Spirit Airlines (SAVEQ) 6 Feb 182017 Q4 Earnings call transcript

Company Profile

Participants

DeAnne Gabel	Spirit Airlines, Inc.
Robert L. Fornaro	Spirit Airlines, Inc.
Matt Klein	Spirit Airlines, Inc.
Edward M. (Ted) Christie III	Spirit Airlines, Inc.
Duane Pfennigwerth	Evercore Group LLC
Savanthi N. Syth	Raymond James & Associates, Inc.
Hunter K. Keay	Wolfe Research LLC
Rajeev Lalwani	Morgan Stanley & Co. LLC
Brandon Oglenski	Barclays Capital, Inc.
Kevin Crissey	Citigroup Global Markets, Inc.
Joseph William DeNardi	Stifel, Nicolaus & Co., Inc.
Helane Becker	Cowen & Co. LLC
Michael J. Linenberg	Deutsche Bank Securities, Inc.
Dan J. McKenzie	The Buckingham Research Group, Inc.
Jack Atkins	Stephens, Inc.
Susan Donofrio	Macquarie Capital (NYSE:USA), Inc.
Nishant Mani	JPMorgan Securities LLC

Call transcript

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Operator

Good morning, and welcome to the Fourth Quarter 2017 Earnings Call. My name is Cheryl and I will be your operator for today's call. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session. I would now like to turn the call over to your host, DeAnne Gabel. begin. may you DeAnne,

DeAnne Gabel

who Chief Klein, and and revenue Bob to Officer, President Fornaro, performance brief by review a Cheryl, quarter and will Airlines by remarks. Officer Financial will earnings and few President Matt followed comments; call. cost will our Christie, Bob performance; closing outlook; followed Ted our opening Senior welcome, Officer, Commercial you, our Chief Vice Spirit everyone, fourth and give our discuss Thank our Chief with Executive

and We a prepared other call Canfield, concerning and simultaneously our and have today of in Q&A forward-looking website will recorded on Bendoraitis, our analysts statements session Officer; replay This Thomas following A current remarks. the will members beliefs for of future our company's XX our the archived are expectations us being days. John discussion this for Operating webcast. sell-side General our or that events is Today's Counsel; contains performance. Also senior joining Chief be call team. room financial represent leadership

on non-GAAP refer of for of risks are will With We adjusting to Form could Please actual belief website performance XXXX reports comparing factors quarterly February reflected those statements results XX-Q. reconciliation statements, the XXXX. in today on forward-looking duty Bob. differ as including exclude we on guarantee be and and/or measures. based statements. the future currently our is risk that release, discussed no which a quarter not to are of fourth special or results Annual that, management's could all any There materially from X, and on information be uncertainties Forward-looking Form significant In and here's available available earnings to Report to XX-K cause undertake in our the results our our today, periods items. update forward-looking

Robert L. Fornaro

the for today us. and results reported XXXX. full-year Thanks, we for our fourth everyone thanks quarter joining to Earlier and DeAnne,

the was items adjusted net quarter operating diluted for tax non-cash benefit million, fourth $XX.X $X.XX XX.X%. our XXXX, per special For was and income or margin and one-time share

income For or XX.X%. diluted was $XXX.X the was share XXXX, year operating and per margin full $X.XX net million,

see operational a time our the performance still of team exceeded want the This We overcame for record quarter, and with to so and was our and to our ratio the challenges on our I overall delivered fourth past performance. efforts XXXX lowest improve I'm one several to year ever. our During of major XX% and year, ended In team we thank guest to finish recorded our goals solid far. complaint our contributions. experience members pleased XXXX, results a on-time their

and I Ted want detail, Matt his to turn congratulate the discuss President. in to promotion Before to to Ted performance I call more quarter fourth our over on

we him With but leadership. choice our addition, very discuss his a end plan to and I'm to and it Matt retire and I'm quarter Ted me will I'm for year. fourth yet, Spirit well known I over announced I'll in that, speech with In not do board's at the confident under detail. to decade of my performance turn more delighted over our a retirement succeed giving for when as Ted CEO I've the

Matt Klein

of of integrity, leading job pursuing being our team excellent an with Bob, the the competitive Thanks and to to midst changes dealing environment, thank in team always, our Spirit challenging in our you guests relentlessly. safe disruptions, and with operational results entire care values Spirit the from modeling taking of did

year-over-year. seat For revenue mile decreased the we total quarter Total fourth $XXX XXXX, of reported available million. X.X% revenue per

periods we line with trough were periods holiday initially during and yield was had performance our the the passenger expectations. better than Our in expected, peak

were segment improved services in offering primary passenger again once we pricing the seats revenue Pittsburgh Guayaquil, our announced and quarter. In Dynamic fourth to new add improvement. saw the to strength. of the international we of and X.X% service revenue, drivers pleased Haiti. XXXX, among Ecuador destinations. of bundled ancillary year-over-year to two Cap-Haïtien, in Beginning destinations: For Hartford our XXXX, were we've continued per list and Non-ticket

network in Additionally, changed fare we large, are to still coming the since as marketplace. well service international a will October months, materially the destinations. service fares to and Virginia will of and diversify to Ohio. we markets, continue small as Throughout and The mid-size structures published in haven't launch Columbus, Richmond, XXXX, selling adding there dilutive lot select our by

has second whole at a in trough to the in mitigate pulled be XX% are periods well to to and us of of controls strategy XXXX We tweaks, as the help term. during play some yield near the Tuesday approximately things expect quarter and other peak inventory changes flying those that's well. Wednesday industry in how as XXXX some at will XXXX periods weakness With the months beneficial I been and April year-over-year. now off-peak we we exercising full-year and in and looking tighter quarter worked The increasing think it May. the However, point this out capacity fourth

QX about are in XX% capacity forecasting and increase currently QX, XX.X% in XX% We in to XX.X% in QX, QX.

that are were operational XXXX, in QX periods we depressed in disruptions. and artificially due to reminder, a XXXX As lapping QX

improvement our XXXX our year-over-year. cost X.X% to launched in ultra-low RASM maturity. potential based remain excited of is will estimate to revenue with Along our trends, down as production advantages the competitive revenue. continue ancillary we to to roughly total our the X% current be we on will outlook and structure, initiatives accounts for in XXXX continues anticipate one turning first our which Now, our higher. the half non-ticket between see we pulling of largest see We for push non-ticket We about and quarter

and to our this year, roll allow our per path plan price year full for the ancillary that, a merchandise quarter XXXX. deliver on segment here's first passenger leverage In us cost products performance some improve With out that our to put discuss should both outlook. will which further us to later Ted to to revenue enhancements addition, we to non-ticket technology ability higher again and

Edward M. (Ted) Christie III

will partially Thanks, to than more of the quarter for tireless thanking I the national rent fair its thank lower decrease to Spirit and pilots' caring guests for CASM new a with year-over-year in challenges year-over-year holding offset Matt the Last XXXX for we or union agreement. our Out for to comment by join of committed driven efforts Matt. and entire Bob week, further in while and share per our and bad aircraft the believe a operational mediators growing tentative diligence we on ex-fuel by Fourth to our primarily teams their hard efficiencies. expense maintaining by I XXXX not benefits family operational That contract getting We early of weather results $X.XXX. a per the The agreement need March. one X.X% process, the the us ASM, to and rewards will for are in cost amortization decreased costs. a tools on not was airline, good conditions tentative line negotiating which, particulars wages, advantage. depreciation higher consistently reached salaries, about drive and going and want work solid giving their five-year long-term agreement. our ASM. this had us next deliver better that goal the the of in or we while run pilots respect their ratify even we said, to our We and contract whether step. remain knowing believe, this we anticipate relative contributions, can

shares During our quarter, million under returned million to share $XX X.X repurchase program. the fourth by we repurchasing approximately shareholders

reliability we and We expand for other five route NEO to agreement we our open Airbus we the Airbus believe, are with resume a will support mid-XXXX. our lessor, fuel that we fleet excited And deliveries also from burn blended only Pratt rate with very attractive a fleet, utilization, second news, but our NEO. have In XXX operating generated range November all enhanced Airbus, tweak our delivery and aircraft of under of advantage took that slight needed through did reached a about NEO the variants, leased ending CEO not to one in an aircraft high just our perspective, to aircraft the at XXXX, high how EETC aircraft In provides Regarding its we opportunities issued year with will a operational very returned the capability proceeds, six of schedule aircraft. up us of make with $XXX that, considerable delivery will but X.X%. fully (XX:XX) new million and are cost in and XXXX operator. AXXX modifications

of capital XXXX. these on year XX.X%. use will for XX scheduled with a We funds to in aircrafts new this invested return We Airbus delivery ended finance

As ownership. high ROIC inherently as burdens is a growth reminder, it during our penalized of calculation over periods

you perspective, like been for the reports provide guidance would ROIC over others January From longer traffic this, forward the XXXX will in beginning adjust traffic monthly industry no If our with results. we have a XX%.

new As for from contract. outlook, a guidance pilot any excludes impact cost our our

we to X.X%. For the X.X% ex-fuel XXXX, quarter down will first estimate CASM be

are impact contract. CASM digits ex low-single down We X% estimate the mid-single new in quarter digits to any be up year-over-year. full digits will For again year CASM X% fourth will still XXXX, in pilot a the in second high-single projecting the excluding we quarter, third ex-fuel down quarter, down and be from

per price of of the satisfaction from we In operational XXXX, year. proud gallon guest very and the closing, assuming over fuel an $X.XX. team the a past what For quarter Spirit I'm has delivered first are perspective

cost is However, competitive of of deliver what the our compressed capacity Low given may the under with Spirit of full very very to of experience even period, low more or pieces outperformance. is environment. coupled any than network in us the viable fare on are also we remain lost service costs today face of high not make competitor a elevated domestic level growth, this must In some business. important that will with a In profit on industry ever. focused quality any potential

expansion even Bob. aircraft our I'll markets turn each balance and that, into will delivery, more today. performance than diversify and back further with successive However, With domestic international to more it our network

Robert L. Fornaro

our In Ted. even know driving we strengthening we focusing for further good service performance be improvement XXXX, initiatives, future. on achieved improvements high but done our we customer our Thanks, guest will on-time footprint overall aren't a in the Throughout and maintaining yet. in experience XXXX, we

the committed are to turn shareholders. driving going vigilant our to are we all I'm we that, areas productivity of so. confident addition, efficiencies it cost our to over to and have our DeAnne. ability structure industry to With increasing To in throughout earnings protect and growth low we deliver do In that, do to remain leading company in for back

DeAnne Gabel

Ted. and Matt Bob, Thanks,

follow-up. related Cheryl, now limit ready are begin. yourself the are take one from ready with to to We we you questions that ask to one We question analysts.

Operator

Thank you.

We will session. question-and-answer the now begin

Pfennigwerth. Our comes state first question. from Please question Duane your

Duane Pfennigwerth

morning. Good Hey.

Robert L. Fornaro

Good morning, Duane.

Duane Pfennigwerth

to Just of if with the lower in the don't respect fourth your you, guidance, second, us maybe remind can you have just I but front quarterly what know to quarters? and factor you was impact third completion handy ASM it

Robert L. Fornaro

XX.X%, think X.X quarter than and our factor higher we that year. maybe were in points completion X quarter. third it the obviously, annual basis, an on for Well, second was say to I'd I is about And, which the

the In we impact terms were XX%. of

So, least XXX of get XXX factor. may tied here. it's capacity I is think, at completion increase the points the But to number basis we the to

Matt Klein

Yeah.

Duane, we a in XQ quote in XQ. the XX.X% XX.X% stats, and to Just had

pilot and banged the hurricanes disruptions of us kind the that up So, way.

through those and but the full of points of the of Bob's XXX kind If it right, year, basis we about think, average couple hundred, year expect a spread of lap. you I a take

Duane Pfennigwerth

on Thanks then, in great. growth thinking the with you're just order respect longer your conversion questions. book. for the XXXX how term taking in XXXX And That's to you to growth? Can CEOs, your does that us thoughts change and this from a NEOs on about does tell tweak And basis? XXXX

Robert L. Fornaro

Sure.

that delivery, standpoint. So, the the working views with up delivery our way not It sure full in do gets as conversion aircraft more NEO on had in that participating we're can from a with that make does just success sure to ramps that change make a our to growth. to partners

to think sure making helpful well. So, it's we Pratt and Airbus it's helpful Spirit to we maintain our from both slots and as

thoughts and company's think, structure we what done, our said we've growth to then, objective our And is the influence contract like. relates as to availability to get the have pilot it previously, XXXX, XXXX here a company's in cost we understand As looks on beyond.

so, we to place. take our continue that get And agreement in we'll dynamically once

Duane Pfennigwerth

Okay. Thank you.

Operator

Our state comes next Savi question from your Please Syth. question.

Savanthi N. Syth

going new frequency mid Matt, talk Hey. what like Maybe going doing be could versus you're more, morning. the maybe is Good and there, growth or we it what has the expect kind but you the versus small, about to and components of and this dots, little can pretty markets, been kind going connecting question you growth generally? what mix off to forward a mentioned what from diverse

Matt Klein

international customers, Yeah. destinations exact there, to. that breakdown how new versus in running now Fort Certainly. we the in general. we're generally doing guests routes front is I connecting know don't can relatively we cities the will think When to destinations our of really Columbus Savi, get looking in we places and have been dots out that Lauderdale. new well of A are a you. go of dots about perform just of that want and at Richmond, our leisure the for much me we've of couple connecting speaking, lot right But

dots of the get aircraft aircraft and we're as to revenue that performing routes well larger well, in, the way best terms of lot think our a connecting that. other some as see as make will growth, as about some maximizing helps along up-gauging In we sure the as unit our total we us larger-sized

Robert L. Fornaro

other just point, just one Let add me Savi.

have network range. Just XX Fort that's XXXX, of grown, Dallas that the way XX, March has in Baltimore more the and XX we're going biggest, XX kind have with of in to the terms departures to of Lauderdale than the XX, XX actually cities

creates as is growing, of opportunities. as does, larger And it some some kind again, the the ones smaller cities of So, and more been it out. we've in again filling network just

more today where into we market. our have have daily double strength some service We markets of

size the again, in of creates opportunities and itself. So

Savanthi N. Syth

see next Thank of to you even year, it, slowing again of just you the growth like if but isn't follow in Bob. helpful, a remind cost where talk ready maybe do just – moderation And cost kind kind then drive not of about could you. up lower That's us I might can if beyond on this initially growth you're side, you a growth?

Matt Klein

is Savi. one company's structure. Sure just Growth of component cost the

we better sheet about talked in company's few years, we've advantage. operations. drive that As efficiency use our over way we a balance efficiency to last the We the drive in

things it operational but provides Our only XX%. and even continue the from not overall growth provides as power scale leverage shifts XX% those to buying rate that

the And that, manage news for we're we of on And continue expanding see. so, we optimistic that. the remain of about cost advantage to in very control And our ability in good it. to protective is we're environment Spirit

drive And seen last improvement probably we've the so, I company that's consistently notice as to think continued I becomes think the going benefit continue the most. you're And I going to year, see it think throughout structure. operational over the which reliable. will more you'll And it and continue where to it's cost

Savanthi N. Syth

All it. Got Thanks. right.

Operator

Hunter Keay. your question. Our next question from Please comes state

Hunter K. Keay

going Good than XQ that so that's with you. deal. surely guys. question about the the growth digits, to be to Thank Hey. some morning, similar XX.X% about pilot what of we've think here. A CASM talked up low-single To ex capacity far higher

be. some about the that we have that's But XQ? move improvement you I than higher number So, little would in model, lower is onto forward. that, it's bit CASM obviously mentioned a it expected labor, might know should thought given translating higher be the higher as ops I particularly in that anything growth rate, I'm exit as there a thinking rate driving

or anything move there doesn't into that is quarter goes So fourth repeat that's you XXXX? in we number think that away as

Edward M. (Ted) Christie III

I Yeah. cadence, hung too up the get wouldn't Hunter. on

because are would to know their and in flow when calendars our the are. want you As business only throughout useful costs people holidays expect, year,

the we years. course structure the through the cost So manage through

whatever the $X.XXX. the on that, we will just you impact so on basis, lap saw at the ex of year-over-year quarter have an CASM produced of fourth a in maintenance timing And

and So blended so I think ability deliver across to to rate performance. why the our it a has cost more on time, longer with do of bullish we're period on that's better

think that little that XX% – anything growth and it's fourth bit So it's has the I fact into quarter too wouldn't I coincidence than pressure. more more much the look a else

Hunter K. Keay

Right.

anything a for Are new have I there more quick one PFS. budgeting Just a follow you in this. after up.

Edward M. (Ted) Christie III

You mean a res system?

Hunter K. Keay

Yeah.

system. res Yeah. New

Sorry.

Edward M. (Ted) Christie III

No.

Hunter K. Keay

Anything? Okay. right. All

Edward M. (Ted) Christie III

that's We continually do and kind of Navitaire but our the in platform, more maintenance. improvements to CapEx upgrades normal

Hunter K. Keay

schedule? who Savi is like know it as think weakness little peaks there mentioned see Spirit better can expected guys growth it you – as I before a I about the the feels then sort opportunistically as that bit, like scheduling of you And in trough that cool. you the about day do but in performed that But strengths talking in Again, have anything move was in maybe you be always do had this quarter. Okay, it week anything if anything trough. slows But periods? about forgot performance some there said your forward, surgical you could I had is better that. more or is particularly the of off-peak to to

Matt Klein

Matt, Yeah, Hunter. This is certainly.

of a in we're one lot our the past we is it's QX lot from that following So, year that the something more. did in to a on remarks, we and things schedule mentioned seasonalize this starting

Specifically performance. Easter help until Wednesday coming trough to up get we Tuesday and to period, removing flying after Memorial here some Day yield period address we're

in take So you'll where late look expectations, well. is where we into And appropriate, we April and think can, what's a trim as based we surgically performing on at see we May definitely that and well coming

Hunter K. Keay

guys. Thanks,

Edward M. (Ted) Christie III

Yeah.

Operator

your comes question Rajeev Please question. Lalwani. from state next Our

Rajeev Lalwani

Hi. morning. Good

Edward M. (Ted) Christie III

Good morning.

Rajeev Lalwani

idea but congrats control, years far just last look capacity, thinking versus How as maybe the it's positioning. how to we ahead. change next maybe trying costs about the to shifting You've you and responsibilities. going going the what's to differ talked you few? an guess, get are few under of as keeping for expanded the on approach Spirit A and as I strategy on just Ted, question future for the about

Edward M. (Ted) Christie III

Sure.

Rajeev. an it's think evolution, I

I think part I be see of And been what Spirit more to that. the the you're five next so or out think years. over last of we've will going of few that over

in overall airline migrate And ancillary so aggressively production. is And what and reliable, a a growth. friendly structure product as to opportunity and in but guests us growth over we there bigger, we're improvement leisure-based and clean, a yes, gets still see low-cost we position those that percentage And, focused on deliver big pretty provides that low-fare, of our is out our the the wheelhouse. think the time give to business unique a with traffic, value earnings highly for that will things continued

to so a just mentioned, that And with using a we I passing better each day, indicated I will those continue become I – as cost much competitor, improved with network, pursue structure. a more much that better think levers comments, in we my and and

it's more So evolution I think than change.

Rajeev Lalwani

again, ticking Bob, the up seeing quite industry would on also well get your have yields mean, you're time mean, do in perspective Spirit now. industry higher cetera? seeing bit, regard as for margins, I fuel. and but the same the that at think love I And, how but where environment I you to a interesting to et you're what for in guess growth plays you is capacity out, this Thanks.

Robert L. Fornaro

Well, share, you all to doing you well in something hub we the for their many mostly the most cities and mean, are focus things to large lot on. competing which ways is evolution, hubs. of there's in carriers it's beyond us don't degree flying, are larger addition carriers But And the growing. a carriers gateway like find who I been know what, some in of

a cities. our I have doing, season, we but competition. us any maybe are good last quarter I or that is it degree. think And given way, prices long I our for one really building been that's discipline any given diverse again, again, in – core said, years. pockets always portfolio see find a about there's fuel to what quite last will to And ongoing to of So, well. I think we two over the heavy going found how Like – news it it's But cities, lasts, few some to the

to at low-to-mid the can what And our thing point, with deal be moving X% competitive And but can it. cost and do, that best and manage to focus is of structure, I cost the I our as that's which range think low pressures. the costs. and and primary our in is. we'll going structure probably we're move they some on We'll situation if just is diversification. due for upside again, others depending you'll talked we'll it. if us reduce improved quality help into XX%s follow fuel But to our And any about, take other we now, going down one total. cost we the area, can there's respond be from to so we adjust improvement the focus the But on reputation, for elevated to teens we But see to it's think

Rajeev Lalwani

Thank you, gentlemen.

Operator

comes from Oglenski. your next question Please state question. Our Brandon

Brandon Oglenski

operational I guys everyone, to revenue pilot of in letting the think guys because Hey. your costs unique the you the last unique relatively fly schedule through just impact the summarizing walk for of Good that don't mistaken. I'm year, lack you to not want XXXX, and I a know impacts or can in morning, some me the contract on here. guys ability us the and faced of – whole if thanks was impacts, But the here. the about you talk call future to you

Robert L. Fornaro

really what impact get we we're June. about do, the into May could going activity not the so the but and of can to agreement. We talk Again, again, in

Brandon Oglenski

Yeah.

Robert L. Fornaro

take...? – to do Ted, you ...and want

Edward M. (Ted) Christie III

pretty kind effect costs we we the the follow-on were on Brandon, as the due was about public mean, I quarter to we impact of and our the second cancellations what felt way and worked out. Yeah. in revenue then

on $XX million smooth costs. to around to will our revenue of on $XX over the performance, the I improve process tread And think on, seeing course. performance we And I improve unit water. to is was not deal objective to what's to correct, is stuff run consistent most comment But us the to because it way delivering want will operational its impact. quarter, were but important we're out as earlier, that – its the second you're million specifically somewhere said let not we time, going

we so and improve. to team And that behind objective, be see I But room there know out. us Spirit that let of kind it to we'll is for play the

Brandon Oglenski

revenue that the that. the comps because Appreciate your front, metrics second in little of to the obviously, should we But that a issue then goal quarter, get be And get positive Okay. on mean RASM year note? on thinking the bit difficult. is throughout I total a

Matt Klein

Brandon, revenue unit really where growing, stage when provided well about our when this on comfortable that around unit about is talking this X% full-year add first average Matt. year, is the as we're not revenue unit is think on has to We're impact some think an about increasing numbers revenue. and guides quarter we of and at nuance We how growing this to time. we're we One guide. our

fourth So, stage-adjusted, you quarter. reported back our stage-adjusted flat X.X% But even actually results around up. look actually if to I our for think down we're we and results, QX slightly think about

think role a when revenue. about plays unit stage So, you

it's So, something to out there. in mind keep

Robert L. Fornaro

And, Brandon, improvement see Again, yields. a of an comment. we fourth ancillary other a activities continuing just is of that's The declines in much our we passenger the and continuing. couple one passenger, trend per that with and improvement X.X% after flow in years one ebb and the there's control had quarter, more

carriers of is that because positive actually it's less positioning real capacity. the impacted competitive and So, industry a by dynamics

positive I right? late or since think All declining And, us. guess, early it's XXXX been So, real XXXX. that's I a for

Brandon Oglenski

it. Appreciate

Operator

question Our comes from next Kevin Crissey.

is line Your Kevin. open,

Kevin Crissey

touch But I going your When I benefits focused-city all does your approach morning. of and about this of Good you maybe disadvantages about think Can in those having focused strategy? concentration terms then and in think five they have think Is with your and they differ? I a don't day, from cities. of network a in about cities operations terms think that JetBlue continue through think their some you How those. strategy. doing Thank how having was talk some perspective? it network, to six Do it you about particular percent focused-city flights high there a about? their or at when differ I that you XX-something flights you. that of there's

Robert L. Fornaro

Sure.

I of JetBlue period and think So, practicality there's which think a the the of can In time, I for actually JFK I this. getting for it's mean, have a you opportunity. were most carriers really the good unique – most the observation slots, decade, the and cities carriers created in during the And last big avoided created pulling maybe part, of opportunities. which would that larger a back legacy previous other credit the of lot

so, large and operational in Boston. JFK And these created that centers

at if I airplanes about XXXX. Spirit, think you had really at look XX So, we in

large So, we most their were those through networks. pretty bankruptcies the their gone aren't opportunities Spirit small. beginning By adjust had the of quite And there. carriers time started were growing, and to

XX or gates. XXX some major city So, you've need flights different XX got to look run to at your opportunities in a you much way. wanted If we in

So, do. to hard that's

always last ways. grow to a extremely your year We'll very Lauderdale. our have strongest have somewhere in stepped network, a the large year have route largest (XX:XX) second the it's which Fort in many diverse but in operation Again, should XX carrier a up today in you activity the XXs. city Orlando, So, is presence. It's really now, Right year portfolio we've place and we different Las our our finish about low-cost last strong a flights and is Vegas. we added

Spirit our markets some where there have actually about because then are And places legacy strong we've equal think driver a or and position had that anybody, costs where -that's a is low founded. and was Chicago you to or real for we costs flying we're better. Detroit longstanding where years and cost if we're are are compete we a can with So, the

we cities So, together. there's a lot been connecting of places like core and have our that

Angeles, Los So, XX have over flights. we

haul is connecting those focusing together. to on routes. strategy We're mid Our cities leisure long

this going a actually international again, with that opportunity. are our I to position flying, more Fort to cities So, I depending getting growth as to destinations. certain Caribbean gates additional Cancún leverage A finally all going other on an and year, from think, an see lot think opportunity array of places. see Baltimore to Lauderdale – you're the and And we're servers

beginning be, our to those least, of be capitalize going – we're will on as time. then well. came to Spirit, So some growth But of the opportunities opportunities at international a different at

And take in got available. what's advantage so, therefore, of our – it's effect has strategy to

much we're stronger than kind our The say are and only let's that's east ways. So West a versus in we of Coast, similarity JetBlue primary Mississippi the yes, geography different is, of on the where is. many

Okay?

Kevin Crissey

Bob. comprehensive I answer, for Thanks really appreciate that. that

talk they hub, small about to how versus you into how of the large differs when of impact grow grow out Okay. in cities Can they that growth, out legacy terms your maybe network to markets? market competitor of airline when or overall the

Matt Klein

sure. This take can Matt. is I Yeah, one. that

which when higher major they're also small been So the flow do on their connectivity that, what from generally there's pulls a to trying over their to cities traffic if is successful we they legacy flights speaking, that in carrier, of trying it there they be that can off cities is to they yielding the hub, more and stating do some that should when find serve. have hub they and doing what into traffic actually

happened a that say, also activity, are our we've of so, or some kinds while also pricing last competitors the different is what's of from that nine So, months taking in seen traffic. perspective,

small some Now of extent from they those pull that to the connectivity seats back. more should add it cities,

in virtual a adjustment it's So almost capacity a way. like

a from what right in periods, data more peak whenever going paying And pleased peak process we're put And are place analytics relatively In the we're that's in and a last they So, the we've way in seeing perspective with, control that inventory off competing more for the off we're about compete with they more marketplace, we that are periods and how lot can. and year-and-a-half. what sort leverage lot wherever that it's and we're we'll of we can with think monitoring well. a we as been now doing the what lot the and what's on. we us and seeing

Kevin Crissey

the it. for Thank you appreciate Really very much time.

Matt Klein

Certainly.

Operator

Our DeNardi. state your next Please Joseph question comes from question.

Joseph William DeNardi

how's quarter that guide, what's into benefit going the Easter? Thanks. Matt, there on first And just Yeah. looked RASM XQ? the from then,

Matt Klein

Certainly.

around benefit couple QX. modeling points hundred a we're now, So, into basis right of

of We expect QX. a similar impact to sort

but we'll as you get better move as much can imagine, through we're right we out looking holiday, the So, what that's visibility now.

Joseph William DeNardi

balance Ted, a of just the sheet. questions then, And couple on maybe Okay.

operating come and number for kind standpoint, a where balance X talk in of place Just to think your the now? Is the still leverage is about times there accounting comfort the the from you And on just just changes when taking about to that? leases the given use us where impact the then sheet. XXXX to approximate leases then you of level can right

Edward M. (Ted) Christie III

Sure.

the first X is a to think believe not. So, as I or times proxy for still question, relates us, decent it it

to I You're right There right. all add We'll for around the number. the come we that balance be that's analytical proxy fair exercise But full today. will sure sheet. making a a think

you that swap is it maintenance-related we're leverage As about way different is and out far stable operating than leverage on want others. or that or think carrier if as a of concerned, growth the CapEx, CapEx us retire taking have on is whether a to only airplanes bit impact carriers little

And is so moves. the over finance always here of definitely we've position is said growth. depending going to that use leverage But denominator And leverage on move that our the will where remain consistent. to what time principal is our

have other very part the a model. the And think airplanes. of than light our of sheet I that's We balance success

about years, will that's we think it's and our true it's sheet balance building company few but its I sheet think be perspective We said as actually a in last had to off chosen it's the it you comments my the as ROIC different than income leverage, finance leverage the for if position long aircraft also company about again, completely right So, from the But over is term. the return a protects answer perspective. right think don't balance answer don't from presented an today. the

ROIC, with and is So, that with input wide we're true one the a as we consider including leverage but metric metrics managing of across important return. it's business one along it's variety

So, I hope helps. that

Joseph William DeNardi

Ted. it Thanks, Yeah, does.

Operator

Please Becker. state Helane question. from your comes question next Our

Helane Becker

Hi you team, thank very operator. time. for Thanks, the much

two time Just this domestic as International the domestic were or been cities going you a wondering a an add fill about a or one for forward two opportunity you think should in I focus this international questions. two of you and we just cities know and and with cities long where internationally then opportunity? couple said I'm year one-off that of doing that year. that is a a you hasn't

Matt Klein

we something on right. to So, and wanting to add you're It's Helane, our been focus have some of that can destinations. we we constraints international in have some and airports how capacity

of and see as those those to add whenever are them. can, of going so we Some constraints opportunities we some wherever we're up, loosening

more something an as Fort something is certainly we've terms And destinations been from learned have Lauderdale in Bay that time think the we I that to destinations have airport we're points launching do from well. year, We Fort that we've Antigua position get that as other very the starting to do. here that and should say, leverage to forward to and of internationally, of continue mentioned us that – we other, will build for that's arrival In Lauderdale also do over we this it's and do origination strength we've to unique as that. successful ability large from we perspective, shortly I that U.S. wanting some will extremely We're a in more and on perspective leisure moving grown Cancún to departure

look So, when us works to in. we're opportunities those to continue to and those going it see going for put you're

Helane Becker

Lauderdale are specifically talking network? Just or the those about, your airport at Fort you're constraints around are those that

Robert L. Fornaro

terms a a we expansion, year, in Cancún actually, the Fort big was these do to others, that's things Lauderdale. this so some the in now bid hoped FISO the last, speeding of certainly (XX:XX) expanding Lauderdale, why them had of and so seeing But roll-out Fort and constraint we're slots you're – so of number In (XX:XX) of the we've that's up.

as So, slots are of inbound constraints are the primarily the because those Cancún and the Lauderdale speak. other resolving tied we really was on themselves, customers to Fort

you'll of by end flights – be again, the XXs will XX, XX why could another that's there possible well. Fort as city be that see approaching in So expansion Lauderdale, our the year. it's And

Helane Becker

great. That's Thanks, Bob.

you with have with respect other about But I other know have are agreements I The high-load airline makes sense codeshare – because factor. to don't you and your for this thought if aren't question like U.S. the fly as that make low-cost, something airlines like don't guys into sense you an Norwegian able low-fare a to they for airline – like really growth connect. where Does but opportunity? is

Edward M. (Ted) Christie III

Hey, Yeah. Ted. Helane. It's

Helane Becker

Ted. Hi,

Edward M. (Ted) Christie III

form too just growing any we but been factor in getting you're to the is in so, or haven't focused off and distribution. it. we We been whatever shut past, for never organic the high-load at, now on might until network. we've of interested kind are altered And an opportunity have up able Codeshare us been right, look of we justify

Helane Becker

Okay. very congratulations, your Great. on much and Thanks promotion. Ted,

Edward M. (Ted) Christie III

Thanks, Helane.

Operator

line comes question next from open. Mike Our your Sir, Linenberg.

Michael J. Linenberg

Hey, two I morning, on Ted start want Yeah. just Good with Hey. to here. everyone. sheet. just the questions balance

up you would aircraft now really are airplanes that also they know balance some maintenance start as company? down and with down. there And on more number opportunity are, But of additional I really the deposits, just just that mean, think how the $XXX come that to lessors sheet Your down, free for is these million. liquidity an that bring aggressive I as to put I

Edward M. (Ted) Christie III

We've to our off we and leases. as balance Mike. since and really sheet, optimize been we but move financing using since that arrival working part operating the of half my around our have – financed still of – on for mix those Absolutely, fleet

are or of the our obligations. of And to is relieve those the tweak primary those still objectives period. a this ourselves the piece lessor five from of partners course And one opportunity to six-year throughout We've cash-type big arrangements taken so, the airline.

So, the answer yes. is

over happen the an to working call up two of opportunity free We a it years. continue next time period that to see capital there will in to five

Michael J. Linenberg

there on-time, when consumer question you And your I my can Spirit November's around way we're for factor and like and it providing shares one the it get not the lot create is on sort those the just issue like issue? feel side. pure the not the report, And until get on monthly trade you're what is I it like of basic that I provide highlights that the at PRASM around to quarter what just money put Then number. ends. the undue in What's and October's just is monthly the to doing now, seems like of data I volatility or look the factor monthly out? to things of of getting decision But fact investment the and get of look rid – at monthly I going side completion and mean great. second ops traffic data, people as Okay, thoughts after the data, behind a reports. it just cost reports right DOT was I think, now may completion that – reports the thesis

Edward M. (Ted) Christie III

not Mike, around others no. more necessarily. some was No. it and isn't releasing information helpful

lot noise traffic So, from about marketplace it talking is performing. a our revenue how just perspective. not in was and creating the about costs of or And

the results creating than felt conviction we that focus and let's information. we little a additional just more answer bit on was noise about So, we'll right rather what with undue to of the deliver and know give we'll like just be kind able

Michael J. Linenberg

Okay. Fair enough. Ted. Thanks,

Operator

question comes Dan open. Dan from McKenzie, your... Our is line your next McKenzie. Dan,

Dan J. McKenzie

morning, guys. Hi. Good

Robert L. Fornaro

Hey, Dan.

Matt Klein

morning. Good

Dan J. McKenzie

revenue a revenue the up Easter up Hey, yields And trough commentary does that, could first the Matt, also spring kind of I'm travel? spring just move commentary peak on fact, implication the break prior or following in of break quarter periods, the in Easter related the year-over-year? in in then, versus factor is from here. outlook question, yields to be

Matt Klein

So, question. Dan, great

impact about what the spring and breaks. So, first Easter is part is, breaks, spring really,

Easter of and part of out into QX where Easter And at. being breaks a our the spring And lot right this year bit, got year. moved network, a X just and we're with country last way our the quite the part at lot this least, a and year. falls April spring that's – of exactly. from And all moves of You nearly – Easter QX of this the looking that year breaks on

year-over-year yields. on activities. prior an now, about moves, where advanced in in the a been on bulk and lot years, more we're And periods. understanding spring happening entire where what And way book So, going over smart that we're about there's moves but thinking with we're seeing sense. just straddling we doing sure at be inventory been travel what's around have our of period we're and of work that right about flight-by-flight, time, in the thinking We've a of a of production, basis now lot drive bulk over of traffic in thinking the week-by-week simply on bulk drive terms yield of making that about the much will in instead makes break sort basis, perhaps, we better in terms of we March. holiday, just would yields, if happy pricing of And more and being

Dan J. McKenzie

following-up helpful. higher that Well, back timing commentary then, your can that's Yeah. the that drive non-ticket again commentary all is are And initiatives, I And guess, the Matt just prices or year? the commercialization confident you're maybe just better this you're to to this roll new on some layers going out? simply here year, on non-ticket you you there how mobile products that in could include strategy this planning if and of

Matt Klein

Right.

able kind of not again, bring in pricing of something It's about I been is just we know say of is better how only is we're way something terms just the terms our ability is offering. I exactly think that it and of the when we're not we we've products to which the of that technology it, need data is of thinking in have what this better that one-size-fits-all past. in analytics the the past, the of a non-ticket a some new it been that how lot to in part that process to is do about merchandising, in-house But we price products. had product I had and is than repeat we've and think doing and on a about we and lot So, the side

And and year, has be allowed us through to going going year launch went will with us this notification. makes business as move our our basic about just to that how we how with with merchandising mobile do market as things will customers they are of and the this we coming be want our think as functionality we're communicated to more like app you last us allow a to operate us to receive allow functionality be – of making to to merchandising, that As that's and the e-commerce and well year to offers. website, and enhancements about age just want progresses more how an some think digital lot better push out in

lot and year, those for and not to just what is lot but talking this of things, and to will all that's breathing a be a digest, is kind us. not about take done be of moving All and once a process in an opportunity of things it but we're those forward that to action. way ongoing going as or living well. It's This for

Dan J. McKenzie

second mobile from later thanks. a X.X perspective Yeah. or perhaps your year? this that app, is phenomenon I that, appreciate the Is quarter

Matt Klein

on and likely that year. moving as it's on we'll on it talk going want second visibility functionality. to is it be promise it But really that we're over to that. it'll arrives about because I added and be when better this there, you give to now It'll so getting early be when just able later Yeah, don't coming not as real be quarter.

Dan J. McKenzie

Thanks guys. you for the time,

Matt Klein

Yep.

Operator

Atkins. Our next question state from question. comes Jack your Please

Jack Atkins

time. Good the Thanks morning. for Great.

much front that think on of on as increased the half non-ticket up of from that Matt, adding point what's currently? there the think of is way efforts about you've we about any sort around brackets a already Is are about we to there following perspective? that last opportunity year, And sort revenue for that put undertaken Just your pricing and that dynamic some sort then the this the back to us? the functionality into move of kind of when way, revenue the non-ticket to revenue, how

Matt Klein

going that now guidance, look take know step I on to we're for there from like it's don't is don't perspective like, just doing business TRASM out can just what there's we're you create non-ticket. give a things a to things I comfortable we is, right number back to full-year want that. non-ticket But that exactly headwinds like and a tell that saying what actually putting

to from sort trying to that more direct helps cost and guests and more sure with lot in on our we're helps can a our making a very we've example, globalized successful basis. a It for For that. a it communicate been us us we of traffic perspective drive website structure

we to and slight have that headwinds then of that So, think beyond with actually to overcome initiatives production some non-ticket we overall be go new have some those when non-ticket, we're things when that that of we of talking careful we and about. those headwinds then have kinds the above about

over further. initiatives do a would that So, that and makes overcoming the naturally initiatives, Does are plus sense? know time, didn't if if get pushing I things but new little even don't sense make new worse us up we that

Jack Atkins

towards the peak during performance altering inventory did you expected out look sort to both the competitors. does. of travel Thank the or get you when a being better it And to than influence what lead management thinking and travel, think the versus that. (XX:XX) inventory non-peak flying flying than quarter then you fourth in could just peak in fourth sort March of encouraged around And how of No, of revenue into flying commentary, expected due the end March very in do sort among peak understand management better peak we strength follow-up guess you performance the your sort flying the hear break of question to quarter? the for I'm the on guess I that about peak marketplace obviously better you're quarter I to trying spring Spirit about is, as

Matt Klein

our three what's the data accurate. seeing more what ago. a make about marketplace. an perspective but we're We are expected given know happening that hypotheses opinion, would have possibly understanding quarter I that from is in the peak trend do we period it's have also but Well, had to I for the months quarter. us than the mean, on don't sure But say I peak we I better and than periods to for that fourth confidence can you comment reflect performance the that also more want tell from like revenue

that what talk do take Now and we always dynamic, risks, control to and what inventory pay pricing we off try of to every day. adjust extremely do to having want and we things one the is and about and that, we they to do is try said where

rest right that's the we of through of out as see now, other the year for And we'll also to periods periods as peak out that, marketplace what So, where that what to years' is the expect confidence drive just we're happening play our would happens periods. as peak not throughout this seeing said see lies of the us and well. forward having quarter peak over well, later but historically the

Jack Atkins

for XXXX? And rate for using item the Ted, models our great. should one last Okay, housekeeping we what's Ted. for tax be

Edward M. (Ted) Christie III

For to full be year, going XX%. about you're

Jack Atkins

Okay, great.

Edward M. (Ted) Christie III

be little of higher to going throughout just the it's a quarter earnings first year. of The bit pacing because the

the bigger So the impact permanent items have quarter. in a first

full the XX% to think closer it's XX.X%, work XX%, for year. I it will So to out but

Jack Atkins

much. very you Thank Great.

Operator

you next our Donofrio. strategy. Macquarie question - comes and Please your growth Donofrio of morning. from a And markets, seasonal your have Susan Capital Susan winter. state Good at some did Yes. your just some I looking question (USA), add Inc. question. newer I'm on

the international smoothing revenues to the should Is new of really You also year destinations. big the have the we one continue your goals throughout summer? or see the in peak out

Matt Klein

to definitely is smooth out. make to goals our of one efforts Susan, So,

peaks. of of the are doing do now has that's having Things said in done, simply forward. but general great only way network some to that, Capital will Susan those kinds peak, done more time things still in Spirit find focused Inc. as what not our places present exactly Donofrio that always is we're we right year. the right the in a we of the just move to right the Macquarie periods going at the more But year (USA), However, and more it's past, fly that are now, - in on that we've the always but to is right have be observation trying often

to And was Exchange? was question great. New York the for my what the Stock then reason another moving Okay,

Edward M. (Ted) Christie III

the Susan view of – Susan, Inc. - Good good our (USA), morning. all Donofrio morning, It's by Macquarie Capital We Ted. way.

Edward M. (Ted) Christie III

the an it our view a with relationships all was we our we time to period, We switch. And basis. thought while throughout NASDAQ on were ongoing pleased make

Inc. relationships manage with And other we Susan That's - Donofrio nothing Macquarie it so than there's in our more (USA), that. Capital partners. our the way

Okay, terrific. Thank you.

DeAnne Gabel

more one we Cheryl, for question. have time

Operator

And Baker. comes our final Jamie line is open. question from Jamie, your

Nishant Mani

about contract? guys. can the morning, from benefits factors get on of sense and I and how traditional I you guys and efficiencies to Hey. you bids, want a away I what wanting kind kind not specifics term? you system potential out Mani the can PBS guys qualitative actually growth the the Nish your Good operational new agreement. how is of your ask in you operational And longer is in from to This But going to pilot of on question moving terms expect that PBS kind that Jamie. for to paper of comment play a respect in of the towards

Robert L. Fornaro

thing and from what desire operation. quality together. company's years. agreement only going our just agreement, to will pilot on stay than with had the for want of think in really improve open necessary improvements about the some terms is union We Spirit the the at to that agreement and wages, away But I all everybody made the PBS back do we're we the the to accomplish a the work pilot of shares trying details to something I'd management an I other have of adjustments,

And think Spirit And customers that they well. of get what compensation, the quality salaries, deserve, and a one does so I provides is and we simply things company as northeast. pilots benefits labor agreement lot operate our things the the that quality seeing of in the going once we've happen is mostly everywhere. and starts the seen that a the there's And that up, operation we're in

able weather got If manage on to issues, really and the adapt to you've you have fly. be

going is on. agreement for moves we'll the as a to get the to Thanks. detail And more think year win-win I be company. So the

Nishant Mani

a should topic. come there follow-up any in does integration Are passed, system move on That's vote in quick particular And of or front potentially a we agreement in just very If PBS hiccups is to helpful. we of challenges be paper PBS? how aware that a and there do towards fact the in of is of? Thanks. one moving kind kind logistically from this that

Edward M. (Ted) Christie III

Yeah. This Ted. is

teams let to going we're all out. work the Now that

now. Bob As on and to nothing work mentioned, specific but right we happen, that will with closely there's union the comment make

Nishant Mani

for so you color. Okay. That's the Thank great. much

DeAnne Gabel

talk everyone, for next us you today, you, to joining and Great. quarter. Thank we'll

Operator

Thank for gentlemen. you you, and conference This ladies today's concludes Thank call. participating.

disconnect. now may You

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