11 Worst Aviation Stocks to Buy According to Analysts

3. Spirit Airlines, Inc. (NYSE:SAVE)

Average Analyst Price Target Upside as of September 16: -10%

Number of Hedge Fund Holders: 15

One of the worst aviation stocks according to analysts, Spirit Airlines, Inc. (NYSE:SAVE) operates as a low-cost carrier, providing airline services to over 90 destinations across 15 countries in the United States, Latin America, and the Caribbean. The airline also offers hotel and car rental services, adding value to its travel packages.

The stock has 4 Hold ratings and 8 Sell ratings by analysts. The average price target of $2.25 is 10% below the current levels, as of September 16.

The company faced a significant setback in January when its proposed merger with JetBlue was blocked by regulators. The merger was expected to improve its position in the market by creating a larger discount airline.

However, concerns that such a merger would reduce competition and increase ticket prices led to the court’s decision, which resulted in a substantial drop in its stock price.

The company’s financial performance has been under pressure for a while now. In the second quarter, Spirit Airlines (NYSE:SAVE) reported a non-GAAP EPS of -$1.44, which was worse than analysts’ expectations of -$1.36 per share. Revenue for the quarter was $1.28 billion, marking a 10.5% decline compared to the previous year. The downturn is a reflection of broader challenges in the airline industry, including increased competition and an oversupply of seats in the domestic market.

The airline has also been dealing with operational issues, especially with its Pratt & Whitney engines. The problems have led to a significant number of aircraft being grounded for maintenance and inspections.

Management expects up to 70 aircraft to be out of service by the end of 2025 due to these engine issues, compared to an average of about 20 grounded planes this year. The situation has added to the company’s difficulties, which has impacted its ability to manage capacity and maintain service levels.

In response to these challenges, the airline is taking aggressive cost-cutting measures. It has announced plans to furlough approximately 240 pilots and suspend all aircraft deliveries from Airbus.

Additionally, it is downgrading around 100 captains, offering voluntary unpaid leaves to flight attendants, and halting the recruitment and training of new pilots and flight attendants. The measures are aimed at conserving cash amid ongoing financial strain.

Despite the setbacks, Spirit Airlines (NYSE:SAVE) remains focused on adapting to market conditions. However, the forecast for the third quarter suggests that the airline may experience a steeper loss, with a negative adjusted operating margin projected between 26% and 29%. It shows ongoing competitive pressures and the oversupply of seats, which continue to challenge the airline’s profitability.