Spirit Airlines (SAVEQ) 24 Oct 192019 Q3 Earnings call transcript

Company Profile

Participants

DeAnne Gabel	Senior Director, Investor Relations
Ted Christie	Chief Executive Officer
Matt Klein	Chief Commercial Officer
Scott Haralson	Chief Financial Officer.
Michael Linenberg	Deutsche Bank
Savi Syth	Raymond James & Associates
Jamie Baker	JPMorgan
Hunter Keay	Wolfe Trahan
Duane Pfennigwerth	Evercore Partners
Catherine O'Brien	Goldman Sachs
Helane Becker	Cowen Securities LLC
Joe Caiado	Credit Suisse Securities
Joseph DeNardi	Stifel
Rajeev Lalwani	Morgan Stanley
Susan Donofrio	Macquarie Capital
Brandon Oglenski	Barclays
Dan McKenzie	Buckingham Research Group

Call transcript

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Operator

Welcome to the Spirit Airlines' Third Quarter 2019 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. [Operator Instructions]

turn Relations. over like Senior DeAnne now Investor Director, would the to call Gabel, I

begin. may You

DeAnne Gabel

Chief Thank Scott you, recorded Executive Spirit's welcome be Presenting call. Chief A Ellen, on and our of Officer; archived This Haralson, quarter Airlines' replay Officer; Financial are for Commercial call Matt earnings on third today's our Officer. Klein, is XX call call Chief being this and our website webcast. everyone simultaneously and will to days. Spirit Christie, Ted

We for prepared will sell-side analysts remarks. a Q&A have session following our

us Also of Canfield, Chief our John the Operating joining General our team. leadership in Thomas room today Bendoraitis, members senior our are Officer; other and Counsel;

financial forward-looking the that represent contains or company's discussion beliefs statements events performance. expectations Today's and current concerning future

management's to and guarantee expectations those Reports are materially Forward-looking Form our risks are results. could Annual on XX-K results statements XX-Q. Report future on reflected of the Risk uncertainties statements, Quarterly be based actual differ in a and cause There on including discussed significant or and the performance forward-looking Factors from Form in could not that current

measures. We all Please no is to be results will today, special duty adjusting our website earnings on In available of any third to non-GAAP we statements. reconciliation undertake forward-looking items. quarter our our refer comparing which to exclude XXXX periods update release, the for

here's Ted. that, With

Ted Christie

to for everyone joining Thanks DeAnne. today. Thanks, us

made share operating earnings our summer third and with $X.XX the operational passenger storms along For difficult Dorian environment. per operating self-inflicted of Hurricane record margin own a XXXX, adjusted reported XX.X%. challenges including we and of Numerous quarter for volumes

travel the XXs very for commitment at during provide an or dedication travel or to performance to in that we achieved above a team summer a the season. good high performance I Day have guests mid-pack the on-time want members, those and once I'm pleased especially in report on to of us been post-Labor was and busy to again consistently our their experience and competitors XX% our very the operational quality year. frontline what our for better, all has placing completion factors our thank

spread Over headquarters new buildings we're Fort We've locations, amongst had are headquarters near we've location various of will facilities Lauderdale us announced including and ever-growing a consolidate several facilities. drive our our outgrown building week, training in cost the currently and big various This a that complex our complex efficiencies We to to Airport. announcements. last current support network. couple and savings allow

we are give We'll AXXXneo and options. with of of for announced speaking along you those growing lot exciting shortly. with of more for MoU happening network, also Airbus an details XXX for our Spirit purchase our And family things aircraft A XX guests.

results our discuss for Scott our here's outlook more But detail. to forward quarter and and XXXX first, in Matt third

Matt Klein

Ted. Thanks,

growth. For decreased the Total $XX an XX.X% estimated on million which capacity impact year-over-year mile third seat X.X% Dorian. XXXX, quarter total Hurricane per includes available revenue revenue X.X%, from increased

year-over-year. would Excluding Hurricane have estimate down been about Dorian, X% we TRASM our

was $XX.XX, quarter X.X% On a up third revenue for non-ticket per-passenger year-over-year. basis the segment

We in for the per-passenger assignment to bundled continue our and revenue offering to see seat segment improvement grow. continues take services rate

optimization both these initiatives and have is lot that of to opportunity of rate Additionally, still important a it note for expansion. conversion

will between For increase we non-ticket X% X% per-passenger the quarter, to segment fourth revenue anticipate year-over-year.

non-ticket expected implementation be is assumed initiatives delayed full non-ticket still and initially for next we per penalizing the of $XX, which our than XXXX stage average shorter to for year a to for ancillary few of segment $XX well XXXX, and which between the is a bodes Despite year.

fully to versus implemented has stronger been the version our initiatives. The been e-commerce our spirit.com update about levels of comments last converting site. overall some to has now and Shifting latest at

mobile web the and metrics have non-ticket site. and ticket Our versions considerably the of desktop improved both on

the be to current a we are the last like will to create revenue of Turning has to three on help in the booking see start will on for app the volume and improvements that SEAT, this higher gone production starting months and app. from and driving which FRONT the products Push have soon take-rate BIG benefits for product well. notifications live The drive version been yields able more we as stream further non-ticket perspective. demand

launch are next our we grow per-passenger pleased by ancillary segment are together confident the initiatives very of the continued initiatives. performance can non-ticket year in with We revenue And with we X% XXXX. to

is fastest-growing Turning cities one are only it Nashville system. U.S. to in a to month, vacation the Earlier it added Nashville to excited leisure and add our the to we growing Not destination, is portfolio. network. this the of we

busy also March been footprint origination of By our service from to service Cancún, expanding will we offer to We've cities. XXXX Mexico. XX Cancún

from ago. Rico to flights ability leisure we will to a will service our XXXX, Our less of a to These leveraging recently Puerto the makes a Rico grow. international for flights XX March grow day unbundled product unique to additions market. markets be maintain mid-teens of our Cancún on just capacity. and also We've Caribbean focus three up profitably size this perfect VFR us additional America than a day and By announced system Latin destination at Puerto mix few years

will increase to fourth quarter, the XX%. estimate capacity forward growth Looking our we

demand Now our to remain international outlook. Domestic revenue and trends strong. turning

to season. the experiencing markets Our retiming routes flights have been these effect international have of maturing summer and upon the nature taken in since built our Orlando

For this year-over-year. we're down will demand currently is are off-peak for seeing into volume on our domestic factors. quarter high-low more X.X% and which year we good still XXXX trends fourth the loose X.X% inventory seeing the capturing we're for we translating TRASM but to leisure Based than we controls remains at fares last estimate network, time, saw be

this a reference XXXX. to versus on a For translates stack increase QX two-year X.X%

advantage, good factor. year a is to supporting with we Looking From an XX% XXXX the able strong is leverage environment. grow part year-over-year year being the ancillary to capacity cost of perspective last inventory airports as ourselves was story to segment, points not revenue depressed XXX is sets with in real-estate-constrained and plan set tight as our in been XXXX network completion for to us the of continued ahead basis to grow into powerful demand the backdrop to closing strength set A we've XX% it which per-passenger the a revenue about well but attributable In QX. which XXXX up holidays is a maturing in up with profitably coupled compete.

that, it And turn to Scott. with I'll over

Scott Haralson

and Matt thanks Thanks, to joining us today. everyone

ex-fuel of increase was Our an third year-over-year. CASM X.X% $X.XX, quarter XXXX

operational transitory we continued service quarter airport and face the other landing to In maintenance third amortization. ground fees, addition ongoing the challenges Dorian during pressures to and due pressures to from cost Hurricane and rates our rents

the to the to are estimate the pattern ex-fuel to That and for our what be guide landing related we the CASM XXXX. the that experienced we will rates over we quarter quarter, last up the As our with fourth will the $X.XX maintenance quarter, rents about full will with put we service ground about at XXX our to for increase, pressures X.X% X.X% basis contributes CASM remain ex-fuel that fees, stages fourth look amortization. of similar months. weather And fourth assuming have six remainder year average points and year-over-year. forward continued Shorter airport primarily from in

recover assuming disruption, are the in While confident to year-over-year. adjustments we are disruptions we a higher weather-related number the made we better of event weather a have of

Turning to fleet.

delivering signed mentioned, XXXX XX aircraft, to through with that Ted with XXX have along say firm, from happy As family Airbus options purchase are we we an for XXXX. MoU AXXXneo

growth We over terms will but our some leased conditions. order rate supplementing target aircraft outdated allowed that additional mid-teens the period. This be and us not orders improve to economics reach of also these our only order book, address with current to

We more enhances our total that to flexibility fleet down, retirements with or less count or options further gained or aircraft. flex this ability leasing our using fleet up order

on to aircraft, not tariffs it is a assembled tariff. deliveries understanding Regarding our potential that in will Alabama Airbus levied to subject Mobile be be

delivered We well two be be XXXX do firm our mid-summer deliveries leases our XXXX operating are other half All All have first deliveries determined. still are first as from XXXX remaining as to Hamburg. nine deliveries. of delivering Mobile slated orders direct through to

change term, overall tariffs In not our near the cost structure. do

mitigate with we our the communication believe time, impact over trade that it are to and with remain representatives will Airbus in regular and We working resolved. get

However, until concern. does remain then a it

development. the currently additional time. various around new our headquarters approximately middle need ready portion of mentioned have the in development this we'll eliminate million. will the Fort fleet lease will $XX XXX fleets This will lease the Lauderdale. development at of also administrative The in aircrafts development we approximately Ted replace cost Part of facilities be to XXXX and and our that

cost for facility with operations our flight facility four personnel. about the consolidate Lauderdale also an estimated is will current facilities and $XXX attendants This training into to million. Fort training pilots We airport's

to addition, corporate we of our NPV Lauderdale. large million is cost enough positive. All In in overnight approximately in, and spend Fort needs plan cover residence our $XX total building the another to is about million $XXX lodging half

operating drive one which our neighborhood savings will over the million realize relative cost to growing advantage. in significantly $XX expect We year of cost in in further time, improvement

investments. X.X, our average with. we $X to very with EBITDA comfortable net billion a and cash adjusted down which year-over-year unrestricted the September ended level And the We to XX-months short-term of was quarter XX, ending debt are for

of budgeting airports process, through had but landing Looking our and network in are ahead initially even plan, assumed. to mix based XXXX. on fees anticipating on than working greater We're current final rates we the ground-handling airport rents, still pressure we the

current a up given in excess ex-fuel perspective, and also our we believe drive From can This ex-fuel CASM at earnings for ancillary year-over-year. an to revenue the passenger pressure on increase profitability of drive to in growth rate. TRASM assumptions, increases be expected will maturity our segment our Based network XXXX, X% in ROIC would we or XXXX. capacity produce estimate X% CASM relative in for growth

And it's back that Ted. to with

Ted Christie

our few a We've lowest future maintaining and A job excited done those delivering structure brand, our industry experience on our a all we improve network, and Scott. our growing on cost to ago, profitably in guest years our operation relative good ourselves our while about and the initiatives the are cost set growing Thanks, course advantage. plans.

guests and the three operational noticing. highs, record our a hiccups proving our few we this the years, our despite are summer are factors guest on-time This in have reliability. dividends. brand high performance completion our made paying that improving strides satisfaction summer, And deliver consistently Over and reached numbers investments in last we good great

next And and position that our us by market help years. new we to achieve large us the total aircraft capture Our addressable opportunities those very future. in over foreseeable the to several support We plan will over the growth. our orders complex capacity remains range mid-teens to new headquarters secured growing growth

seats in comfortable will benefit. usable legroom. comfort more August, we guests our for additional provide acting aircraft seat new that announced we'll will In will that installations December. the new add will reduce be begin installing and as The cost seats additional on weight The an

And guests online more as improvements for and of end program our revamped a are year. loyalty before planned the to next come Wi-Fi such

to we our by our to productive further tools improving product, giving to are addition In drive members committed improved for them them efficiencies investing levels. and and in training team service higher

and with leading well operations, delivering experience. and continue of our exceptional growth. our product, the us mission sets our Together sky, are value all people to our to in Investing drive best structure, the part fares while earnings up to reliable consistently providing this in low deliver cost while guest

to With DeAnne. that, back

DeAnne Gabel

gentlemen. you, Thank

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

are begin. to ready Ellen, we

Operator

you. first Linenberg. Michael Our Thank from Instructions] is question [Operator

Michael Linenberg

morning, of one you're type. the tied And of, know growth. Airbus second it everyone. XXX-aircraft conversion sort the to it topic does narrow alive? good Is mean bodies? to With on into that Or doesn't maybe just going considering kind topic smaller Airbus here behind I to now Hey, that order, Two you still that AXXX? that if focus at questions a were is point that you? And aircraft include rates any, respect does

Scott Haralson

the XXXs, XXXs this Yes, quick Mike, We in XXXs component. so this did XXX the and Haralson. family. order on Scott comment conversion is

to like down what at desire all. of through not that. spectrum However, to the mechanism rates have XXXX, -- hint do XXXX contract we up a offers as XXXX and well and a would that the the just and into the we to do That's XXXX do conversion our Airbus if

Our XXX family the aircraft. of plan operate is to

Michael Linenberg

least a an focus at like there that it of, couple airplane? down AXXX is sort that looking the Is next not any, of that smaller Or at few that and contemplating was going over to Because the was going company line years years? be a that sounds a back.

Scott Haralson

today the small is AXXX way Yes, if for we that's be placed we to are sit the us have change is said aircraft to MoU as XXX option wanted we to like a the were that way do gauge as viewing this we we the the the that I would not today. convert we if sit down things to plan but that but

Michael Linenberg

second thoughts Has on large of prior should the markets you. quite few all of maybe just to -- or of at comment then still a available of calculus everybody for to larger Thank of talked basically feel ago Ted, you to Do you basic that addressable about And it's I that question. Okay. more the today you economy the and years is that. the tied the similarly philosophical the changed by large Your a you this made are growth. is say you number sort markets else? like rollout there? by

Ted Christie

it No hasn't. Sure.

what's here, opportunity interesting even that despite my in years expansion the growth it's to eight been our the time seven fact, opportunities. over in been watch or In that into

the the rate. markets actually opportunity cost consuming market total us rather we So positioning it has the any addressable in advantage see at where grown relative realistic fair and than that

we Scott we think we fleet the feel grow us a about bullish that that And to think so is, right be family and for that broadly. pursued to What why we it. the the reserve within ability can That's flexible into XXX that we do answer addresses gauge. mentioned

it about several years. the excited next pretty actually we're So over

Michael Linenberg

Thanks, good. gentlemen. Very Okay.

Operator

Syth. Savi The is from question next

Savi Syth

morning. good Hey,

there driving growth kind generally what Just your given, the is just growth departures just -- it coming the fewer wondered, bit you color anything like the another be give had of this bit here. issues don't most could more revenue of on be you on it that so operational little seems year the and I'm on going ancillary to will where It a how bit by level else of surprised wondering it's is from on I a is if Thanks. line? and and but kind you also growth? that of -- operational made little more front, confidence color will question the the have on up the with that little a

Ted Christie

Sure, I you're Savi. growth. about XXXX talking It's the Ted. assume forecast for

the back there in is things: what a is stretch again. will So probably few we're assuming one stage out

bit to growth of going that's So by give a you points. couple a of little mathematical

in a the as is Matt artificially be. you're about XXXX that, normalizing and an through due mentioned, of mid-teens of kind we to really season, on actually the which the depressed into another year When for addition stage-neutral start to some In was so where to operational Easter, hurricane you would adds that challenges summer landing that plan beginning point. basis,

since alluded was of started gauge we perspective things the I'd of us Now the one that, we fleet you to long-range aircraft the exciting accretive deployment optimize and tell to airplane accretive fleet a clearly fleet, capacity. AXXXneo to, the in that it the it's network. it's to which we've CASM become and for earnings one dilutive the And once our got to produces type, within going things scale from margin, is ability the is ex taking to in is

at position we're a So today. finally

and airplanes. In long-haul fact, the fleet XXXs today XX, have are we those our in

the by end of XX, we'll we and of be XXXneos about As today, year almost XX. have the

be the benefit way going point gauge, which we it guess to beneficial was where and is that's run to that another we're have we finally net think So built I growth. to getting and to subfleet run actually it can airplane the to

we are opportunities right feel next what feel the consuming like year. we net-net, we So

because couple much I next are normalize say, you years. alluded last very if you into going feel also do for rate in we company's year. with we I'd the what line I unit of how that, the over things is production think add would the growth think few And I revenue about to is

But margin a into we points going got we about right year, XXX figure performance, really XXX if you mentioned, a pressure about basis bit the margin of as is we talked by to cost pressure XXX X%, points there. almost ancillary that's of up to we expect probably cost that's as Clearly to basis which almost that little the be point. on pressure, next heading

drag And Orlando. things those as Both course new XXX had was the course about maturity around the of the to in we've year. of we've and throughout talked figured network we both the year of out market amount international throughout this exposure year, of flying points each relative basis of the the

stacks actually of in add position and a to start stuff box the of set we're I deliver got of a growth then yourself up, a year. how question up you kind earnings the But environment and good out up the looks this just margin industry you when where we're So tailwind standpoint. it's coming capacity competitive think well pretty to how from set next

Savi Syth

step to assume alluding my kind what fair similar versus you're keep you that that to -- but fixed? it back Is be domestic so kind we question to of growth. should seems mid-teens that, on And so of international

Ted Christie

Exactly, which that's but by network the saying because international around of sit greenfield going Puerto drag lot a the in out course what chunk was it's issue that that way you good of this we've that add But Rico a was American, when XX% all Orlando, we're the had Matt we or the the and of mentioned of call international do the is year throughout really of what what going Caribbean, international. we're up, technically not it's to Latin comments, his to flying.

with very feel it's this good like retiming right now, beginning quarter the maturing we about this that did especially setup, we and So the lapping quarter. we're

Savi Syth

Okay. Thank you.

Operator

Baker. Jamie from is question next The

Jamie Baker

everybody. Hey, morning, good

the build you not point any order? M&A did at the into flexibility in deliberate stream? issue. about Should of during new with end contract the are up know not aircraft any as contract asking consolidation delivery directly But We I don't really part that that's participating you the

Ted Christie

Ted. Hey, Jamie, it's

we pretty And flexibility this to mentioned things. a went gauge, fleet we that as throughout down course comments, were forward balance and of was for So going thoughtful up variety way. enhance within a of order Scott the and in his built flexibility or sheet a the of that by our desires component

excited setup. growth So, we're good the We the about feel very prospects. about

within gauge flexibility aircraft, that sell have move to We the aircraft. airplanes more fleet desired to get we to retire to want

the within contract well. flexibility as have We

say think in we're spot. speaking, I would I good broadly a So,

Jamie Baker

Okay. about was That next disappointing is helps. to the And point has earnings. do a cost The second, Scott despite the market growth as and talked question Street what But just helpful. the cost next year flat essentially the response assumes can you The Savi's that to earnings out guide year guide? interpreted color or best disappointing obvious

So my question that? settle whether really you is would for

like mid-to-high XXXX, into another Or make changes is you be internal it to at differently, to in months a get The put range plan? months if $X looks call than do a you Street Or modeling, is year, it's year the the, you well clearly you're what going just say, because next and XXXX? few if it, that but forecast few maybe point get better into you

Ted Christie

the do Scott have think our feel think question, we that we headed set up provided earnings right. are us the I and well. next year. relative as you we was So, ability We mean where tools good mentioning to drive as about commentary the I sets prior both on growth well as comparison up I into in

going cancelled. we to in like -- given is launched the close-in we're fact, working, we change make some always we the business, were look a We're year. number this shift. if any opportunities Look, managers, if don't and we're this things be this and looking there But, don't doing If the that; undo in year. that year There markets long-term that we of that feel would true did and feel of we're not strategy we to are we like a macro active to adjustments. of

too stage some network the going routing the looking from frequency reflection into at next the operating stretching markets. is we're an of year perspective And and out way aircraft the I think in of performance driving

think to going I into things heading are the helpful next those be us year. for

looking that here push we're of going like you managers. active not tell short based would small earnings. I need micro -- a to to we're kind yeah, thing, We're in the So, short-term but on always

Jamie Baker

Okay. very Thank much. you

Operator

is from question next Keay. Our Hunter

Hunter Keay

the which ex, morning, I up can you some the you. the maintenance question. Hey, On for -- see best do example, costs here like given asking drive actually CASM one. see of than Thank capacity, let pretty Hi. items what, XQ Good moving to distribution less in and you've know change everybody. you Scott, parts opportunity in well. for came I'm P&L me

beat see you're you I buckets sort if So, where where able to there, most If P&L of number? CASM I about that? think be likely be might of going ex to to am a

Scott Haralson

Yeah.

of lot before, the a most will challenges A mentioned benefit we especially year-over-year. itself think I replicate running that airline, have in we'll come this XXXX. as XXXX year, see into we won't of good from the

get hopefully perspective. and well better crew our we'll pilots an ability expense from benefits to attendants utilize operating flight So, both as as from

So, of good time, benefits all from things including that we areas in ground over P&L, handling airline. obviously those benefit does a it interrupted indirectly have trip expense, from sorts running throughout we littering get of the number an but do that

Hunter Keay

A a like if anything That's other right? sounds like be might that lot it OpEx. of OpEx, other

Scott Haralson

ground It's and handling airport components. of OpEx ITE of most -- some that the is other including

Hunter Keay

forwards And impacts this then asset. up long-term growth look? indicator Thank look, lagging leading in understand help you sheet it's that whether the it's line help right. Can maintenance look is two-year heavy $XXX Just on one-year on item you or the the the you. lag, anything and understand million, us for balance to how ultimately lag at All see P&L P&L? deferred CASM now a that how ex, is a us backwards might

Scott Haralson

heavy through Yeah. maintenance obviously well I that amortization. flows mean

outsized capital and years maintenance years So, year spend actually. years, in we've XXXX, like had heavy this

look numbers of into sort come dramatically. we down those XXXX, and as XXXX So,

where through line will well. So down that as the come amortization flows

XXXX an as and mitigate and sheet XXXX will in So the faced will from a that's XXXX perspective, we headwinds balance into those perspective. have been where pretty outsized flow that head But amortization then we and from XXXX. a through bit

where show will So benefit that's the up.

Hunter Keay

Scott. Okay. Thanks,

Operator

question Pfennigwerth. next from The is Duane

Duane Pfennigwerth

Hey, thanks.

Just you to and from year, do do plan a network this what execution on looking back differently new perspective top line reflecting your in markets XXXX plan? on your

Matt Klein

Well, Sure. Duane, Matt. year this think is important start with think you're seven we new to I entered In at cities. to look off the think nine which cities; alluding to. it's this in I history back new I XXXX, we entered XXXX

cities a next network We will years. be the in couple adding we've than be year, will considerably few the new of last to but it seen less

new spool be that the matters been cities, And of when tailwind run. we've spool overall, of percentage we're help short ASM those opportunities overall does great city are cities very add having should in our new mix a will less It the and where those to the In seen. mix matter. unit definitely you growing that overall year-over-year. increase But and we've overall run, network long and with the and results the that pleased revenue

Duane Pfennigwerth

I we have much And Okay. plans, see way about talk your annual but you do XXXX? how there retirements this, you can And flexibility is then -- to plan? new the of in XXXX, kind XXXX, fleet but a if don't

Scott Haralson

our have we retirement that flexibility an macroeconomic shock mitigate them We issues sheet the ability to through more for Duane, Scott. Ted the fleet, face. have of year sooner which -- of little this sort a estimated or up gives unencumbered And retire. to plan like aging of flexibility do to to do us own but the we may some mentioned assets us do is have provides flex an balance we earlier, set the

So this we we're firm think built the taking less have we delivery as into also one two early that of that part about component an concepts a XXXX that the this aircraft then we period of less aircraft is do sort flexibility. in acts And or fleet which optionality in where be we more or And more period. a take that really in means XXXX aircraft of timeframe. for we'll can us leasing that few to the

about the of in planned that we we leased you already aircraft the of form in of the think have as of So form schedule on what and today. it comes also flexibility, sort mentioned aircraft a retirement

Duane Pfennigwerth

Thanks for sneak one in. more if Okay. that and could I

it mid-single in the your next cadence it, Just into to digits specifically look does March year, are cost continue XQ? growth like here we call of quarter up, the seeing non-fuel unit

Scott Haralson

Hey Duane, is Scott this again.

So thinking at this sort of the year process, cadence budgeting about don't unit the for cadence of view the we we're the so good in for a our -- have into cost mid-innings point.

tell much not you So there's I can there.

be I today how look cadence. a think we'll to in have year you you guidance any months. I on perspective of give can year But from you the don't be coming through able CASM history to way. update here the in given sort flows any at may estimated that

Duane Pfennigwerth

you. Thank Okay.

Operator

Catherine is The next from O'Brien. question

Catherine O'Brien

Good morning.

introduced here your segment taking you be room in the more flight just at quarter, here on non-ticket flight segment So know, look some a I guidance newly there realize per passenger could growth. fourth

the But is X% growth that there. had you you we can in on mean, two just which high-teens growth XX% a or out good guidance there? even three what's a segment given flight or down I last imply at would on fair talk years year that maybe I look how deceleration it? know X% about Can to going

Just some that? Thank a higher great? of non-ticket what's you. would just driving Is on driving be any there color refocusing that

Matt Klein

question. is that Matt. This I'll Sure. take

between We've you and on pushing is segment at strategy based in lot look the more a component TRASM there volume necessary and as periods. non-ticket shift the to flight you how passenger volume competitive There when able a mix passenger, and that on So did our key there, in participating is are been we hit off-peak also off-peak environment. through the comprised periods number. which the is

yield driving even off-peak going hold number in seen has lower which to been and periods volume The we've from is ticket perspective improve a while to that That our generally the ticket average be non-ticket side. on number the fare degradation. able impressive very is some that, non-ticket is

And of way driving and matters help the volume So the make correct numbers the to that's of continue maintain flight segment the lot to flight passenger to week, part a times long component the say, production segment number off-peak, of you're some month. the of times more that would passenger in

Catherine O'Brien

that the situation. And what operation? great. some measures noted doing that the you're just of cost details quickly side of to operation on make recover Can you more you've flesh the IROP that bit going forward on taken the you the case sure house, in an can then maybe to little help you've more Okay, out one a

I guess Or stuff bit about those by recovery little to maybe cost And we like should tailwind net measures these lower on a offset that? passenger being think of reaccoms, more some a CASM?

Scott Haralson

start XXXX, replicate the the those perspective, is we the into how we Catherine. few XXXX starting really network, things. Ted a more from XXXX Scott. reserves But operational in that we as were cost block planning an of think, and Hey, don't fill we run as run Even in a and part we'll thinking the of issues about summer, well. airline think perspective, XXXX we've a then through about and can we've a This as in I'll primarily headed crew. done things few we the centered and around that how from crew has some had with

about thoughtful around So the really think pilots what reserves specifically. the be we utilize is plan and we've how done we as XXXX

Ted Christie

operational is or not asked we is a been it testing This is this is what investment answer has mean three our years you been was to CASM over that, last the that decision I that Yes. believe yes. resounding, performance. this better we've whether accretive, view the or

of expect this CASM. that utilization While the time trip forward. the system side But margin. the the those expense, reduce amount have. benefit of out of either it interrupt may all scheduling certain the we going you you deploy, does see to good moving the and a lodging, less reserves The of coming saw the at things summer parts it We expenses amount "investments" believe crew block the throughout side we bad to the net is of associated savings different require over airplanes with a in that disruption-related

answer the yes is question that your CASM. think benefit I a to absolutely So to

Catherine O'Brien

you. Understood. Thank

Operator

Helane Our from next question is Becker.

Helane Becker

contract team. XX -- about five as One a about come growth I time Hi, you wondering the per you And the guess as -- per plus hire until reserves pay. fleet, process Two if these I'm very who retired crews you're if plan. think aircraft, pilots thinking XXXX and your you XX whatever -- XXXX. so you for per operator. up I the pilots in of Thank compete of to more I course. with you -- crews that think questions. do how other on Thanks, in the much mean pilots you you are have higher airlines hire doesn't need are replacing starting -- for the

to attracting your contemplating brand? So you are how people

Scott Haralson

attractive faster two than or faster times schedules. is into new a move the is than and into when really it's good three The do most therefore one that of factor Yes, anywhere story Helane. of the it account themselves our places even times of that Spirit else a achieve And to our growth they taking up retirement will reason work by because captaincy airline. the seniority any other pilots they

are want hear be they we because opportunities love we to office. it get them pilots them there about growth that further and to to and see here we with come a into some their they bring the we good the in and of career. and when mentioned what -- thrilled every of see to time you So here We and deal them part want we're company's meet be and to hiring numbers they they

our that's attracting talent. when So we're single-best pilot asset

Helane Becker

as then don't X% expenses guess X% right get the have for big about you number this you is or think is But And know better on your more great. to and know do about way. to I by cost, ability Scott power how do don't word not I but and I airports that? lower is or not right but think costs I is you agreements? this other question the ability back greater I a are do alone your to to and airport That's more you of -- better my you really a the Or get complain grow Okay. push them

Scott Haralson

expenses, airport can the that own airports this. get negotiate We're we with in to we but the belt from an much don't too are most do on a perspective, have of carrier. do. Helane much Obviously, taker in a pretty tool things our cost we high-utilization we some

the assets is think pretty airport at headwind relative But for that the of ability the we and the considerable our there. the thinking as we and assets utilize to about the So is for there think airports end we It's about points airport the a substantial the are front expense the process. that pretty effectively use resources our desire airport and think number we we a as number efficient to to at this go-forward have and the drives as resources about industry. Plus use about we the us the XXXX, plan at inflation basis increase. XXX even think about automation

Helane Becker

Okay. Great.

Ted Christie

that the airport, average, is pick into is because go. And we're on that In you're experience of if that as we profit selection some even We fly our intentionally where you where our because revenue choose is geography. doing are we answer that to it opportunity Helane we costs opportunity to we structures active an we driving the almost cost go what higher our decision. than view should airport exist based the view in there. on ways pass-through, when

that. picked benefit us we to because we decisions to see obviously less But that a asked it we of earlier pivot. making, I CASM on of was definitely it's extent expect concerning to these While to go unit intentionally mathematical our not pressures working cost because to that's should pressure it there. some while the is we're And

Helane Becker

Right.

as say you price? of cost a specific So can ticket I your cost the is guess the you to go market on I'm of into knowing what pass regardless a you form the hearing customer in higher

Ted Christie

say we don't the so say intentionally. where we change our do I'd the to so that extent And do mind. work that things we of we cost, and mindfully pick regardless those wouldn't I

Helane Becker

That's it. very Got helpful. it. a Got very. Actually great day. thank you that's much, very Have

Ted Christie

All right you, Thank

Operator

is Caiado. next from Joe question Our

Joe Caiado

going good growth XXXX? year the of specific sort the X% are you. Hey, Matt of next one to ramp for drive give quick initiatives cadence ancillary you on that and detail more non-ticket in some in that just up those Can morning. or initiatives Thanks. the

Matt Klein

for The Yes have sure that. The I biggest that certainly off initiatives cadence may is app some are I but initiatives. for to as well it's things live little is the we forward been moving Joe. those I development as while the continuous for us. our can on hold our talk can and platforms live us new now website through of now thing a in go

the the lot modernized in are finally we to we really what's a start site. us analytics of and to ability the perspective But place got to and from this a into that understand better like where feel where gives going merchandising we we ability on getting

site to to know is mix rate opportunity we but to those opportunity we that through lot leverage a drive as we've what start high unlock. in year, how are we to move take goal of we as the been an definitely our products next the Our this to what waiting going of conversion really really as website, we to that there. is for There be we're rates as off and of products able well. can on the be into quarter And with a sell and

So, that's piece giving the confidence that's one on us number.

car a a of will this stages putting our basically other And now more year; then year, opportunity there start as to by new be to getting we're little website I year is in bit we the into piece onto the up benefit final would say merchandising pick improved well. the the that hotel content and the later next even middle of an and will really have of

the these time took at of in to of about step really those some that one of opportunities. bit industry we we point on now back, leaders we're in little the a were of and advantage take products a So, a lot

as and -- has me XXXX good about. that feel really So let to opportunities just XXXX we add well.

we six We looking the going ways to And next the sit around we that months. know build. can what also today. the at further to down what's are look think line optimize and we're we coming We're and what know about XX we

sure opportunities just pieces want the many that we're learn time moving way. It's that at Those to same time. take harder not to too to absorb. We make off

when very launch So, to we we're it. trying to and and what methodical do we as pragmatic be

Joe Caiado

also get seat your density order. Okay. XXX have that is same Are new opportunity they upgauging? densifying decade? Thanks. for and the these next some and current an And going aircraft as then -- XXX on XXXceos? a Are question to and XXXneos going the you're this the Or to

Scott Haralson

Yes, is hey Scott. Joe, this

fleet we right LOPA how most can same the over that think think all XXX on have plan LOPA changes So, now keep fleet. the that does on the configuration three. we we period the We is those But about depending to be will on flexible on today what really of XXX time. about

they really we sits of XXX aircraft with same. sit will But the around number may and make as it some depending where XXX today The we LOPA. decisions be on about the

Joe Caiado

Understood. Thanks everyone.

Operator

Joseph Our is question DeNardi. from next

Joseph DeNardi

the looks billion? probably $X morning. of years, you business with few maybe speak for profile like over the the will to Scott the couple you start just Good Can thanks. on next that? It Yes, CapEx years. next

leverage a with then on through your be And high kind of perspective what end? comfortable on just of the you'd kind cycle,

Scott Haralson

Sure.

I just a think you're perspective, think see few that fleet from over years, have we up $X a to the you perspective. giving the count CapEx CapEx going it like said, from I next billion around

a is perspective. And of what we've over on since few really that be will typical the XXXX from to been size the CapEx pretty relative next XXXX, we a airline; years

actually isn't smaller. a percentage it's it probably material So, from a increase basis

we're leverage timeframe. XXXX, XXXX perspective leverage going numbers a knew because basis, we CapEx continue the we peak a drive think that maybe down to around from would lever even those with to And from we

we amortizes and the debt sort will down. new of continue the in XXXX had to come number As levered XXXX, grow that we that airline

comfortable feel we where feel it's comfortable We we So, are. trend with going. where the

all I think about CapEx. not we're at so And concerned the

Joseph DeNardi

to it given the kind be an would and pressured Is in in then of base And back that of the kind your for kind like particularly Okay. that year expectation very maybe of fair, continue half next assumptions exit just safe Is high RASM Matt the you'd RASM is the environment assume the of it be then on kind to of half expectation? the the and rate would expect first or that your level? inflection year.

Scott Haralson

over and bad impactful we storm things Joe And That's is went that that things of again. those are you on a about as of thinking don't how a And answer Easter we yes. that into pretty are plan And some well. anticipate were that. like happen it. us. year weekend Ted last can't like short couple having for there things The happened to

other but of bit some things to generally; the in that pieces to So, there advantage think little start year-over-year first mixed be the that's answer, comp. how we overall about back a take to are able are kinds half we'll of pressured; half

Joseph DeNardi

you. Thank Great.

Operator

is question from Rajeev next The Lalwani.

Rajeev Lalwani

Hi, good for time. the Thanks Actually questions two morning. Matt. for

then better guys? XQ First with And you generally does SAVE think and i.e. or yield of is things Matt, all just about weakness the XQ, starting more strategic environment folks you talk with just some the targeting this near-term. Can in you i.e., between come yield progression the of where worse? do are into

Matt Klein

Sure.

have industry from summer, out liked perspective, July passenger through to were the as of did as see yields an we were seen. strong we Xth have what anticipating coming not So we and would

weekend hit I talked Labor got think And that weekend, which deal. last great of with the pretty was in probably Day Hurricane great the hard then we a we about quarter. over Dorian

So performance. have pricing, sure what to we capacity that of capture off-peak terms us we price the to – revenue in make capacity and industry, need we're adjust the our have drive unit to being basically capturing that more periods behind for to drives

but been have that a level at low fares. pretty stable are off-peaks So stable,

way trying in generally unit revenue, best we'll great push can to been to think a up, drive cost make when players fares been And -- if do we've that structure. have We that's last that. years the to think sure we've trying that. we few do speaking, Historically, we

the As times other times well. as of or week, shifts the the month, the to other adjust of we're year, going comes capacity of environment other to into times as that

we for position said There's place that. fares. the having the of low continue understand all And years last to probably have our to about volume utilizing are peaks through to we'll But the processes best low-fare industry in if then revenue unit really and out We to putting strong. do do few that, we've We're we're demand drive the in plenty there. competitive been that dynamics. be our that,

times three to to definitely months we we take the don't ability when on There know fare have and need that are the from sit curve, cheapest we booking out departure. the out

where We and when have we can and will, the the ability else holiday strong. peak like demand leverage know we to we're And in just forecast we especially periods. those everybody yields higher

I the Fort demand. in As we XX% great New you And all -- of our seat last strong. how we couple deploy thinking like we participate a Austin, about network just Lauderdale, of are and great in incoming as think Orleans. about Vegas, have well places that, mentioned Over growth We're how thinking which we been demand has assets, city like Las of demand, Tampa, outbound Orlando, as years our has outgoing to I it. there and out the about where thinking

how we play X% of capacity new XXXX unit from our mix to certainly quarter cities And for help. revenue. in XXXX production. in those about of unit all having into So, of XXXX, goes new that's things revenue will mix first less the By X% meaningful think

Rajeev Lalwani

yield, given the guide an high others? lower size given Obviously, matter it next thinking That's you whatever or industry upper follow-up of greatly it's to as are helpful. about the is? your And on leads a capacity just to going of standpoint idea being how year brief of versus then Spirit from

Ted Christie

network to. is which face this a of a Ted. it's little we a that's versus things what bit and from talking with CASM ancillary us what because know don't earlier, at maturity, if things be Spirit. all because start a actually I guide if then did X% believe of assume talk we've just discussion, get rest from those the this fuel-neutral ex margin relative ancillary Rajeev, discussed referring an the perspective, about headwind I that of we before so to for math, through we perspective We on unique industry, a and sets purposes the up the out to specific you you these tailwind basic tailwind But about very the the we maybe were we walked and get up up. on advantage being are of a Hey, you're as

feel what's at that perspective But as to happening puts have that said in to about relative rate thing. spot like and think a an us at earlier, and good industry competitive Then you we issues overlap the from we do and of we of positioning have growth. grow least our sort growth earnings

happens. that revenue revenue imply RASM that to we're we down the we're be down; moves that up, sometimes few and And of think the a to versus changes would whatever going earnings moves digest competitors moves our and set drive that And growth. right moves a up. But able to in few marketplace -- neutral up space

Rajeev Lalwani

guys. it leave I’ll you Okay. there. Thank

Ted Christie

Yeah.

Matt Klein

Thanks.

Operator

from Donofrio. question Susan The next is

Susan Donofrio

everybody. Hello Yes.

and Just wanted just international. your you ask going your for thoughts bit forward? Can on talk plans performance on about growth to a little

Matt Klein

it's Susan, Sure. Matt.

from it dislocated -- as not comes are we other international. we as talk So about airlines

destinations. we've Haiti of seen strength tourist and For to out have to volume continues be Republic does pressured, well. other pressure really both as some just continue example, of that, the of at end But good Dominican kinds other

Our about like should how Cancun growth think in markets tell leisure we you Cancun.

Rico in rest the you also Our news general, good how think Puerto we've and lots how Rico been throughout of growth But about grow there. the of in to should there's we able tell region. Puerto

quarter year last mix be out This In may to move first that mid-teens the That's year same going up our continued intent to to about on based given XX% of capacity. any our mix seasonality the our see out and that's plan capacity system not be percentage. serve shows or down, change region. quarter, you set to around the for around schedule. at mostly the We our to be is which of the

on to of the good year the there especially depending the of performance ability stronger our to good non-ticket really us profile as lot international non-ticket time that continue well around see it and for news a and flex periods peak with the is gives markets. -- So we even

And Islands America the U.S. international international, about we're and mentioned. There’s but not like same way we talking Rico, by Virgin Caribbean Puerto say when really are Latin they're region in as Ted there. the places

Susan Donofrio

just terms we think question bags and on that then of unrelated about thoughts And an Right. just should pricing how of your dynamic in on that?

Matt Klein

Sure.

on So I we're that individualizing individual when bags, clear talk points different about profile We're definitely request. different kinds points we the make want to not it talking people. of price talking of search about based the for about price

am trip destination days on leisure am different for buying might tourist months and out to a flying I tickets to this So then three a point for I'm quick -- I seven my price have weekend going a Vegas. bags;

technologies to want but around our bring and help And don't lot a We on learning in new refine of there's we able work. data leverage we and here, really we analyze of may ways new we forward. So lot a and been to of the being our take about able can have new getting think really how data. lot kinds price of we're how of move do, of too And points weeds into to nuanced different think machine I how analytics. about that a lot talk rates that. e-commerce really to as thoughts do We've companies

Susan Donofrio

very Thank you. helpful. Great,

Operator

The next question Oglenski. is from Brandon

Brandon Oglenski

question. guess. max I your to most one at keep to on have go resolve that's your and Thanks when confidence just off-peak been network back we will my you up growth? capacity give morning, that Or to confidence taking these be drag the XXXX a some mean could I'll for those earnings of the investors year? maybe but good why Hey we is see issues in Ted competitors, here headwinds have this in the capacity of equal point of comes you can it everyone. growing explicit offset that outlook, some that can What maturity the I more likely some

Ted Christie

Yeah.

flip that that has drag the anywhere the drag the unique year called out on XXX a Orlando to that's Brandon this Those point revenue relative International I course point of has them, basis think throughout throughout we around unit and the on from which of point a unit some was few year. revenue -- described we I actually were specific basis of XXX had course things year. maturity next XXX our Spirit is

online be have And or while we where that with tailwinds. is heading on or so, growing into depending there who we do year example, for will whatever to or unique comes the capacity benefits believe next when, pressures max Spirit

are so right in And the believe set position. up, we we

also our load used would add from referenced years, I in the to around is factor of three and one where comments Matt three this his last over it that be. points down

of point environment more yield Now part because is same load and the becomes we're more effort becomes of advantage driving of extent or same I driving that that point of to focus, or year every has point and and intentional underappreciated the yield. drive getting that in of cost two point, as a point focus a yield And yield. our it's is less getting more where a our been of in at And the the the to think important. load two an ancillary a -- factor of performance as good is

higher for I we depending into things the on feel that going And how good a that's growth be of so reason what about year could the industry part come. that think

Brandon Oglenski

appreciate. I Thank you.

DeAnne Gabel