By Shivansh Tiwary and Rajesh Kumar Singh

(Reuters) -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.

Spirit this week unveiled plans to tap into a growing demand for high-end travel to boost its earnings. On Thursday, its executives said the changes would take more than a year before showing full results.

In the meantime, the company is doubling down on cost cuts to save cash. It is downgrading about 100 captains and offering voluntary unpaid leaves to flight attendants to save costs. It has also temporarily suspended the recruitment and training of pilots and flight attendants.

It has already announced plans to furlough about 240 pilots and defer all aircraft deliveries from Airbus.

Spirit is among the most heavily impacted by issues with RTX’s Pratt & Whitney Geared Turbofan engines, which have forced it to ground multiple aircraft and have left the airline with bloated costs.

The airline said it expects to end 2025 with about 67 aircraft on the ground, compared with an average of about 20 grounded planes this year.

Spirit forecast a negative adjusted operating margin in the range of 26% to 29% in the September quarter. Analysts at Raymond James said the outlook implies an adjusted loss of $2.40-$2.55 a share for the quarter – wider than a loss of $1.20 per share expected by analysts in a LSEG survey.

It reported an adjusted loss of $1.44 per share in the June quarter, wider than analysts’ estimates of $1.36 per share.

(Reporting by Rajesh Kumar Singh in Chicago and Shivansh Tiwary in Bengaluru; Editing by Krishna Chandra Eluri and Nick Zieminski)

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