Spirit Airlines (SAVEQ) 26 Jul 182018 Q2 Earnings call transcript

Company Profile

Participants

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

Call transcript

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Operator

Welcome to the Spirit Airlines Second Quarter 2018 Earnings Conference Call. My name is Ellen 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 will now turn the call over to DeAnne Gabel, Senior Director-Investor Relations. Ms. begin. may you Gabel,

DeAnne Gabel

and Matt before and Ted call. to with Executive Bob few followed give and for be the will future Ellen, members and Vice leadership some Today's who second review represent this Commercial senior Chief beliefs This Officer, expectation our our will our room Spirit quarter webcast. archived XX A session contains or by a General on Officer, by comments the forward-looking of prepared call opening in earnings Fornaro, brief our recorded Thomas team. cost is replay and are days. joining begin – Officer; of performance. and welcome, have President you, Senior Canfield, our for the us President that everyone, our and we following performance. Airlines will financial other analysts statements Klein, outlook, Thank our performance today Bendoraitis, will our current remarks Chief discussion Counsel; close Bob website Q&A discuss call our simultaneously closing will remarks. who followed We'll company's sell-side revenue John Christie, the Financial events Officer, being Also Operating Chief our concerning Chief

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

Robert L. Fornaro

production thanks for XX.X%. was second materially net margin DeAnne, by primarily adjusted items, Yesterday, quarter due of fuel for expectations driven we quarter performance Thanks, cost million per and everyone us Despite second our joining operational our to reported excellent operating diluted our today. revenue results income, $XX.X and or $X.XX XXXX prices, share, and higher special to strong exceeded better-than-expected ancillary performance.

achieved and second we hard congratulate benefits our we quarter, completion expected. performance shown work begun Spirit effort of second the the really For team XX.X%, these to reap a our company's in performance achievements. history, I XX.X%. commend best was the and team DOT by on factor has on-time The and members quarter our the

that, I'll We things better operational performance. over are strong Spirit Ted to competitor. customer doing and discuss turn combined while satisfaction, achieving Matt revenue it our make a and second With are detail. improving structure All quarter ancillary improved cost this and in driving these reliability very more and our to we

Matthew H. Klein

Thanks, Bob.

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

by quarter factors, for our the in negatively year-over-year. down estimate second Normalizing TRASM stage have been those shift year-over-year was average Our TRASM increase Easter. XXXX X.X% a by we of impacted result would calendar and length

is take and items attributable per passenger experienced X% we $XX the revenue as revenue. competitive is that was passenger segment Non-ticket can the This improvement third dynamics last we quarter higher pace as for non-ticket to have other segment revenue year, achieve as headwind by pressures revenue this gives our did in up we yield on and pricing increases initiatives. that non-ticket to with yet the to continue segment per combos, passenger year. $XX.XX, Although of our in we we run-rate us non-fare from both of of lap bags, second seats, offset are revenue the trend quarter rates per the on target year-over-year. of some front plus the certain well dynamic This a end confidence to such big drive year-over-year basis stronger

of component is develop how driving Another we our ancillary revenue network.

and with network. months, schedule network areas three areas: access to network, concentration our XX our entire growing Building gives key and last have our of flows a international For big helps cities. focusing key growth the destinations; a large and diversifying few in our customers we cities; diverse been leisure with broader

second the service quarter, we Tampa, September to we will During our in Florida that and of Greensboro from destinations: Lauderdale, three announced Asheville and Orlando. Fort begin

from to XX We international to in Caribbean additional service of Orlando also announced an from international end compared will big of only for as the By our in total and the approximately beginning X% at some the cities our destinations expansion XXXX. network. international account Latin well as year, capacity, capacity America the XX% of

opportunity We our international the excited be to continue footprint. expand to about

have we as discussed shorter-stage routes network. of redeployed our these long-haul lot Day Additionally, schedule, underperforming quarter, cut routes last we've post-Labor throughout aircraft our in a and on

year-over-year. the approximately XX.X% to we third ASMs XXXX capacity, quarter for will Turning increase estimate

X,XXX may due the are ASMs in third nearly XXXX, up XX% Hurricanes we flights basis, canceled and recall, quarter you As our third quarter. a On year-over-year Maria. Harvey, in schedule-over-schedule to Irma,

year. beginning quarter, at fourth about XX%, of be our we our up the to which capacity points basis the For XXX estimate is than expect the lower

quarter peak techniques price Now revenue the we action taken third higher. is period as have turning for summer demand structure for using to passenger strong drive the anticipated, to well as effort both and in overall as revenue an yields XXXX; adjustments our outlook management

our do by will about slight third basis quarter region is we softness it was well to second quarter the While but to This started points. signs TRASM negative of we in XXX in international overall, quarter. impact see our performing Cancun results, second a estimate

We to have trims some the capacity beginning have made in new postponed Cancun. fall to Cancun select and additions

advisory an and the its situation, further on started RASM outlook. stage for drag total Cancun. and a for the which well softness discuss impact increase third this issue X% and cost be necessary. as With a monitor a into travel Ted XXX-basis-point We continue takes inventory cost we length X.X% third our quarter related attributable to adjustments the on up our review current to between industry demand will performance trends year-over-year. account control XXXX become pricing as to our we estimate travel will to X% in earlier are here's XXX-basis-point Based year, and as that, Cancun, to This we to quarter seeing,

Edward M. Christie

join thanks we commitment excellent and in to Bob for how are congratulating our for improved. dedication Matt, in joining survey compliment their achievements the service now guests. noticing today. number have in them us receive, results you also of second Thanks, our I our guests providing Based and the we their quarter on and and team to all letters for thank of

So, kudos to our team.

our expense CASM and ASM Better XX.X% per to expense second year-over-year. XXXX of resulted driver was was and this a large well performance as $X.XXXX, passenger in decrease improvement ex-fuel on Moving re-accommodation operational lower as rates. cost efficiency, crew of a primarily expense lower elimination performance, also disruption higher off-lease due XX lower rent quarter. Aircraft labor the productivity aircraft lease during ASM company partially purchased offset related of year-over-year and improved the per to the the to helped which was impact AXXX wage the to quarter of

these At aircraft unencumbered. our this point, what future With have planning the fleet assets that unencumbered aren't as now purchase our are but near-term flexibility look XX like. of having these we in fleet AXXX will on creates any aircraft, retirements, we we plan aircraft

having XXXX update year-end. deliveries on the that We front options anticipate are of in an and midst the evaluating for beyond by

our X% CASM will for XXXX, for third the As quarter we outlook, to down X%. cost be ex-fuel estimate

achieve up be We maintenance the ex-fuel pilot continued Along the are a projecting fourth to down pilot scheduled fourth have prepare attendant from we the higher we as timing as are flight to quarter. in pressure CASM XXXX training well full-year headwinds with CASM from mid-single peak as X% schedule. during we digits of ex-fuel of on rates, Nonetheless, and for higher track year-over-year. XXXX quarter, will X.X%

bottoms-up which our with beginning starts level operations. determining are planning XXXX our process for We of just

gaining push this means our is our highest. utilization completion to as increasing how has operation capacity the is running consider best our we about while can be time year, XXXX been periods growth the Together we are trends, that up maintain demand factor when reliability peak well will confidence our for is with the we XX%. our in assets next higher As level believe that of high we a which

update been once non-ticket recently dedicated producing range ex-fuel our We'll this we make by we on estimate process. through flat trends what more ex, you experiencing, growth As we've expect it X%. we we be now our in operational network, line driving refinement. formal pushing we pricing are taking improvement again up are relates budgeting fuel once to some include to and updated to prices detailed complete closing, while we high-level There with this action and, we've goal our to revenue. In higher to CASM can, initial and higher may XXXX be earnings where difficult, adjusting to go XXXX CASM our

across on-time benefits on running maintaining so of cost The remain to the commitment focused business In doing addition board. the non-fuel to helps our we reliable, discipline, a airline.

Our it that, is member throw is is better, guest I'll positive, to With experience Bob. our our back experience structure and team strong. cost

Robert L. Fornaro

Thanks, Ted. Spirit is evolving.

making service We enhancements is much operational reliability and our improved. are

to remains structure and widen competition. cost likely intact versus Our our

and well. for several diverse efficiencies. it a than number labor is network for today much more of And the we agreements years as exist evolved has set ago. Our years believe are was opportunities It more

Las than and Orlando. in established We're strong mid-to-small And plenty Fort finally, today. see are more big a in have leveraging international we we we of operation traditional excess leisure and We markets key markets. Lauderdale. Vegas opportunity in well markets, like have in cities XX And of XX now departures

the together, So, the over that predictable, the DeAnne. shape. potential smooth if is And to see it margin With turn slowly that, I'll in trend as taking ride all future. but for you isn't the always improvement you add and we know,

DeAnne Gabel

ask ready related session. to We Thanks, one Bob, that everyone Ted, begin Matt. themselves limit with Ellen, the we are to do follow-up. Ellen? question question-answer one

Operator

Thank you.

from first Jack question is Our Atkins.

Jack Atkins

to pricing side guess you taking clearly, and morning, I'm rollouts start just if I with have left come over the questions. off everyone. year. perspective on lever a maybe else on for this look further of to year you front this moment of a sort dynamic pull product rollout the on comment as the my from at for new what more Matt; successful dynamic could and few you maybe what's quarters all Matt, Thanks with sort been last there. you here could very product Good ancillary curious pricing

Matthew H. Klein

Yeah, Thanks the sure. for question. Great.

continue our we how able more us of we today. combo year, through So, we an about thinking our similar put And on like for learn customers And opportunity we that's to through we move continue of We're the continue an like our think bundled and us website on we've put place, of newer necessarily think things to as manage and patterns. customers. to to around products move basis. in not traffic how some been – terms as thoughts products how to see to – move more allow this individualized that and we this have changes year have offer of our some as we yield about in technologies we make to some it's that how rest

is customers size in stay the length or or patterns, record traffic as where of the headed. that to we of how party about going may stay the matters themselves So, group themselves they're learn

customers All offering. of ancillary their play and from those in what an into may come want those perspective revenue

offer. more think same about and we right when the offer. the and about merchandise to and them our It's act products. to present So, it's offer more as more about a to it how way gets that how we Everyone retailer

but committing be for of about then that longer into the we're rest they do we opportunity as a know As have of next a and year this well, year time at going we not areas. to lead times. next we we're that to key Things now target in but year, this have addressing think couple

opportunity really that one there's on for And created as competed well for the disruptive our know and program relationship that we at tangible now to the we model industry that For worked us. that opportunities we be time, now those ago, it the and we it that, have is example, of years it right number we affinity a that card kinds needs are upside when of was and have that know refreshed. in

times, when think to little where us take all year. opportunity it's going exciting for Some see to this about But to I of put to a so together trends for that. we on lead recognize that's us while those some the longer have that XXXX, continue build we

Jack Atkins

then for as else quarter? That basis clearly significantly makes the that revenue year, quarter we should positive on fourth looking it to continued we the right the XQ seasonal Thank But rest and equal, you. a fourth with is the the kind third down step. all quarter up progression Matt. lot just move thinking of think normal a at is revenue on just being growth great about seeing, side And the into TRASM on in side the of trends sense, assume momentum turning to capacity about forward on coming be year-over-year environment, following TRASM the XQ, of with a the TRASM as you

Matthew H. Klein

So, how network, to quarter lot fourth that sequential actually, question what do what takes talking of in redeploying. really growth the versus to third we're to in route have the quarter, incremental but on are have we've momentum. there. We do we we're continue anticipate about. the a We and with a we be kind less there's like going really The basis puts is basis of going good done on

Ted, add as color you that maybe to I some think, have to well.

Edward M. Christie

in we're the by The traction the pull. very a that but answer make discussed point in we we peak, that we specifically that we're Jack. gives the would ancillary just company trends the only see, is Yeah, Matt's see prior on on excited bullish I way, to – lever the

the fourth little a into head we comp the sequentially, As difficult. quarter, is more

in think, And recall, quarter third year may The the peak then, industry. as pretty tough some quarter, performance last you strong reported last year. the was for a we I revenue

we So quarter. a as faced the fourth sequentially headwind that going into

in what – as in third the the turn. that and we preamble, would I we're it come in to improvement about right? get will in Bob we're like direction You'll bites, excited I by right way, the seeing we into see the the the quarter movement is while maintain his to So see we're some happening fourth. will think, move positive And going mentioned probably definitely and and, regardless, itself feel

right we're And in direction. definitely going so, the

Jack Atkins

the again That's for great to hear. Thanks time.

Operator

Susan Our Macquarie everyone. Donofrio next Inc. Good question Capital morning, is from (USA), Susan Donofrio. - Yes.

Robert L. Fornaro

morning, Susan. Good

DeAnne Gabel

are give Good to on question to Susan app. started bit do - you also, morning, an a Macquarie Susan. know update had Capital Inc. And (USA), where your Donofrio Yeah, my is some enhancements technology. on you us little your website? Could on with I you

Matthew H. Klein

Yeah, certainly.

people website year deploying their that for been and better website includes also or as well updates we've of all So to really our mobile optimization that our use tablets. smartphones

us taking that that adding to place be flexibility give analytic more throughout that also year about deploying an going continue to more been we're the this double our deployments site. very a excited of the From end analytics have the and positive. I'm we've We which So opportunities closer also perspective, will be to the will site, year. do to on

besides On on hand, as well. the modern we way do the deploy learn we're have the one test going the more the to lot also more ability and a becoming in website website, to that we're also

have going our we're app already more last them be also to in to good selling but did able do experience. the not big not offers actually Susan to us can that on is Inc. we're a learn to terms also a year – out experience, well. really do the purchased further. be Today, us. to this a from the also really in presenting we talk think of our just a – in of ability put our year, and we impact, acting that in a the we a future, Again, better what airport something we about in smarter a sell Capital the for tickets we're what then to they customers be out which going hear on but want, about then again, ancillary products. taking they've bit how me conversion to And tool rolling going last (USA), late able as to app, to just And how of So, going our time way, only our we merchandizing months products. to have of merchandize for itself, offer we generation maybe little a better Donofrio lot first the way we going ticket flight ancillary be more seamless to job going them retailer is guests was to quite you're that, be year few - our later Macquarie to about a how and say customers; times orders after In go a

So to more you we pushed specialized end think, towards of offers see the should the start year? more out,

Matthew H. Klein

the specialized. of be year. we're end better the be to what more towards to going so able that have It's merchandise we already that not they'll Yeah, out much there. about It's

them be out open to Today, product. of normal them a people airport. the get way includes presenting just efficient normal two much Big for are have what's attention them seat paying the airport, So, of that the experience, then kinds under to using that lot assignment just guest you availability. times, available, out to going may get in not all our example: may opportunity to just app, experience and airport buy able that the is for at we'll the or that We'll or know out that's our more Front guests there and when able opportunities activity be Seat to Getting on, them. letting be a we seat may who you have to to offer to into merchandise a

the and to out Capital it. guests - Macquarie just Donofrio Susan we expect improve. the take one there. that Got example to able be Now, Inc. That's we'll have those we (USA), to opportunity message rate

Thank you. Okay.

Matthew H. Klein

Certainly.

Operator

next The Savi Syth. question is from

Savanthi N. Syth

Hey. Good morning.

Matthew H. Klein

morning. Good

Robert L. Fornaro

Good Savi. morning,

Savanthi N. Syth

Good morning.

I'm First understand. have question somewhat off-peaks I strong was on and peaks trying just been been softer. know the the the I know have to trend.

into Or what So, incrementally is the well ancillary changes adjustments in the industry the that's in making really making quarter, you're are you capacity fourth as how look on as as is the maybe it better? more seeing contributing thinking that optimism? revenue you're you that's about increase that the driving

Edward M. Christie

this Ted. in Savi, is can jump Maybe in Well, my I'll there. to dive do best as Matt well.

it So, off-peak a contributing question was revenue company's and was performance the not feel or like it's but moves you, also and sounds around to just assisting. the capacity ancillary or tough into hear how we the whether little bit peak it about making heading the

off-peak And discussed moves. in made positive around our in to however, the see consumer be we like I consistent. the been still the own the think We the yield. that management our the before we've favor performance, a of been obviously to we using setup. the and than But capacity balance management inventory opportunity. has supply/demand view in before, has previously problem revenue more a is said what commentary would In peak. is techniques of shifting large pretty peak that growth The type probably We're and them. domestic that off-peak, broader lever trajectory,

growth and managing own to it our perspective seeing the make sizable the we're from right upside managing deploying a So capacity sure balance we're a at between rate. pretty

I capacity just feather So, to of with everyone's seeing be think into fourth Savi, honest that schedules phases we're at quarter. it's beginning probably you. the contributing, the move through But think I

Robert L. Fornaro

reiterate, a than let's less again, detail did you And of if through of schedule a just some there's seasonal. year. in there's that, routes some of we routes the maybe just flew year. period dig to going number that last anticipating be flying an say, be we're in number changes, throughout that that And the long-haul They're to of kind We're demand there of our to just won't business. we the opportunity recapture of shoulder

than have many opportunities in more year a today we connecting had our We ago. network

some combination industry's so doing of see a – it's the we're we things So, combination of things ourselves. doing,

Savanthi N. Syth

a market, about That's very helpful. for but early this what I XXXX, it's new versus length we versus think might, the mix know I Thank how stage you. probably there And you little year? should if saw

Edward M. Christie

stage. about asked You

early up. it think I to set is

higher XXX miles. flying And Our and stage, not before, has probably alluded as it to bit I longer-haul indicated attractive miles as was and we hovered is it, historically, fuel before. between Bob think, as X,XXX just with little

So business dramatic the be into see adds some wouldn't may be which average below the swings average But if come incremental have forward. of going slightly XXXX. of at the surprised we're in stage what not stage, to you'll going

Savanthi N. Syth

All helpful. right, very Thanks, guys.

Operator

is Please question from next ahead. The Duane Pfennigwerth. go

Duane Pfennigwerth

seeing you wondering Was the specifically, there, through et Lauderdale, and, of could cetera. that that you network speak if how of how a thanks. trends see was the little opportunity internationally, flowing to Hey, RASM Fort Orlando changes bit you're out much

Matthew H. Klein

Duane. Yeah. Thanks,

station, grow second, Orlando as continue third on it So, being with this station. Vegas, think destinations we We've – and as leisure for end had Fort along large Las big in by in general. year, in it's of second largest of there our our focus up sort station Vegas Las as a to about largest well neck-and-neck Lauderdale largest be Orlando the will now general,

added vacation see to that traffic Orleans travelers of Beach. us a profitable want as we're more kinds significant New It's go, quite a We for work comfortable of well add where levels. Myrtle really carrying Those destinations bunch You percentage and to well. to at us.

So, continue key destinations for about us us. of those as growth of see areas to you'll kinds think

curves in. In the terms of kicking out of international Orlando, booking are

in a some our in are slower; there. some exceeding that expectations up little Just some like routes routes new there's any spool are

we're in promotional right It's the behind, we overall, little working of what's the with happy where more think there. work that we a average, happy with booking really general, on on So, so in now. curve to we're areas it. going we're need But, any on early put

were already. the an perspective we through think Orlando traffic we from basis Lauderdale made connect decisions One the is understanding Fort that that about on to a carrying of

opportunity of that the us, local So, Orlando, Lauderdale flow Fort we well in now we'll then nonstop traffic Fort to passenger. of with saw other a to seats as able front the lot Lauderdale and carry of as the fill we're our out back throughout on able be network

connect a us it's home for Orlando of push overall, big able through then south So, for also incremental say what One that's itineraries out them. network. together. if and Fort nonstop can kinds not the us to periods. where That be most Lauderdale off it of about of build piece future these that They presence, to to day in customers Orlando, start maybe network, week going to build day off going to different a go of of is that we same And last is, how the the every like meets their to schedule I'd routes, thing as allows of allows some which to start we're them to the in international destinations we are we're is way destinations. lot the and in of starting allow off it grow

right So we that up behind that's of we like seeing. how with the we're sort came and, strategy what now,

Duane Pfennigwerth

a you then an some provide But you. could items upside there actually to to you relative to operation? easy that CASM had Thank XQ maybe guidance. the line given better the my And with performance Obviously, the some the respect detail for Thanks. follow-up on conservatism. initial just you ex comp and surprised

Edward M. Christie

Sure, Duane.

basis that, going improvement as about saw quarter. market to So, shift of our we investor is better the income update, the XXX the mentioned in statement points across improvement But, due lines the in beyond to we operational performance. fourth

completion we've ever is of unit group get And than in across you perspective, salaries, related disruption, handling this our and it top We operating you're and seen, less operating expense. other interrupted We times, going in ground the type ship factor had less pay line. our all, which see So, on and in see We maintenance the then, a in have, when expense, with and so from benefits. to that through production it see because every in ASM overtime, trip which deliver as wages, avoiding parts better improvement repairs of we operating follows freight better line line. first see it expense, did which we're we just line. system throughput other throughout to related at

forward. and room at on the help as way training, work this the staffing models, to operation we And this drive And so, – going have look before. it's to things still we own we refine a And tendrils our we believe have the operational better has improve performance setup those structure. look the It bases, future. now, across into of of we to handle way better Bob this cost board. the well earlier; is performance going can going it at it's We all that really line cost said deliver kind is throughout how the we've translates alluded better to us on this cost

Duane Pfennigwerth

you. Thank Okay.

Operator

Becker. The next Helane question from is

Helane Becker

Ted, related that strong expanding part growth Can maintaining do how about was which do good talking to Hi, performance. and right? as was Great. response successfully? Have to next you thought Thanks, about year, that operator. You're everybody. of adding actually my that you a question, think really actually you'd that? operational you about operations

Edward M. Christie

have. We

Helane Becker

I mainly went ask slipped because, path guys kind improved then down once focusing of before, you operations and this of back. you on

down making path just again. not sure So, you're that going

Edward M. Christie

Helane. that, No. Appreciate

to... wants Bob Okay.

Robert L. Fornaro

go issue to did that beginning. was year, to last but the We We'll back labor. almost tied all have an

things when than of period for generally the made and the year. two establish you're a we words. that better reduce adjusted last are – again, to lot not basically, of when adverse baseline halfway of just stability, improvements only a been or first right pilot a begin every new you new we're process. And you the not there's to comparable cost. have month can low not it's the begin our the May We had creates since then improvements. airline. And agreement XXs through initially And of to and months in We all once fix it We and implemented month in make sudden, that And running to about has you're a quarter. create just make XXs, lot XXXX, utilization in fundamental running frankly, ultimately of start to agreement the the actually had – quite

drive the is, implemented bid we we're in quality away. see this depending And we will fundamental we've because as operation. months needed made can frankly, That's good what the haven't people. all be thought what than not still for shifts what in yet. of weather spare we planned, pref finding using big one We terms Certainly, have we in more we were on summer become changes. have months better system I many think we less we But quite

do operational us six months is labor issues issues. said, it we And took it continue. stuff have intact. trend well. ultimately, that. accidental. we the ingredients to of We tied of habit a environment of OCC running some only surprise is said place, standards because you confident past, its terms happening. But, some Helane, put to about tools, I longer I to different you you always well few dramatically – once think a think how summer And kind like in I back, you not in in and we the have. go in had once the my It's the trajectory go of bad month. Very should can were have standards of this going Again, through if the probably last becomes it's a is that But it place Our to we operate, terms and the in

Helane Becker

great. Bob. That's Excuse me. Thanks,

much. answer. know I Sorry. the wrong what's with I my voice. very don't Thanks it appreciate

Edward M. Christie

Thanks, Helane.

Operator

question next The Linenberg. from is Michael

Michael Linenberg

markets part had didn't Bob, fall guess, you the very I operational targeting to in a get it airports you you mentioned saw going sounds point time, that here. or your to, since opportunity was to saw prior enough some fact the so. off that, that additional got were of And rattle build-out calls, you're I It gates. And ones you plus big this ops. of constraints was for know that one like That an I'll as Two to to long Orlando. you where gate additional the one I started gates, do airports to improve some Yes. on XX the you have you space. recall,

What like see what airports space? constrained as we you're next you over probably up some additional where going look where space? get can't feel you now? you to you're do are the still So, airports get actually And do year, and out

Robert L. Fornaro

next So, look project. of maybe generally at one in or say at And places whole bigger not before if the a Dallas, is like speaking, let's Atlanta just you or tight. even there's O'Hare gate or lot gates airports, really space construction here there's available. there And

think constraint is biggest New us I York. the for

have gate in a Newark. We

so so we And get big there. only can

sense We outside two have lot if to in more additional can New bigger York, New have in makes New things like be you LaGuardia. York, you of We'd a do a because lot It York. in New York. flights

So become a those key.

Fort Lauderdale opportunity, a growth is it's but also tight.

everybody enough estate to to a real of if lot part think Lauderdale. more lot there important. a what it's why Orlando initiative reason do. growing do even There's in you for not talk want of listen calls, there's to becomes the I our And Fort they about carriers of

do the one kind right eggs what we fact by like It's is we in all So, of don't design. now, our have basket.

with others that. XX-some much kind than odd again, cities door. And – than we have knocking the we on today, have have more a We XX that's some more few of

and to that's an And on So we plan we choose. have what doing. pick opportunity

use like at So, to And mostly that that we do to fact wait number where because years. again, we go an opportunity you An we find fly opportunities. a next is and be that have of a double maybe sometimes in may get three in opportunity airport to new the the gate didn't in we today a used quite daily, but than market. the few the we was better we daily single have markets that past what

the pretty of like about we the comfortable of nature. optionality network. So said, like the we size I the because feel And, diverse

Okay?

Michael Linenberg

Okay. Great. Great.

just one Just follow-up quick Matt. to

quarter? Cancun. percentage was what headwind And how seats? or like It mentioned You just curious of was Did I the does that system? your third like... of XXX-basis-point say in represent Like ASMs to Cancun much seemed – you that RASM

Matthew H. Klein

Yeah. Sure, Mike.

yeah. – So

You did hear that correctly.

Michael Linenberg

Okay.

Matthew H. Klein

X% It's overall of about capacity. our

we're now curve. is different a booking what right So, seeing

and it's to right us, the it's basically third at other expectations. that what's for advisories coming but They've and it's an year. But, think something past is to in Mexican a the prices it pay destinations. passenger us, But those and late We most there travel seeing paid of is happening as for and our a in be it's resolve all demand not much Cancun impactful for drag up least And will updated well. now. travel us down. are And coming sure. there we that is There's quarter but lot demand, for issue different on in for that itself, been Cancun willing eventually makeup been it advisories of have been continues is a the out

Michael Linenberg

Great. Thank you. Okay.

Matthew H. Klein

Certainly.

Operator

next from Hunter question Keay. The is

Hunter K. Keay

Hey, good morning.

Edward M. Christie

Hey, Hunter.

Hunter K. Keay

Hey.

you too. last Maybe kind are of for of backup your a to an follow-up of from and the improved a a you're not seeing the I'm perceived and or sort of option kind resort, or book between of people. sort of of have far like duration perspective. you're an or that general out if as relationship airline booking how brand product being So, a there's Spirit viewed how I curve like I'm customers brand a for length tickets? relationship like know likability between – curious like

Edward M. Christie

lowest longer we've Hunter, selling know we're price the more are And our no late those point I'll at before. this a comment. it's We of is market. and there point And been make said the noticeable fares. in instances price where

lending it's a the indicate upside certain at that savings Remember deliver was that curve. quality to there to perspective that reliability cost that, booking product tough a be just consumer. me And our to drive revenue would our see The true. operational there. all timing on to least It's and indications measure. the and a to drive may from itself effect tough improve direct are good. But, to it's reliability beyond always our along that So and is of flight

Hunter K. Keay

like around bit, fair your to get made does in guess, bit trip is plane point, little to so is, choices they're a think the know some I the a you strategic if they earlier, as... a nature more ability and that's you give but maybe value the this book product your you of tactical early taking making that that question also And that I and thought you that a Yeah. process people a up driving loads willing reasonable of fill noisy last year more fare little yields manage closing at

Edward M. Christie

Absolutely.

Hunter K. Keay

your improvement Okay. an have in ...you brand?

Edward M. Christie

And lever is Absolutely. that think I Yeah. regardless. a That's point. true

add to wants comment maybe here. Matt think a I

Matthew H. Klein

Hunter, about sound they answer, we one to things our of – price. but the know is, by Yeah, guests experience bit from think divided reality I value the that the as this think a little the receive marketing going the a the receive we

experience as and So, over price be way. float would value improves the the to experience they're will that receiving allow improving along the up, the up time goes the because

a set allow their consideration even that's know question, now in I in answer but marketing about who how past. in wouldn't that So of your we set. in kinds for we – it wouldn't and customers their of their We're that's a – to bit been think does consideration the have different

to we see the customer of flow Brand So, it'll seeing happening through our that it's everyone. numbers. some that reputation signs for early we're to time in But repair take takes way and that satisfaction time.

Hunter K. Keay

perspective you set RM advantage tools take Yeah. feel have And of that you an to from the IT changing dynamic?

Matthew H. Klein

Yeah.

question. great a that's So

tickets in be around building this see taking competitors. the months, years risk able able to been improvements as alluded we're been that to our environment. that. that's we got tools been we for And some to to, to risk. really environment, confident that the do now revenue better means the We're sure to we have place able in starting And And different than six right price thoughts that in now higher leverage about couple on how come think putting hone and, last And a really about. for to to is reputation be able taking which, the and one Ted at in talking management, through. that we've management making people have times, And actively sell that have of us and So, have in be of and we're related. in to and brand are to revenue nine to that's really, we're

Hunter K. Keay

Thanks, Matt.

Matthew H. Klein

Sure.

Operator

Our Baker. from next question is Jamie

Jamie N. Baker

Hey. Good morning.

margins to push, grow. could international over the than time think continues I whether is progress more prepared reason trying imagine the are is I'm as On how to just very I international ask yet would be. ex-Cancun profitable it international well that domestic? The say you to that component about

Edward M. Christie

and two-off to be international Yeah. Detroit more discussed Ted. But, Lauderdale. pads elsewhere the we've better obviously, the complementary Chicago in that, these do or to markets pushing the we're is in and one-off build earlier. The well, Orlando had things. kind And is find Matt been a or finding reason of network It's and then international opportunities decided those those it launching Newark effort as gateways to international Jamie. we've out and generally Sure, find days, network or

flying towards think percentage international been push yes, effort of a to So, do the I deserted because that well. has those very markets

Jamie N. Baker

Helpful. Okay.

Robert L. Fornaro

lot limit actually But, structurally, there's actually piece the actually – of we better Fort it. sense, a in number it. They're ultimately, a we're because and network only get let's connections more Lauderdale. is And other through to mean our – Lauderdale. looks I going go the traditional can more say, our carry we connections I to Jamie, Fort like, – predominant of of the compete size to a ultimately really,

we not a perspective. of revenue which benefit – to also – from do cost, we So only a with flow, kind lot are a of able of structural it a optionality low we we do creates get

Matthew H. Klein

together there, established something of also been if friends traffic, economic well is add and VFR lot be over forth less a going time. that to just and seasonal constrained Lauderdale We're is less out wants we've visiting and and as relatives. relatives we what And also by a environment to friends call with a That little go developing time. communities traffic because to kind how of It's Fort back little not reaching that, the to communities that footprint of I we right. it's Jamie, It's joining down. over could at our just international That's end threw and Yeah. traffic. see

rate really a our in there's here well as and between communities that in We Lauderdale. Latin a of advantage same those kind to take be something America opportunities well lot self these we're positioned we tie success it's And of a So may we think Caribbean. Fort the others know uniquely have lot and Orlando perhaps of of not positioned on. the to able that

Jamie N. Baker

Excellent. And follow-up. quick just a

the wondering at Just if each the competition to asking name couple of has hubs names. OA behavior all? in over I'm And you the just changed same competitive I'm the months, of not in just last hubs might you face is in does airline it any been all in airline hubs. with how another their regardless recently. who there's versus it is One uniform? its or Or compete it if hub dominates divergence you

Matthew H. Klein

Right.

carriers are So, as we're it it's now. everything's and Having carriers concerned the some about fares with summer and across most hub relatively selling right well. are can that there's definitely offering. demand And said that, personalities summer what different the within be strong each

changes. going a think I of there there's that's activity and lot anticipate And efforts peak into been as on. So shoulder, there I we get And do demand. about the concerted be will think going know of that pricing we head is to peak as we the out on some

into the the inventory lot constructive of hub. it's shoulder a think perspective off-peak, get And seeing. out from then, peak the our what then and we're see change been trends we may by the how we'll in I into of as

going there's a seeing sort on, of a of we're now. same constrain activity lot it's of Jamie, peak a right inventory the the there's lot So, – at pricing but that in time,

Jamie N. Baker

the it. Got guys. very answers. Thanks much Appreciate it, for

Operator

Kevin from is question next The Crissey.

Kevin Crissey

really answer up Good follow a I obviously, utilization? very doing face from wondering to for more And year. periods. hoping the I'm you that to are cheap of it revenue you their the there. around whether you're I basically Everyone morning. off-peak fleet capacity you. general fuel, peak the made built staff the are assets the businesses you'll but the way that, peaks on higher not the all and time. your at average use Spirit's are the I'm Thank in perspective. airlines look guess, the the industry-wide It's just But question, kind for of of in wanted answer Thank around the their but to then off-peaks peaks and periods. people as at they in Obviously, and or the kind of are built changes cost do responses and structures look if much protects

Edward M. Christie

because Yeah, I Kevin, to speak can better ourselves it's a great suited specifically to. we're We think question.

more way stable the operation, as you're is think I a would so We're it next the the airline, growth peak idea espousing, – as black not white to fly which as is and a be it's hiring for which that or that opportunity we're XX% possible adding the at all necessary growing having resources to – and shoulder. we're to add times. of the

by to harder pushing in as to in would suffer the don't assets peak. I off-peak. assets our think we a what more those from the such much we resources way, we and not that flex we're – perspective hiring We're which that efficiency the cost in around peak the the imply, the do peak is

that It's true remember, an more our because true And structure. to implication July. our airline, are focus so there our the to growth and but asset a is and line average. of the tend September, in primary we we draw target is that's in that primary it's harder cost And

however. can how gives airlines, such as July be with I efficient that that means addresses make in so slower least we you we're hopefully, have some Spirit the what for And to a growth perspective bit issue. work. And to September flying can't at speak little more we that

Kevin Crissey

absorb wildly I appreciate summer? just but is margins it worried they're capacity about that's lower then don't industry why those it. and you, profitable I guess cut willing Thanks. their seems a like sacred the can't airlines get Yeah. Is the I the fill difference. that that it in in is periods? spilling you protected cow, to do so traffic, can that

Edward M. Christie

the least there's of that influence timing wildly from be answer there summer. in to at summer Remember profitable is those does trimming and would our resources. we perspective, how that well, resources, things capacity add so the is yes. be reason, our The no The and a lot of

on they're If timings one bunched delivery have us an certain impact it particular forces can together do all to time, things. Our that. at

here us idea and in is definitely in think to the the the we we business. so, And that way shoulders And and for manage peak, the do growth. about it off. we through that's earnings drive the And our

Kevin Crissey

the Thank you so for much time.

Edward M. Christie

Yes.

Operator

next from Joseph question The is DeNardi.

Joseph William DeNardi

next Yeah, capacity of plans hey. Ted, the talk to some year. just want morning. Good for about

confidence rate influencing your of guess, revenue what I that, Is of your level of that going and your structure we've over the that isn't had slower these very of you've is to assets. growth environments to mentioned kind of cost most that that gives past growth you that seen just it's You unpredictable Acknowledging lead what growth of valuable one than choppy, years? recently. kind couple

Edward M. Christie

we is over Joe, this opportunity. growing Yeah. the grow answer last a at that six about is into the rate think And and no. which The and the years. than look at lot, admittedly XXXX, which tackle reflective We opportunity been we that less of is pace think we've I

last I think our XX%. average growth around the come think with if a that's you up number you'd six straight I just of years rate, a took of

growth ago. And We're so, all than rate. factors airline our today bigger a about were into when think we we we years when take account six

growth, of people, select the the feel We train markets. our the to ability have to good deliver a to

year. on indicative we view account, We at next a all CASM. our of opportunity. around to business. rate And X% into we And flat costs than manage less targeting arrive I take our think way based next so, on we up that's still the grow regardless. our year going that we're when the And considerably We're this year growth and to that's manage

costs and the that's low-cost opportunity management – between way, then it's difference, not it. that's the So one. carrier And a and by I think around

Joseph William DeNardi

control Okay. credit relative your there slower you, Ted. advantage just going up but with grow ask you your want in again. more I'm to follow get grow peers that and to the about tempted Matt at your probably growth to I is Even to allow for CASM industry manage capacity Yeah. it card environment? to with to bit would gets with enough a year, pricing a opportunity, more little CASM that you next Is which to the line point so over wide the start

Edward M. Christie

don't about – it's rate it. airline the And the our me Well, as at lot one that before. great exactly use when Joe, know will some business. gets bigger heard where to as once expense up And in a I hit a business. exactly growth, doesn't word the and setting lower we the be the point, to any will all to growth airline know point, eat point – inflationary a that's matures. talked continue reach We're you've I've we growth, that that we're and a that any And our going be line starting marginal was up. than moves manage else. with objective everyone that's over that of dramatically rest low-cost true, it just you But, don't taper I will to time just point

peers. year, to that's that's is year for and after, widening next the So that's wide the maintain not advantage while that's because that the long-term, its a business big. against objective But not not be a opportunity's a low-cost too can

Joseph William DeNardi

Thank you. Okay.

Edward M. Christie

Yes.

Operator

McKenzie. next The is question from Dan

Dan J. McKenzie

think is morning. unencumbered XX aircraft. right to Good about as the What Thanks, Hey. number guys. fleet? your have you

Edward M. Christie

Well, right now it's XX.

in specifically we others, anyone think at like aircraft can now looks a flexibility we least CASM we a good of it decision, fleet not term swing or made it their that all encumbered because outline we thought the the during was Dan, to XXXX of the fleet towards them that And alluded and and decision. decision, We deployment as to and thought direct as beyond keep are of capital and were that now original perhaps to good them not flexibility. process, we choose off-lease and extended what thought alone here, else. a purchase we're tactical we flexibility the was or a evaluation these aircraft have term we've variety So, but earlier, lease end reaching These was to decisions aircraft will I reasons. airplanes also want. for these process midst it good right a creates lease it We act are

to I the good this so will now, evaluate or And that opportunities And be. the we to about way. increase the to reduce But, spot it. change think that, number is other either to number, right feel we by right

Dan J. McKenzie

plans Okay. of contribution back how increased And how as we the then about it XXXX, some just is growth And relationship, the points the of earlier that separately, for utilization, the level? do at margin system adding? percentage to going questions, size we think CASM-RASM many just

Edward M. Christie

utilization to opportunity. six, that perspective, a Dan, seeing of there's towards Well, I'll a out the about try to last – bottomed per is, I a we're from improvement right think utilization I second XX.X above or utilization further we talked day. and really now perspective we from hours now. think we're year, number, XX.X half Fleet it trailing and And on

You just points that. of off take can percentage

by don't a XXs. capacity. in in at Our very is point, previous that, to it's But, back peak utilization we the get in a high percent the know percent if some utilization was ever I way.

utilization so, because next And still kind sifted all XX that we're looking the I slice day yet deliveries wouldn't that's in at getting year of per and dice or the hours out.

That's way the that's work. would the it math. So

Dan J. McKenzie

contribution? And relationship, the margin the CASM-RASM

Edward M. Christie

Can you Dan? clarify question, the

Dan J. McKenzie

Yeah.

of you about that generates, that of dynamic, utilization you the non-fuel system it in As flex results how the incremental as down at about lower profit materiality costs, unit helps drive it do think level? and just revenues, think that kind the obviously, we also flying, lower

Edward M. Christie

because today is when are premise it's this business flying and in to with necessarily you're to Admittedly, only we to RASMs the can RASM contributes that we can it get do caveat your going the all the above flying dilutive not is grow. theoretically off-peak by The earnings and would to and when at peak? add We more RASM true, the I you that's CASM Well, going by that it. we're peak dilutive as that, way. is to the or more Higher overall to focused, get goal And is the is way. advantage utilization dilution. generally come utilization at to utilization, And continue be average. look of to where add how will

you So, right to we evaluate is peak a you we do will the I mentioned that. of in it's today think off-peak as and And flying. just long summary the as adjust that accordingly. how and trade-off EPS quick contributing And do we way, it

be flying RASM. to have dilutive I'd say that is caveat only the to doesn't necessarily So, utilization

Robert L. Fornaro

higher we dramatically to September, this beat our a dramatically in month could like to Just higher. death, utilization run

all work U.S. the flying for didn't be if let's pretty of have this And the into, that much better I a that part year. In better us. close do, trying the to lot off-peak better revenue be to do and with new year of we say, thought of September an we get utilization both last the expansion, did. job we term is those capacity as well greater long-term a job did at doing right fact, and this we'll the of day. watch months where we'll lot thought. end the didn't think, short opportunity. nature east-west to out many primary we mix year, and but it do we're we're comprehensive a probably the what well more that I long a what And make it in A dilutive is a as trying extra were we We kind in think reason went – will why of was of dynamics. our back very capacity southeastern international think improvements month years But our which And competitive won't five less-than-average has was you and can schedules, what ago it to

Okay?

Dan J. McKenzie

guys. Thanks,

Operator

Oglenski. Brandon from is question next The

Brandon R. Oglenski

should the towards that you're if margin in mid-teens be not, call Ted, Thanks profit growing in Hey. plan? what longer my And that But, target recently question. are one. for low-teens remain and you you've said term, we given fact like, the the to, I committed headwinds to it conference that next at the in taking managing you business? just year, the I'll a it, thinking level that of that a profitability think keep XXXX

Edward M. Christie

have I've Sure, the The believe I conference, mid-teens on we're those building they environment, or a opportunities whether fuel said, still at those. opportunity. reiterated on prices, month and we've materialize competitive not Brandon. target always in opportunities this mid-teens probably the discrete environment and we term and effect business of we What for that a different margin the and long target with is market, depend will with inputs. prevailing first competitive the a But bunch

always the we're So, organization objectively, looking margin forward a perspective. push from to

the we're that like it's think nibbles but right I the trend seeing. bites, fact direction. It in alluded in Bob to headed definitely that may we and come the

We side the and couple years. cost we fully years, have over now have think three couple on stability the last understanding of didn't I that

we're is describing to confidence seasonality running, and flying the off-peak answer, looking the so which Which and adjustments, flexibility, opportunities the we And were what business in optimize now with we're comes these how changes. margin? at do tackle, network are peak prior with is say this can we we the some of

that the for line. that's And I'll has growth. And business to and the to this that on because pushing so, be. say on margin delivering be We've earnings again where focused got organization we're

Brandon R. Oglenski

Appreciate it.

DeAnne Gabel

question. more Ellen, time for we have one

Operator

from Thank you. Lalwani. Rajeev Question comes

Rajeev Lalwani

morning, Good guys.

Matthew H. Klein

morning. Good

Edward M. Christie

Hey, Rajeev.

Rajeev Lalwani

have of couple I you. actually Matt, for questions a

like for question your where correct I XX% with me side, recapture bit, RASM there. you next but two. the opportunity that competition if wrong year ease something over the is some It making now, is, I'm to it think starting below maybe you're with progress XX%, a the there, to is the prior pretty or there and fuel On legacies peak are good an like seems

figure to or not. it's trying realistic goal out Just if a

Matthew H. Klein

and anticipate some is see to some that we way what the going industry capacity we'll and things Rajeev, seeing the so to that of from there we're that the we incremental that we're see of continue moves improvements. see out some

predict how we here look I we on think exactly like of a or from thing in about difficult or going front going things this – we momentum, I understand like to the anticipate three to it environment's we is moving. see. is things are like little the what really call us probably I now know for now which me what's cannot talked the to what the are like to I to two years and But what look know in understand. four morning, future.

really can answer know don't I that So, question way. that I your fully

Rajeev Lalwani

other get $XXX sort a Maybe to growth way of you domestic to do back of What to need see approach Do so? we Okay. or environment to it. of were where year, the X% before? capacity you oil

Robert L. Fornaro

back. Continental can I And in price no We basically, had So you was if if it, think, you sure look there better of job struggling combination. getting industry. taking now. you was not just – they're matching back through let's Rajeev but just XXXX, created go back go what pinpoint the in much environment, that an of I'm kind None. kind doing what just was a United American got at They're reorganized. just the had shape,

couple the $X the anything difference debate to day. or the see make We the $X disappearing. is stable, is need to at And make at network in I business looking had are We're pricing intact. well of of big. Southwest where costs place. $X on got improved. is point through in the $X oil be. planning is was was The numbers that's going We've kind got gravy not It like the is improvement. taking that different key And a really huge begin completely margin flyers. the a that beyond its much just avoidance; of always will business. it. of pieces a a can of would don't end points fact we're we we way route pretty AirTran. is digestion the will we're positive place. lot that. We've When and avoidance

with going and to I think up we and we're at going pace, And at making its to for think, this of in other half year journey how is see industry a you're business and I gone change think the kind things We've thing. pretty some see So us half same a through do of have I I we year positive and at said two the we'll you're two do start and point, lot a through we decide but moving I set improvements. a that, airlines moves. think point, happy good. And this got the we're to going think we've

DeAnne Gabel

joining day. you, Bob. Thank great. call to you quarter. Talk That's Thank our for next you, us. That everyone, the for concludes

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