A Spirit plane.

Spirit Airlines (SAVE - Get Report)  is in the news, but not for the obvious reasons. 

Customers on a Spirit flight from Las Vegas reportedly watched one passenger strip naked during boarding. The incident happened on Saturday on a flight bound for Oakland -- the flight was delayed.

The news is the latest in a string of unfortunate developments for the low cost operator. 

Spirit shares plunged 17% last Thursday after saying it faced consequences from a pilot sickout not only in the second quarter, which resulted in $25 million in lost revenue and about $20 million in costs including re-accommodations on other airlines, but also in July as passengers booked away.

Moreover, the carrier also said that starting in June it felt the impact from falling ticket prices throughout the industry, particularly in United Continental Holdings Inc. (UAL - Get Report) markets, possibly as retaliation for Spirit price-cutting at Newark International Airport.

During Spirit's earnings call, Matt Klein, chief commercial officer, said the carrier has seen "a developing change in the pricing backdrop" that began in late June.

"The competitive environment has spread to a larger number of markets at deeper discount levels {as} our competitors resort to an unusual level of discounting," particularly for summer, Klein said.

Generally, "in a healthy yield environment, you'll see walkup fares 200% or more over leisure fares, sometimes more than that," he said. "We're not necessarily seeing that dynamic hold true right now."

CEO Bob Fornaro said the largest amount of discounting has been in Chicago, Houston and Newark, with "tremendous discounting going on in Denver as well." All four cities are United hubs.

"In many cases, we're seeing carriers with higher costs than us charging the lowest prices," Fornaro said. He said little of the discounting is related to the big three carrier's move to offer basic economy seating in order to compete with Spirit and other ultra-low-cost carriers.

Some discounting appears to have been in response to Spirit's operations at Newark, where the carrier operates out of a single gate. Klein said, "It can be a little surprising to see how the addition of one gate and a handful of flights has the impact it has (in other cities.}

Citing "the implication that some competitors are retaliating based on what you've done in other markets," JP Morgan analyst Jamie Baker asked, "If a single gate in Newark elicits this network response, isn't the solution to get out of Newark?"

Fornaro said Spirit had no plans to enter Newark, but the Federal Aviation Administration made the gate available "so we decided to go in," and now has no plans to leave.

As for Spirit itself, the pilot work slowdown in May impacted July bookings, the carrier said. The July load factor has been down 3.5 points and "our views on the second half have changed," said Ted Christie, chief financial officer.

"It is frustrating and disappointing," he said.

Christie said the airline may slightly slow planned full-year capacity growth, partially because of a lower completion factor. Most major airlines complete more than 99% of their flights. Spirit currently operates at around 96% and expects to complete about 98% of its flights for the full year, down about a point from last year's level.

Fornaro also noted that as Spirit continues to expand, he sees Fort Lauderdale, Fla., and the Caribbean as offering prime opportunities for 2018 expansion. "The best opportunity for us in Fort Lauderdale will come next year," Fornaro said. That could impact JetBlue Airways Corp. (JBLU - Get Report) which operates a hub at Fort Lauderdale.

In a note, Stifel analyst Joseph DeNardi wrote, "Spirit provided guidance for weaker than expected 3Q TRASM and cited more aggressive pricing behavior and competition in recent weeks as the primary driver behind the soft outlook.

"While our estimates will likely come down as a result of the lower guidance, our initial thoughts would be that the magnitude of the sell off is an over reaction," DeNardi said.

Brian Sozzi contributed to this story.

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This article is commentary by an independent contributor. At the time of publication, the author held no positions in the stocks mentioned.