitors,” he said. Wizz Air’s decision to bring in eight aircraft led to a one-off cost of E39m in the three months to the end of June, the company’s fiscal first quarter. Leasing costs are high given a global shortage of aircraft amid supply-chain problems across the aviation industry. Operating profits for the period fell to E45m from E80m a year earlier, as the airline also suffered from the cost of keeping older and less efficient planes in the air for longer. “The June quarter results missed expectations by a wide margin,” analysts Gerald Khoo, analyst at Panmure Liberum said. Wizz said it expected to return to growth next summer, adding that Pratt & Whitney was returning planes faster than expected. <br/>
Virgin Atlantic Airways Ltd. will stop operating flights to The Bahamas and Turks and Caicos as the carrier ramps up services to other destinations in the Caribbean as well as South Africa. Virgin will cease operations to the Bahamas toward the end of February, while the final service to Turks and Caicos, a destination Virgin started serving only in November of last year, will take place at a similar time, the company said in a statement. The move is part of Virgin’s plan to “focus on optimising our network” while the company increases frequencies to Antigua, Barbados and Cape Town next year, according to the release. The carrier will rebook or refund passengers affected by the changes, it said. Virgin recently also withdrew from the Chinese market, saying it will suspend flights between London Heathrow and Shanghai from October because of high costs associated with avoiding flying over Russian airspace.<br/>
Recent industrial action by Aer Lingus pilots is expected to cost the airline at least E55m, the airline has said. The figures are contained in the company's latest set of financial results, as reported by Irish broadcaster RTÉ. The pilots' pay dispute led to the cancellation of 610 flights due to a two week work-to-rule and an eight-hour strike. Last week, members of the Irish Air Line Pilots' Association (IALPA) voted in favour of accepting Labour Court proposals which included a pay increase of 17.75% over four years. Pilots initially demanded a 24% pay rise, arguing their pay has not kept up with high inflation levels since their last pay increase in 2019. In a statement on Thursday, Aer Lingus said: "The industrial action will have an expected €55m direct financial cost to the business over quarter two and quarter three, before including the impact on forward bookings. "Following the resolution of the pilot pay dispute through a Labour Court recommendation which delivered structural change for the business, Aer Lingus is assessing the implications of the financial damage caused by the dispute in the context of the current competitive environment and the passenger cap at Dublin Airport. "This will include a review of the weaker parts of the airline's network and its cost base."<br/>
AirAsia X is aiming to complete the acquisition of sister company AirAsia Aviation by December, as both companies eye a “new era” following its completion. AirAsia X, the medium-haul, low-cost operator, submitted to the Malaysian stock exchange its draft circular detailing its proposed acquisition plan. Similarly, Malaysia-headquartered Capital A, which is the parent of AirAsia Aviation, has also submitted to Bursa Malaysia its plans to dispose of its shareholding in its airline business. An extraordinary general meeting must be convened within 21 days of the exchange’s approval, where shareholders will vote on whether or not to green-light the acquisition. The deal, which was first announced in January and confirmed in April, is valued at around MYR6.8b ($1.49b). The new acquisition timeline is a slight delay from earlier-disclosed plans, which state that the acquisition will be completed by September. To speed up the process, AirAsia X says it has nixed its own reorganisation plans, and will undertake the acquisition directly. It is likely the newly formed AirAsia Group will retain both brands for now, though there are plans to eventually merge into a single AirAsia brand. Capital A says the move to divest its aviation business is part of its “strategic plan to streamline its operations and concentrate on specialised areas supplementary to the aviation business”. <br/>