Spirit Airlines Stuns with Forecast of Steep Third-Quarter Loss

Spirit Airlines delivered an extremely bearish message to investors this week, warning of a steep operating loss in the quarter that ends this month.

The Florida-based carrier now expects a third-quarter operating margin to register somewhere between negative 15-16%, a figure that stunned even competitors. Speaking at a Morgan Stanley investor event this week, United Airlines executive Michael Leskinen, said “the magnitude of what we have seen from peers was as shocking to us as it was to all of you.” He was referring to not just Spirit but also Frontier Airlines, which similarly reversed course and now expects a third quarter loss.

In August, Spirit expected an operating margin of roughly negative 7% in the third quarter. But fuel prices have increased sharply in recent weeks, while demand has softened. It now expects to pay an average