Spirit Airlines, a major operator of GTF-powered NEO aircraft in the United States, is confronting serious challenges that could affect its revenue. The airline was forced to ground seven of its Airbus A320neo jets for the rest of the year, following a problem with RTX’s Pratt & Whitney Geared Turbofan (GTF) engines. This situation is expected to have significant consequences on Spirit’s operations, impacting both the revenue and overall efficiency of the company.
A Disruptive Engine Problem
Last week, RTX announced that a “rare condition” in powdered metal means 1,200 of more than 3,000 engines built for the Airbus A320neo between 2015 and 2021 must be removed and inspected for micro cracks that may indicate fatigue. This issue is on top of other engine-related problems Spirit is facing, including seven other aircraft currently out of service due to unscheduled engine removals.
The CEO of Spirit Airlines, Ted Christie, expressed his dissatisfaction with the situation, stating, “This new issue is yet another frustrating and disappointing development.”
Furthermore, the latest GTF problem is expected to reduce the Florida-based airline’s planned capacity in September by 5%. It’s also anticipated to affect efficiency, as Spirit will likely be overstaffed and carry more pilots than needed into the fourth quarter and early 2024. Overall, these engine problems are estimated to decrease the airline’s revenue in the current quarter by about 7.5 percentage points.
Impact on Spirit and the Airline Industry
This new engine issue adds to the already existing difficulties that carriers are facing. Shortages of pilots, air traffic controllers, and new planes are making it harder for airlines to add more flights. Spirit Airlines had previously cut its 2023 capacity estimates due to unscheduled engine removals, and this situation only adds to the problem.
The issue is particularly significant for Spirit, with Christie mentioning on an earnings call, “Exposure to this issue is very unique and material for us and is having an impact on our margin.”
Spirit anticipates needing to remove more engines for inspection by the end of next month. The company already expects to have at least 10 NEO aircraft out of service for most of 2024 due to scheduled engine checks.
However, there is some relief in sight, as RTX has promised to compensate the airlines affected by this new engine issue.
Moving Forward
Despite the challenges, Spirit Airlines is working proactively to manage the situation. Thirteen engines out of an initial 200 identified by Pratt & Whitney for accelerated inspection will be out of service starting next month. Further inspections of an additional 1,000 GTF engines are anticipated to be performed before the end of September 2024.
While the road ahead may be fraught with difficulties, Spirit is taking the necessary steps to address these challenges and continue providing service to its passengers.
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