Spirit to take $10 million hit from V2500 engine failure

Washington DC
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Spirit Airlines expects $10 million in additional costs in the fourth quarter as a result of the engine failure on an Airbus A319 earlier this month.

The carrier's chief financial officer Ted Christie says in an earnings call today that the airline will book the expenses in the fourth quarter, and take into account any reimbursements such as insurance payouts after that.

"We are working diligently to return the aircraft to service," says Christie, adding that the $10 million estimated costs were a conservative amount forecasted by Spirit. The additional costs will push Spirit's cost per available seat mile (CASM) excluding fuel up 4% to 5% in the fourth quarter, says Christie.

On a full-year basis, CASM excluding fuel will go up by half a percent as a result of the additional expenses. Before the engine incident, the airline had been on track to post a 1% decline in CASM excluding fuel year-on-year, says Spirit chief executive Ben Baldanza.

The 15 October incident led to Spirit inspecting the International Aero Engines V2500 engines on all of its aircraft, which led to significant flight delays last week. Christie says the delays are not expected to impact revenue significantly.