Spirit Airlines Reports First Quarter 2024 Results
Spirit Airlines, Inc. reported first quarter 2024 financial results, with total operating revenues of $1.265.5 million and a net loss of $142.6 million. The company's strategic and tactical changes are expected to benefit unit revenue, while cost-saving initiatives could save over $75 million in 2024. Despite operational challenges due to adverse weather and civil unrest, Spirit remains confident in its ability to navigate a competitive market. The company is focused on implementing its standalone plan to improve financial performance and drive continuous improvement.
Cost-saving initiatives expected to benefit 2024 by over $75 million
Strategic and tactical changes aimed at benefiting unit revenue
Confident that strategic changes and cost-saving initiatives will enhance competitive position
Operating loss of $(207.3) million in the first quarter 2024
Net loss of $(142.6) million in the first quarter 2024
Total revenue per available seat mile decreased by 8.2% year over year
Insights
Strategic and tactical changes benefiting unit revenue
Expect cost saving initiatives to benefit 2024 by over
DANIA BEACH, Fla., May 6, 2024 /PRNewswire/ -- Spirit Airlines, Inc. ("Spirit" or the "Company") (NYSE: SAVE) today reported first quarter 2024 financial results.
First Quarter 2024 Financial Results
Quarterly results were in line with expectations despite a 230 basis point1 headwind from deferred recognition in earnings of a significant portion of the credits from Pratt & Whitney related to aircraft unavailable for service.
First Quarter 2024 | ||
As Reported | Adjusted1 | |
Total operating revenues | ||
Operating income (loss) | ||
Operating margin | (16.4) % | (13.9) % |
Adj. Operating income (loss), for AOG credits | — | |
Adj. Operating margin adj. for AOG credits | — | (11.6) % |
Net income (loss) | ||
Diluted earnings (loss) per share | ||
"While we reported a loss in the first quarter 2024, we are making progress towards our financial goals. I thank the entire Spirit team for their continued focus on running a reliable operation and delivering value to our Guests as we implement our go-forward standalone plan. There are numerous steps to rollout the plan in a successful, orderly fashion, but we are on track and we are excited to unveil the milestones to you over the coming months," said Ted Christie, Spirit's President and Chief Executive Officer.
"The competitive environment remains challenging due to elevated capacity in many of the markets we serve. Nevertheless, we are confident that the strategic changes we are implementing, together with our cost saving initiatives, will allow Spirit to compete effectively in today's marketplace and drive continuous improvement in the years ahead."
First Quarter 2024 Operations
Adverse weather and air traffic control related delays, particularly along the Eastern seaboard and in Florida, as well as continued civil unrest in Cap-Haitien and Port-au-Prince, Haiti negatively impacted the Company's operational performance for the quarter.
- System completion factor of 98.7 percent
- System controllable completion factor2 of 99.9 percent
- Capacity increase of 2.1 percent year over year
- Load factor of 80.7 percent, a decrease 0.1 pts year over year
- Aircraft utilization of 10.4 hours, down 7.1 percent compared to the first quarter last year of 11.2 hours, primarily due to aircraft unavailable for operational service due to PW1100G-JM geared turbo fan engine availability issues ("AOG")
First Quarter 2024 Revenues
Spirit's total revenue per available seat mile ("TRASM") improved significantly from the fourth quarter 2023 to the first quarter 2024, increasing 4.9 percent sequentially. Sequential improvement in domestic TRASM was partially offset by continued pressures in the Company's international markets, driven by elevated capacity increases by
- Total operating revenues of
$1,265.5 million , a decrease of 6.2 percent year over year - Total revenue per ASM ("TRASM") of 9.38 cents, a decrease of 8.2 percent year over year on 2.1 percent more capacity
- Total revenue per passenger flight segment ("segment") was
$117.03 , a decrease of 8.1 percent year over year - Fare revenue per segment was
$48.08 , a decrease of 16.3 percent year over year - Non-ticket revenue per segment was
$68.95 ,1 a decrease of 1.4 percent year over year
First Quarter 2024 Cost Performance
- Total operating expense of
$1,472.9 million and adjusted operating expenses of$1,441.1 million 1 - Adjusted non-fuel cost of
$1,034.7 million 1 - Average economic fuel price per gallon of
$2.90 - Total non-operating income of
$50.3 million and adjusted total other expense of$31.4 million 1
First Quarter 2024 Liquidity and Capital Deployment
- Ended the quarter with unrestricted cash and cash equivalents, short-term investment securities and liquidity available under the Company's revolving credit facility of
$1.2 billion - Completed sale-leaseback transactions of five previously owned and operated aircraft resulting in net cash proceeds of approximately
$99.0 million - Received a
$69.0 million payment from JetBlue related to the termination of the merger agreement - Total capital expenditures of
$33.9 million
"Over the last several months, our team has been engaged working on the first phase of our new standalone business plan. While we were hopeful for a successful merger with JetBlue, over the last year we have been working in the background to prepare for the possibility that the merger would not be allowed to proceed. The first phase of our standalone plan involved finalizing our AOG compensation agreement with Pratt & Whitney, reducing near term capacity to improve working capital, rightsizing the resources in the business to our expected lower level of capacity and additional liquidity improvements. We believe the combination of AOG compensation, aircraft deferrals and cost savings will improve our cash levels by
"Also, Spirit's advisors have started discussions with our loyalty bondholders and convert holders that come due in September 2025 and May 2026, respectively, and expect a resolution at some point this summer."
First Quarter 2024 Fleet and NEO Engine Update
- Took delivery of seven new aircraft (three A320neos and four A321neos)
- Retired five A319ceo aircraft
- Ended the quarter with a fleet of 207 aircraft
- Reached an agreement with Pratt & Whitney regarding compensation for AOG aircraft through the end of 2024
- AOG credits to be issued by Pratt & Whitney based on AOG days during the quarter were
$30.6 million $1.6 million $16.2 million - Estimates that it will average about 25 AOG aircraft throughout the full year 2024
- Estimates AOG credits to be issued by Pratt & Whitney for AOG aircraft in 2024 will be between
$150 million $200 million - Spirit intends to discuss appropriate arrangements with Pratt & Whitney in due course for any Spirit AOG aircraft after December 31, 2024
On April 8, 2024, Spirit announced that it reached an agreement with Airbus to defer all aircraft on order that are scheduled to be delivered in the second quarter of 2025 through the end of 2026 to 2030-2031. These deferrals do not include the direct-lease aircraft scheduled for delivery in that period, one in each of the second and third quarters of 2025. There were no changes to the aircraft on order with Airbus that are scheduled to be delivered in 2027-2029. Spirit estimates the deferral of these aircraft will enhance its 2024 liquidity position by approximately
Conference Call/Webcast Detail
Spirit will conduct a conference call to discuss these results today at 10:00 a.m.
About Spirit Airlines
Spirit Airlines (NYSE: SAVE) is committed to delivering the best value in the sky. We are the leader in providing customizable travel options starting with an unbundled fare. This allows our Guests to pay only for the options they choose — like bags, seat assignments, refreshments and Wi-Fi — something we call À La Smarte®. Our Fit Fleet® is one of the youngest and most fuel-efficient in
Forward Looking Guidance
The forward-looking guidance items provided in this release are based on the Company's current estimates and are not a guarantee of future performance. There could be significant risks and uncertainties that could cause actual results to differ materially, including the risk factors discussed in the Company's reports on file with the Securities and Exchange Commission. Spirit undertakes no duty to update any forward-looking statements or estimates.
Investors are encouraged to read this press release in conjunction with the company's Investor Update which provides additional information about the company's forward-looking estimates for certain financial metrics and is included along with this press release in the Current Report on Form 8-K furnished to the U.S. Securities and Exchange Commission. The Investor Update is also available at https://ir.spirit.com. Management will also discuss certain business outlook items during the quarterly earnings conference call.
Investors are also encouraged to read the Company's periodic and current reports filed with or furnished to the Securities and Exchange Commission, including its Annual Report on Form 10-K, Quarterly Reports on Form 10-Q and Current Reports on Form 8-K, for additional information regarding the Company.
End Notes | |
(1) | See "Reconciliation of Reported Amounts to Adjusted (Non-GAAP) Items" tables below for more details. |
(2) | Excludes the following events, which are outside of the Company's control, from the calculation of completion factor: weather, air traffic and uncontrolled airport/runway closures, which may include acts of nature, disabled aircraft incidents on the runway, political/civil unrest and disturbances preventing normal operations within airline control, among others, and any city/state closures as declared by local authorities and asserted by our Security department. |
Cautionary Statement Regarding Forward Looking Statements
Forward-Looking Statements in this release and certain oral statements made from time to time by representatives of the Company contain various forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended (the "Securities Act"), and Section 21E of the Securities Exchange Act of 1934, as amended (the "Exchange Act") which are subject to the "safe harbor" created by those sections. Forward-looking statements are based on our management's beliefs and assumptions and on information currently available to our management. All statements other than statements of historical facts are "forward-looking statements" for purposes of these provisions. In some cases, you can identify forward- looking statements by terms such as "may," "will," "should," "could," "would," "expect," "plan," "anticipate," "believe," "estimate," "project," "predict," "potential," and similar expressions intended to identify forward- looking statements. Forward-looking statements include, without limitation, guidance for 2024 and statements regarding the Company's intentions and expectations regarding revenues, cash levels, capacity and passenger demand, additional financing, capital spending, operating costs and expenses, pre-tax income, pre-tax margin, taxes, hiring and furloughs, aircraft deliveries, stakeholders, negotiations and settlement with Pratt & Whitney regarding neo engine availability issues, resolving outstanding indebtedness, vendors and government support. Such forward-looking statements are subject to risks, uncertainties and other important factors that could cause actual results and the timing of certain events to differ materially from future results expressed or implied by such forward-looking statements. Factors include, among others, results of operations and financial condition, the competitive environment in our industry, our ability to keep costs low and the impact of worldwide economic conditions, including the impact of economic cycles or downturns on customer travel behavior and other factors, as described in the Company's filings with the Securities and Exchange Commission, including the detailed factors discussed under the heading "Risk Factors" in the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 2023, as supplemented in the Company's Quarterly Report on Form 10-Q for the fiscal quarter ended March 31, 2024. Furthermore, such forward-looking statements speak only as of the date of this release. Except as required by law, we undertake no obligation to update any forward-looking statements to reflect events or circumstances after the date of such statements. Risks or uncertainties (i) that are not currently known to us, (ii) that we currently deem to be immaterial, or (iii) that could apply to any company, could also materially adversely affect our business, financial condition, or future results. Additional information concerning certain factors is contained in the Company's Securities and Exchange Commission filings, including but not limited to the Company's Annual Report on Form 10-K, Quarterly Reports on Form 10-Q, and Current Reports on Form 8-K.
SPIRIT AIRLINES, INC. | ||||
Condensed Consolidated Statement of Operations | ||||
Three Months Ended March 31, | Percent | |||
2024 | 2023 | Change | ||
Operating revenues: | ||||
Passenger | $ 1,239,310 | $ 1,327,473 | (6.6) | |
Other | 26,227 | 22,301 | 17.6 | |
Total operating revenues | 1,265,537 | 1,349,774 | (6.2) | |
Operating expenses: | ||||
Aircraft fuel | 406,351 | 487,711 | (16.7) | |
Salaries, wages and benefits | 431,483 | 389,185 | 10.9 | |
Landing fees and other rents | 106,718 | 97,345 | 9.6 | |
Aircraft rent | 115,206 | 85,267 | 35.1 | |
Depreciation and amortization | 81,346 | 77,991 | 4.3 | |
Maintenance, materials and repairs | 54,915 | 54,414 | 0.9 | |
Distribution | 45,176 | 48,017 | (5.9) | |
Special charges (credits) | 36,258 | 13,983 | 159.3 | |
Loss (gain) on disposal of assets | (3,029) | 7,100 | (142.7) | |
Other operating | 198,450 | 201,156 | (1.3) | |
Total operating expenses | 1,472,874 | 1,462,169 | 0.7 | |
Operating income (loss) | (207,337) | (112,395) | 84.5 | |
Other (income) expense: | ||||
Interest expense | 54,809 | 51,793 | 5.8 | |
Loss (gain) on extinguishment of debt | (14,996) | — | NM | |
Capitalized interest | (10,003) | (7,648) | 30.8 | |
Interest income | (13,590) | (15,434) | (11.9) | |
Other (income) expense | (66,490) | 542 | NM | |
Total other (income) expense | (50,270) | 29,253 | (271.8) | |
Income (loss) before income taxes | (157,067) | (141,648) | 10.9 | |
Provision (benefit) for income taxes | (14,432) | (37,737) | (61.8) | |
Net income (loss) | $ (142,635) | $ (103,911) | 37.3 | |
Basic earnings (loss) per share | $ (1.30) | $ (0.95) | 36.8 | |
Diluted earnings (loss) per share | $ (1.30) | $ (0.95) | 36.8 | |
Weighted-average shares, basic | 109,430 | 109,110 | 0.3 | |
Weighted-average shares, diluted | 109,430 | 109,110 | 0.3 | |
NM: "Not Meaningful" |
SPIRIT AIRLINES, INC. | ||||
Selected Operating Statistics (unaudited) | ||||
Three Months Ended March 31, | ||||
Operating Statistics | 2024 | 2023 | Change | |
Available seat miles (ASMs) (thousands) | 13,489,019 | 13,209,136 | 2.1 | % |
Revenue passenger miles (RPMs) (thousands) | 10,882,616 | 10,674,879 | 1.9 | % |
Load factor (%) | 80.7 | 80.8 | (0.1) | pts |
Passenger flight segments (thousands) | 10,814 | 10,598 | 2.0 | % |
Departures | 71,921 | 72,749 | (1.1) | % |
Total operating revenue per ASM (TRASM) (cents) | 9.38 | 10.22 | (8.2) | % |
Average yield (cents) | 11.63 | 12.64 | (8.0) | % |
Fare revenue per passenger flight segment ($) | 48.08 | 57.45 | (16.3) | % |
Non-ticket revenue per passenger flight segment ($) | 68.95 | 69.91 | (1.4) | % |
Total revenue per passenger flight segment ($) | 117.03 | 127.36 | (8.1) | % |
CASM (cents) | 10.92 | 11.07 | (1.4) | % |
Adjusted CASM (cents) (1) | 10.68 | 10.91 | (2.1) | % |
Adjusted CASM ex-fuel (cents) (1)(2) | 7.67 | 7.22 | 6.2 | % |
Fuel gallons consumed (thousands) | 140,139 | 142,343 | (1.5) | % |
Average fuel cost per gallon ($) | 2.90 | 3.43 | (15.5) | % |
Aircraft at end of period | 207 | 195 | 6.2 | % |
Average daily aircraft utilization (hours) | 10.4 | 11.2 | (7.1) | % |
Average stage length (miles) | 995 | 991 | 0.4 | % |
(1) | Excludes operating special items. |
(2) | Excludes fuel expense and operating special items. |
Non-GAAP Financial Measures
The Company evaluates its financial performance utilizing various accounting principles generally accepted in
Because the non-GAAP financial measures are not calculated in accordance with GAAP, they should not be considered superior to and are not intended to be considered in isolation or as a substitute for the related GAAP financial measures presented in the press release and may not be the same as or comparable to similarly titled measures presented by other companies due to possible differences in the method of calculation and in the items being adjusted. We encourage investors to review our financial statements and other filings with the Securities and Exchange Commission in their entirety and not to rely on any single financial measure.
The information below provides an explanation of certain adjustments reflected in the non-GAAP financial measures and shows a reconciliation of non-GAAP financial measures reported in this press release (other than forward-looking non-GAAP financial measures) to the most directly comparable GAAP financial measures. Within the financial tables presented, certain columns and rows may not add due to the use of rounded numbers. Per unit amounts presented are calculated from the underlying amounts.
The Company believes that adjusting for a litigation loss contingency (recorded within other operating expenses within the Company's Condensed Consolidated Statement of Operations), loss on disposal of assets, special charges, and loss (gain) on extinguishment of debt is useful to investors because these items are not indicative of the Company's ongoing performance and the adjustments are similar to those made by our peers and allow for enhanced comparability to other airlines.
Operating expenses per available seat mile ("CASM") is a common metric used in the airline industry to measure an airline's cost structure and efficiency. We exclude aircraft fuel and related taxes and special items from operating expenses to determine Adjusted CASM ex-fuel. We also believe that excluding fuel costs from certain measures is useful to investors because it provides an additional measure of management's performance excluding the effects of a significant cost item over which management has limited influence and increases comparability with other airlines that also provide a similar metric.
Reconciliation of Reported Amounts to Adjusted (Non-GAAP) Items | ||
Within the tables presented, certain amounts may not add due to the use of rounded numbers | ||
Three Months Ended | ||
2024 | 2023 | |
Operating revenues | ||
Fare | $ 519,942 | $ 608,861 |
Non-fare | 719,368 | 718,612 |
Total passenger revenues | 1,239,310 | 1,327,473 |
Other revenues | 26,227 | 22,301 |
Total operating revenues | $ 1,265,537 | $ 1,349,774 |
Non-ticket revenues (1) | $ 745,595 | $ 740,913 |
Passenger segments | 10,814 | 10,598 |
Non-ticket revenue per passenger flight segment ($) | $ 68.95 | $ 69.91 |
Special Items (2) | ||
Operating special items include the following: | ||
Litigation loss contingency (3) | $ (1,448) | $ — |
Loss (gain) on disposal of assets (4) | (3,029) | 7,100 |
Operating special charges (5) | 36,258 | 13,983 |
Total operating special items | $ 31,781 | $ 21,083 |
Non-operating special items include the following: | ||
Loss (gain) on extinguishment of debt (6) | $ (14,996) | $ — |
Other (income) expense (7) | (66,720) | — |
Total non-operating special items | $ (81,716) | $ — |
Total special items (2) | $ (49,935) | $ 21,083 |
Total operating expenses, as reported | $ 1,472,874 | $ 1,462,169 |
Less: Operating special items | 31,781 | 21,083 |
Adj. Operating expenses, non-GAAP (8) | $ 1,441,093 | $ 1,441,086 |
Less: Aircraft fuel expense | 406,351 | 487,711 |
Adj. Operating expenses excluding fuel, non-GAAP (9) | $ 1,034,742 | $ 953,375 |
Available seat miles | 13,489,019 | 13,209,136 |
CASM (cents) | 10.92 | 11.07 |
Adj. CASM (cents) (8) | 10.68 | 10.91 |
Adj. CASM ex-fuel (cents) (9) | 7.67 | 7.22 |
Reconciliation of Reported Amounts to Adjusted (Non-GAAP) Items | ||
Within the tables presented, certain amounts may not add due to the use of rounded numbers | ||
Three Months Ended | ||
2024 | 2023 | |
Operating income (loss), as reported | $ (207,337) | $ (112,395) |
Operating margin | (16.4) % | (8.3) % |
Add: Operating special items expense | 31,781 | 21,083 |
Adj. Operating income (loss), non-GAAP (8) | $ (175,556) | $ (91,312) |
Adj. Operating margin, non-GAAP (8) | (13.9) % | (6.8) % |
Add: Adj. for AOG credit | $ 28,991 | $ — |
Adj. Operating income (loss), non-GAAP (10) | $ (146,565) | $ — |
Adj. Operating margin adj. for AOG credits (10) | (11.6) % | — % |
Total other (income) expense, as reported | $ (50,270) | $ 29,253 |
Less: Total non-operating special items | (81,716) | — |
Adj. Total other (income) expense, non-GAAP (11) | $ 31,446 | $ 29,253 |
Income (loss) before income taxes, as reported | $ (157,067) | $ (141,648) |
Pre-tax margin | (12.4) % | (10.5) % |
Less: Operating special items expense | 31,781 | 21,083 |
Less: Total non-operating special items | (81,716) | — |
Adj. Income (loss) before income taxes, non-GAAP (12) | $ (207,002) | $ (120,565) |
Adj. Pre-tax margin, non-GAAP (12) | (16.4) % | (8.9) % |
Provision (benefit) for income taxes, as reported | $ (14,432) | $ (37,737) |
Less: Net income (loss) tax impact of special items | 32,350 | (6,543) |
Adj. Provision (benefit) for income taxes, non-GAAP (13) | $ (46,782) | $ (31,194) |
Net income (loss), as reported | $ (142,635) | $ (103,911) |
Less: Operating special items expense | 31,781 | 21,083 |
Less: Total non-operating special items | (81,716) | — |
Less: Net income (loss) tax impact of special items | 32,350 | (6,543) |
Adj. Net income (loss), non-GAAP (12) | $ (160,220) | $ (89,371) |
Net income (loss) per share, diluted, as reported | $ (1.30) | $ (0.95) |
Add: Impact of special items | (0.46) | 0.19 |
Add: Tax impact of special items (14) | 0.30 | (0.06) |
Adj. Net income (loss) per share, diluted, non-GAAP (2) | $ (1.46) | $ (0.82) |
(1) | Non-ticket revenues equal the sum of non-fare passenger revenues and other revenues. |
(2) | Refer to the section "Non-GAAP Financial Measures" for additional information. |
(3) | 2024 includes an adjustment to the estimated probable loss booked in 2023. |
(4) | 2024 includes gains on aircraft sale-leaseback transactions related to 3 new aircraft deliveries, partially offset by losses related to the sale of 5 A319 airframes and 15 A319 engines and losses related to 2 aircraft sale-lease back transactions. 2023 includes amounts related to the loss on 2 aircraft sale-leaseback transactions net of gains related to the sale of 4 A319 aircraft. |
(5) | 2024 and 2023 include legal, advisory, retention award program and other fees related to the Agreement and Plan of Merger with JetBlue and Sundown Acquisition Corp. (the "JetBlue Merger Agreement"). |
(6) | 2024 includes gains recognized due to the early extinguishment of certain of our outstanding fixed-rate term loans, partially offset by the write-off of unamortized debt issuance costs. |
(7) | 2024 includes a |
(8) | Excludes operating special items. Refer to the section "Non-GAAP Financial Measures" for additional information. |
(9) | Excludes operating special items and aircraft fuel expense. Refer to the section "Non-GAAP Financial Measures" for additional information. |
(10) | Excludes special items and adjusts for the difference between the AOG credits to be received related to the AOG aircraft in the first quarter 2024 and the AOG credits recognized in the Company's operating statement for the first quarter 2024. |
(11) | Excludes non-operating special items. Refer to the section "Non-GAAP Financial Measures" for additional information. |
(12) | Excludes total special items. Refer to the section "Non-GAAP Financial Measures" for additional information. |
(13) | The Company determined the Adjusted Provision (benefit) for income taxes using its statutory tax rate. |
(14) | Reflects the difference between the Company's GAAP Provision (benefit) for income taxes and Adjusted Provision (benefit) for income taxes as presented on a per share basis. |
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SOURCE Spirit Airlines
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