Spirit Airlines (SAVEQ) 23 Jul 202020 Q2 Earnings call transcript

Company Profile

Participants

Maria Cuartas	Senior Analyst, Investor Relations
Ted Christie	Chief Executive Officer
Scott Haralson	Chief Financial Officer
Matt Klein	Chief Commercial Officer
Savi Syth	Raymond James
Mike Linenberg	Deutsche Bank
Brandon Oglenski	Barclays
Jamie Baker	JPMorgan
Dan McKenzie	Seaport Global Securities
Duane Pfennigwerth	Evercore ISI
Joe Caiado	Credit Suisse
Hunter Keay	Wolfe Trahan
Helane Becker	Cowen Securities
Catherine O’Brien	Goldman Sachs
Joseph DeNardi	Stifel
Andrew Didora	Bank of America Merrill Lynch
Darryl Genovesi	Vertical Research Partners

Call transcript

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Operator

Welcome to the 2Q 2020 Conference Call. My name is Erin, and I’ll 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] I’ll now turn the call over to Maria Cuartas, Senior Analyst, Investor Relations. begin. may you Ma’am,

Maria Cuartas

Ted Chief are us on and This joining team. to call senior and call of be Financial A Erin, call Presenting Scott XX quarter today Chief on members simultaneously Airlines’s Executive earnings replay archived will call call. is this on Haralson, website of welcome you, for leadership Also are Spirit days. today’s everyone second webcast. our Thank being and Commercial Matt Officer. Officer; our other our Officer; Klein, Christie, Spirit’s our Chief the recorded

performance the no there non-GAAP the differ Following expectations XXXX are special are our Ted, in we which refer SEC. current on on I release, exclude will over the to reports today, for are available on materially our the and reconciliation website risks second prepared to session be that subject periods remarks, the to statements forward-looking by on We statements turn discussion based our be will results is update file duty any items. and Today’s our statements. comparing call are undertake earnings with adjusting In sell-side cause to contains forward-looking that of and forward-looking actual Factors quarter to for results future uncertainties. now from Please analysts. not company’s question-and-answer will measures. to included reflected a the those a of guarantee our you.

Ted Christie

entire has to by of work I’m I changed, processes to to our and environments driven start been thanks today. team COVID-XX. while by Maria, personal saying responded the proud how procedures, disrupted. everyone our very lives want changes all Many and for have us joining have the of Thanks, Spirit

job in necessary, incredible on the focus delivering sky. as maintaining team the best adapting an value while their done has Our

for healthy a to As are we our members. taking we steps and our welcome to team safe purposeful guests experience begin provide and guests back,

continue cleaning enhance expand procedures. to and We our

aircraft, we During further effective launched disinfectant the against the quarter, antimicrobial improves and This fogging. existing process of coronavirus. upon our high-grade our which is facilities fogging new

air In wear team while cleaning These the we mask policy procedures, on other must enhancements, and members that our most these to guests a handling coupled position. believe addition board. are and today, priority advanced enhanced with enforcing conserve any for all. and a our environment systems enhance our filtration and liquidity top onboard aircraft we line healthy create cash is Financially, safe to and

schedule significant decline Given demand flight COVID-XX, second the to our in the quarter. dramatically for due reduced we

expiration zero with a we June. Due financing month we average payment, If the are of payment agreement the course, deferring and of worst have mean we of aircraft December cash extending our to April, These highly schedule. structure, demand minimum signs one-time continued weak million. would July, of principal in a to rebounding. albeit Airbus, schedule made deferral of of of nearly we principal for the operating aircraft day. a given we as in of connection encouraging, We this favorable in tenuous through June dynamics, our for In PDP this amended in it. per given facility, XXXX. result for dynamics flying demand, low-cost increased financing date March and This, of finalization month the In significant month several relatively-strong cuts the also with of facility, environment, bookings May, amending an burn resulted June the to operate the cash this June. June, not $XX doesn’t only for uptick year our favorable forward we the XX During suppressed about XXXX daily of nearly from achieved demand flights this made

in we’ve new increase fact, In seen demand. regarding setback in another with recent coronavirus the headlines cases, the barrage of

We and expect the us industry. to challenging rest of the the remain for summer

by first our Scott I’ll as it when profitability. rebounds stabilizes, and return June to our With be travel details results, the our to among to leisure leading turn demand to us discuss over low-cost for of that, quarterly However, evidenced more well structure to performance. positions

Scott Haralson

$X.X and for $X.XX operating quarter, Ted. by XXXX decreased adjusted decrease expense for benefits volume-related XX.X% $XXX net despite been flight been period the to expense compared and prior I onset preserving second perseverance and expenses. expenses the in join Salaries, a second and few last changes Spirit billion year-over-year reductions entire per cash our were second investments. in Thanks, short-term and We of thanking fuel Ted was was unrestricted this primarily XX.X% has pandemic. the wages Enhancing liquidity our priority. in flight last to the attendant months year, Adjusted COVID-XX a the or an us same financials, crisis. for workforce our XX.X% To inspiring. with ended the have in million team loss driven million. flat to These increase through loss quarter share. the of of navigate helping and $XXX The the pilot team’s top challenging, about our quarter remains other

debt the at-the-money we our through netting quarter. convertible second of raise our proceeds we completed X $XXX.X drew closing of During million, quarter, million. netting $XXX launched completed the at credit executed yield $XXX about offering we a $XXX increased to of stock, for which, during common facility bring pandemic $XXX proceeds we full financing stock, revolving million liquidity of the of a since transactions our if transactions public an shares secured last yesterday’s second offering, to which $XXX over would million, us from and onset million. million the of total offering us senior million; These common the price, million And night, $XXX.X

million from of for July. $XX received remaining proceeds of portion $XXX Program of addition, million CARES receive the Support the we to expect end before In Payroll the the and proceeds Act

currently unencumbered as we programs, $XXX We well are approximately proceeds. raise that for collateral as used are assets. significant We unencumbered be our as loyalty and other to assets $X traditional at SPIRIT additional assets, valued and assets intangible believe as brand-related that FREE pursuing Club additional Fare such financing million could have our

applied If loan September eligible determine to for or to approved, we under a have not $XXX secured We XX until Act up program. and are CARES have loan to for the million, we whether participate.

of defer and our Regarding Airbus predelivery deliveries agreement we some have aircraft fleet XXXX XXXX plan, and with reached deposits. corresponding to our

of For year, XX only we take now bringing deliveries previously. XX additional to aircraft, will versus the three XXXX our total remainder this

versus we XX have For aircrafts XX now for XXXX, scheduled delivery previously.

on the not three remaining copy a arrangements, secured and Of deliveries our two financing XX financed, the transaction. this we of the will will yet year, six. for the are final lease under fleet debt remaining plan our find the website. be updated in of XXXX XX with sale-leaseback and can financed have direct delivery deliveries You be secured

is in payments. expect XXXX. for year capital or primarily use estimated not approximately until financing. of predelivery financing related We Total for amounts year million expenditures this The these $XXX June of net for are be to not sale-leaseback $XXX first deposit this scheduled six the delivery financed million which aircrafts, are to to

related $XX be For $XXX or the will to estimate year, The remainder financing. capital of the majority net aircraft. expenditures of million expenditures million we of our are these

the from declined define include improvement net deposit quarter, we second capital through sum service, our It primarily We burn does the impact sales. progress total other Program. any as cash cash daily the payments. due to an not funds in of financing flows, cash As CapEx or predelivery Support net average operating financings, of debt the burn and Payroll raises of

average about million cash million from Our April in in trended $X.X about June. daily burn $X.X to

first of $XX of cash one-time our in million related early principal June. levels May, day we burn May Airbus included call of quarter in previously aircraft to back financing conjunction payment deferral As with mentioned, $X PDP nearly cash around million for amendment to June Ted On guided our and agreement. burn our facility per a in an our

which months, our not under day million PDP we for per was up just two in contemplated ended million However, estimate. those the $X at facility excluding $X payment, day per

Looking quarter for estimate cash discuss, and forward, based between million day. $X demand will current daily we Matt third range average per burn and on will the million levels, operation XXXX $X the trends our

close, question how I the utilization to if even than environment, temporarily we this I in advantage want in as to our lower address cost can Before years. maintain is our previous

end, four the to the low higher Our higher four, comes and the largest has utilization, cost lower while things, is the efficient burn fuel higher structurally overall more utilization of advantage that cost In our cost. overall base contributor the advantage. configuration, impact smallest from seating density

lower XX% are we $X.XX. to With XX% the everyone’s being, would Point All have have still the In operated to other and under here’s cost is fact, stay. is be our of half the hours airlines XX average industry ex almost XXXX, would lower at here advantage per carriers short-term it CASM of to well a day impacts structure. the of than facing cost if reductions largest CASM utilization in going three the and utilization that, cost we Matt. daily still airlines. of This ex

Matt Klein

this and inspired our entire has I to to by Spirit everyone’s one communities and unprecedented proud crisis, another I’m team and dedication the economic support the Scott. serve. upheaval the pandemic time. want thank during team. together also Thanks, of Throughout our pulled caused our team we by

others demand. our commented, COVID-XX impact in pandemic As travel industry the has material had have on a

second year-over-year. revenue total declined quarter the in Our XX.X% operating

and volatile. the been Ted As has environment indicated, demand Scott both

were regarding quarter a Our flown were XX.X% by June. flown Having a throughout flown flown for mid-June in and on the factor pulled factor was June anticipated be The increase and rocky, XX% have segment down to load be But in mid-XXs. summer August July July year. the of serving our from unfortunately, been. so bans XX% off many was on bit. and recovery the prior third down nearly equates XX% turned down big We We service, to down it we service April with of bans in of part we are relatives a all the In May bring reduction the intent we year-over-year in trends reduction that, served markets where would lifted, visiting encouraged a it other reinstituted we to capacity, factor the they cases, reached open. demand load we XX.X% travel are in our July destinations it This the capacity. destinations for factor a in travel reduction On last are XX% the international XX% back compared COVID-XX. to and the being anticipate destinations. International seeing the XX% once low XX% load remains year-over-year. load capacity capacity. to has expect quarter month friends an to to once of and the demand negative September still ASM is very on third to said basis, the us But restricting headlines international be estimated certainly as will be COVID-XX year-over-year, XX% capacity

VFR leisure travelers previous we stronger Ted. great our their segments I’ll Based low-fare profit. first and recover. remains offer position The service was come travel. travel crisis recovery broaden to uncertain, network, The more and these anticipate closely but our always to add price-sensitive a fares we will of economy than stabilized and in it has to online. doing of markets relatives service we believe we at now the hand resilient is first bounced to to core itself. back such, rebound, followed United will And history, are demand and among destinations will so As presented back back low the are any to tourism-oriented a of our before Both timing back it States visit segments as be by friends on going it

Ted Christie

caused and many economic have unprecedented challenges on Thanks, Matt. fronts. continued health The that crises

our Social unrest must we country another in overcome. is challenge

to stand and we the Now that dedicated And more differences compassion crises and the is of any of know macro of more ever In of the societal these for team. times Spirit, country our needed. connection of us. power each as Spirit and than heart and against as celebrate encouraged fares. travel selection. setup, is this, In human most together stronger of component kind. fares unite to ever, economic to our are racism remained offer I them. such suited those the guests carry Despite we travel because to other by single are and the air important need team excellent any a that service around to is best together At am we truth provide loads simple humbled anyone’s of plane Spirit our bigotry low challenges, has and and and

us construction in structure offering cost to and the tools fares. way, a sustainable low our precludes and profitable do any from nothing network carrier so give As

can History airlines do that outperform and However, a only recessions the airline low-cost past in win. so of market. a low-cost has multitude shown

utilization, Some about facts the of hub the Discussions market have our of low-cost model lack favor and economic as such density sustainability realities economics to The because cost marginal periods or model. and questioned business be of it hubs. share, this. are our irrelevant model, during

will We assets get back that on ways our our and selectively us we best neutrality, way the return, to drive through in deploy cash believe profitability. possible

that, it needed is With Spirit for normal, guess for return to to anyone’s will to it’s is narrower other of goals than While any travelers clear, one thing to back airline. these as margin when achieve Maria. demand is very the significantly

Maria Cuartas

you. Thank

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

Operator

from James]. And your Syth first Instructions] [Operator question Savi comes [Raymond

Your line is open.

Savi Syth

everyone. morning, good Hey,

Ted Christie

Hi, Savi.

Savi Syth

kind I would net be, little could kind a what us noise the I just you especially could the help given appreciate expectations reversed. seasonality? year-over-year revenue how of understand the you or have And flattened progressed? wonder if around But your out color. of provide maybe trends

Ted Christie

I jump Sure. don’t in and as here introduce, Matt can well.

in So Throughout to in second the began and to the and revenue a we of indicated into May a it’s period into part positive June, of move time. relative the direction we capacity off-peak our of head later as fair very Once be think as added are period to October really size, course. we fall, and to that. period. the September And say I going seasonally summer this it’s to into reaction a off-peak quarter,

you part early and far year-over-year do quarter latter revenues expect thus had second more into experience time of of would the the think give to to that the you I when would of So specifics? July. want challenged be compared that in we for Matt, any part the But period

Matt Klein

I as the that think demand think, holiday basis, think well. this note summer, the there. peak X have is it’s periods a There’s on about we of was a all travel I relative to out course. Savi, through July progression lot relatively strong. important performed Again, the of

is July there. Our – aware to evidenced as speaks that of out I of load perspective we be to we’re the still summer from fall, factor periods we’re is recognize think, going month What to a what the do very traditionally by into the demand get traditionally of in out off-peak off-peak. being continue and will

be end little quarter September for again a about the we’re and year. we’re then thinking just the fourth So to exaggerated ourselves we year hit into as a head there normal prepare periods and progression, this the at And more how through we of holiday reasons. this expecting then probably obvious

the the fall, kind off-peak periods. not periods of into we’re way on So into heading a that’s through how I’m going numbers is about you back bit little the peak of progressing summer the exact – but give revenue to thinking

Savi Syth

above assume of you. but second helpful. – lower the And still quarter, kind of we down as should taken? still third consider the of year-over-year we I’m Thank are then kind Or actions kind on again should that cost is further just there the cost anything declines? else a that pulling capacity on – just you’re now into trend, actually curious That’s quarter,

Scott Haralson

million quarter about I million OpEx, Hey, range OpEx OP QX. this million $X.XX our be million in compared Savi, you includes the think $XXX gallons at expense we’re a XX $XXX is to to of when as expense, of in about think of Scott. Yes, going that $XXX third to probably

it think about you I that could way. So think

Savi Syth

you. That’s super helpful. Thank

Operator

Linenberg from [Deutsche Mike comes question next Bank]. your And

Your is open. line

Mike Linenberg

good Scott. of collateral I’m maybe $XXX it reading million, your highlighted questions the it unencumbered without it, you collateral that that? collateral of million to program I then not like under and a you it does could I LTD all what maybe may have just than some other and related release, sense $XXX $XXX don’t two you wouldn’t a and have less that that it the Can loan the add on guess pool of potential back pledged highlighted reads million that some actual non-traditional? curious, or $XXX to have but And sizable CARES is. into to you just way I’m Maybe the loan million secured too the would a amount. both actually monetary be here morning, or everybody. Hey, traditional be you the you The have, require that items million, does suggest enough traditional collateral much color to to almost Act, it’s up that back $XXX sound the in and that. whether

Scott Haralson

We do can that.

for government think loan, targeting I the intangible we’re to assets. use our So

program $X expect value that’s loyalty the that’s Club. And and going loan. the pretty So we’re that close we Fare the government the be to needed for to

We’re still of any in to but we’d do take loan expect but those have finalizing process we the the enough cover not tangible valuation would we that, other how assets, government the and do the to require assets. wanted if

Mike Linenberg

what peak it, if about period. think traditional as that your and That’s think then so actually a into back are I June? from you Thanks, makes to million and quarter a How it what the if June future great is similar the your demarcation books quarter, did call million, again, was much color. curious at have – I’m the Scott. to be sense at end? change what that quarter on split to here just along sort you, potential my saw actually March head question, very $XXX moved split tickets you as split, shift like we seeing – versus what from when those been you. two-thirds, $XXX about to from carriers that when ATL, it second don’t you sales the that March the to about that seems think quarter end, are still know, I refunds, to about just though, purchased was And a there one-third, of have lines. Thank June you’re it’s March all

Scott Haralson

did as [inaudible] well. Yes, ATL balance Michael, the grow

$XXX-million-plus shell shy is balance ATL, just $XXX So with a million. our of credit

Mike Linenberg

Okay.

Scott Haralson

good you comprises probably That’s the a chunk pretty of way it about the So should think ATL. it.

Mike Linenberg

Thank Very you. good. Okay.

Operator

[Barclays]. from your Oglenski And next comes question Brandon

open. is line Your

Brandon Oglenski

resume And question. restructuring, give for about will we here Hey, you other good my you demand do you any get order normalized competitors or how for announced morning, can of we into like How want that us until insight could you’re book do have taking it growth? everyone. come to the Thanks fast you this think given I some that the Ted, even outcome? XXXX think a highlighted out even you that as virus thinking back vaccine maybe do before your have period?

Ted Christie

Hey, Sure. Brandon.

swing in all. not ballpark. utilization those any to or of is the lower or fleet, obviously, book. us use – that worked little team we’ve a Scott between somewhere point, work at of our that airplanes, So is today described utilization, that not it’s at is fleet another But And we breathing a XX create room that order and – bit we the regular component airplanes the reserve with to which Airbus to closely somewhat regard at remains entirely-owned our more exists the and given with XXX fleet either kind for component XX right of as

our which – we little work those as of company absorber seeing peak is bit the quarter the And help don’t then to we is guide relates deliveries, when fourth breathing into aircraft will to using It’s what information your the the Leisure our regard with timing so will using But room we are shock fresh mentioned, spring today flexibility it It additional to the is on a look did heading a that Matt its we’re will resume is help the will have I recovery. expectation, gives Airbus is decent to that, time that Unfortunately, be and and would better. amount look time to market of expectation core by growth. help also on other us it information what And the CapEx That, The that expect the year. like, our you. next recovery? bumpy. what with the the recover. any real-time question, the us continue. eventually, that views going will economy as like will returning are to already. we what way, travelers that And of

navigating to the to assembling is of and do so to able that And that time window resources board sure appropriate of level rights issue. flexibility, it. really crux be the with with on we a fleet of is the capital And Spirit that have deferral making navigate

that when we happens. as able to we’re So date have I to created flexibility to think because we I information, happen don’t it a definitive enough do when to digesting have but expect it be real-time

Brandon Oglenski

Or that situation I this question will out airline? but see Do you wait got a an Well, appreciate guess then the for had to this manage don’t folks that response, Help bookings can this Ted. build is answer, the And come? run to in you to environment? it schedule? they do and difficult to us capacity where be how I you

Ted Christie

call lead And a our that this we May mentioned Well, intending Yes. to question. the not it’s on were we great recovery.

see which us. exactly I We’re that we what July. into evaluate think recovers did and market, then And where demand going to deploy June it, and well is in for the worked

market recovery. are If from we off-peak to versus capacity it removing July August because the is period, we in And an our think anybody seen into shouldn’t try we don’t shock Matt September. schedules, and that intend peak mentioned, and to drag as forward as I to the you’ve head

going continue of seasonality it. move have in to to to pace going mean will the depending on recovery. and the network that the And we’re the out, We’re evaluate to and

perfectly it. within But think, that’s XX seasonality, cost use our have that we to I XX that those to But to the is last anybody’s it run up feel focus the an ability And over it’s to Timing we’ve assets where So network treacherous. network about been pretty sets airline, us navigate our to guess. don’t navigate able window. of do and the we be days. driving structure, kind flexibility on good to

Brandon Oglenski

it. Appreciate

Operator

Jamie And from your [JPMorgan]. Baker next question comes

open. is line Your

Jamie Baker

Hey, good everybody. morning,

question answerable be a So how demand not just choppy that are. given may trends

to is your your to, as competition aggressive, or say, markets fourth aggressive characterize of relative less competition to would how behaving characterize or were tell? impossible in same, the last quarter more year, you If the you

Ted Christie

morning, Hey, Ted. Jamie, good it’s

a So normalized you’re which to right, that it’s choppy, individual movements period, when sort is capacity compared airlines trend different, impossible across and normal the all to around tell strategies Those I of various because today. are I thing. are of demand think target the that traffic and type not to think

of encouraging. restriction, because clearly has travelers gone come network of new numbers know, a were in they is the state other are the way. okay? spring, back I June late largely home is activity and and Florida and favorable, that has relaxation that say in can And you to it’s fares, media kind Florida. the another ready road in were cycle will market the activity. our as think impossible in not of a fares here more our that low we our characterize early has reinforced bring of So What May looking and it. as June back were to began low news the to coiled And I like July kind leisure turn cycle And hit bump The admittedly, towards

touches XX% Florida. network We of to the XX% have

become what’s bit even that’s time Florida more the seeing get how is okay? as more and a the challenge. the challenge specifically think deploy, us, to the when encouraging we to middle now last going that to more It’s But ready people to the probably where so becomes starts a And window we have been And issue. little navigates to be in days react its we’re new XX the favorable right there of information favorable. starts navigating of over

Jamie Baker

interesting are seeing to based don’t it. helpful. length? leisure difficult – may any totally out flights, But stage XX anything aircraft, like spend follow-up, flying. Got there? on minutes obviously seeing but you and measure, but again, long-haul to any also I example, trends, you’re longer you are a difference be as willing Spirit realize For demand consumers That’s that? demand this different truly don’t have on a patterns And

Matt Klein

it’s Jamie, that Matt. I’ll take Hey, one.

Jamie Baker

Matt. Hey,

Matt Klein

traveler, then of they’re it them, see we traveler, probably best way would we right the really seem the supply law I opportunity that. doesn’t seeing going. basically hold. the say that and for it. the where the to to of When attract continues and to to leisure demand say kind the price then at of ridership time matter schedule we’re have right right If It’s

Jamie Baker

Okay.

Matt Klein

to length doesn’t the that to ridership. seems to where it the pockets It seem then relative I whose seem of you would a the the be there’s aircraft, in case. strength and I’d in, there’s doesn’t is was of bringing be sit of be product you’re to no say, to thought kind that travel, the leisure matter for That really May, further haul any which back travel, the April, willing heading that under on is. up, tell the operating flight the less it really likely guest may demand reflect

Jamie Baker

for That’s Appreciate long great. questions. Thanks taking my it. admittedly

Operator

comes Dan question from next McKenzie your Global [Seaport And Securities].

line Your is open.

Dan McKenzie

bigger the I’m wondering how head Good of in morning. network? or And been I you’re demand the couple know for hotspot pardon a the Hey, markets A impacting as questions thanks. are affecting guess rest into of just will, the fall? Florida, that’s I as that’s you of how states, we the if COVID optimizing versus guys Florida California and XX% you me, of there Has in Matt, how progression the schedules well. Texas – to difference XX% here. state network.

Matt Klein

certainly. Yes,

earlier. things So when taking, states that sort in real-time, the that all pop we in taking we relatively can for information started, at we was on we’re basically Back area up area the of to thought started mentioned, metro New to outset our to quickly, metro the based process. and period – a flying from first outbreaks information of of York that time that York the things stopped are applying the and New as various Ted

service we got area. back metro that New better, As into York more the added

As counts, being and what’s some are from we’re demand. seeing destinations impacted, impacts legitimate, from headlines, are that leisure-oriented happened which with a obviously, direct case impact on has

there’s for We Beach. has Myrtle see some in kind news, And off tail cancellations presence you an and have of impact bookings quickly large negative then relatively had a as relatively well. with and Beach, example, Myrtle

the same a see then a you the and and So to time. reduction start up move pop headlines – as around in at lack the demand country, cancellations gross

immune across to across to impact but to the also going as now, of up some the there things do anticipate to end network feeling not country. on geographic that. airline to we’re the we like that more feel others, that will us than That’s Right every start mix is basis, change then We’re changing a be country. happening we probably

We’re we’re – but that California, in major in are California. That soon player in really not may we have some a players airlines impact presence bigger California.

So the expect going control is little to a months as balloon of the under we it’s bit everything until progress. squeezing be

Dan McKenzie

Understood.

about thinking is to you’re additional of balance here? like shooting map you’re how second terms liquidity wondering at then here, question. year-end I’m on the And Scott, exactly balance terms road sheet in of what raise the going then And need looks that question to in liquidity what end a based of debt, for? Okay. year sheet just what the you’re the target

Scott Haralson

Dan. Hey,

some the of because that debt discussions. start lead So may we’ll with into cash

balance, to through we’re I So in on today you guidance the marketplace of a full-year not guesstimate and target how have But of year. start in that with do any may balance. ATM take we that mean I can how is we on some probably a an out. that take you play can much we what cash or the billion walk of math the the give $X.X going

the loan have collateral. and government of Fare We $X frequent or type where use we program, some flyer Club as the program

million you could the on third guesstimate guidance forma pro how there. burn Act So balance. you can And that take you benefits, for your and There’s $X sort of much then a CARES gives other take cash given million to we’ve quarter. we cash from on $X of

bit better little a be than to directionally quarter that. fourth the expect probably can You

give to bit out, because where going little but directionally not not that’s number going play We’re better. to a a sure we’re

little to sort far, at the bit we in intangible the a ton and bit could the loan least or of has that then haven’t program. a the a But where debt either perspective, are that some in And the revolver payroll balance half component of big of government support really So form ballpark. back year, we’re of type lever cash that, going the program assets. the get or of of been we the a a government of a from at, so year-end added you looking to leverage up use we

is So way the just move There’s lever to around no going it. up.

Dan McKenzie

Understood.

appreciate Thank Okay. you. I that.

Operator

ISI]. from in question queue And [Evercore comes Pfennigwerth Duane your next

Your line is open.

Duane Pfennigwerth

Hey. Thanks.

your impact not Just would that check is these Spirit XXXX a it’s your all map. CapEx definition million, not wanted of It’s if cash in of question to range because the over XXX% of, burn. burn. my financed, the say, understanding cash definitions are but your But $XXX

get to cash still So in could balance expanding? could you the sheet but flow other be break-even, words,

Scott Haralson

Yes, Duane, financing. it’s of net

took, that So a the perspective. to lease then or cost zero we have basically if aircraft from a would perspective XXX% from burn were we CapEx cash of

Duane Pfennigwerth

Okay. hand, That’s if had it off first us if you you all then wonder last not have We for sure got with that disclosures And the breakage of give but of for you night. I last revenue all year? consistent. XXXX? the can half

Scott Haralson

can disclosed not we a do that can see hand. compile I breakage I something we for know if Duane, take have we XXXX, if full there. can don’t on We look. but

Duane Pfennigwerth

of Is you’ve but said of demand in about there’s XX% XX% the to levels just big over of if talked some that XXXX the this kind Okay. seeing and And peers already, industry forgive also? me kind that on picture, then summer. you’re have demand, it how

Matt Klein

is this, we about Savi this that some asked is of that add I’m at about. sure how But we competitors revenue. demand, had think in Duane, to exactly I the what beginning Matt. earlier. the the are terms question also want of very a talking about reference to not overall

capacity We a about earlier. will to be XX%. In And XX%, had third are we the about prepared talk be to down outcome as down we’re quarter, revenue that. mentioned year-over-year expecting

third down XX% in capacity to XX% the quarter. for relative reduction year-over-year So the revenue

Duane Pfennigwerth

Okay.

Matt Klein

helps add to know color or not. So if I don’t there, your question that Duane,

Duane Pfennigwerth

That’s it.

appreciate it. answer. repeat have the to I clear. you Sorry Very

Matt Klein

problem. No Thanks. Yes.

Operator

next your And question Joe comes [Credit Caiado Suisse]. from

open. is line Your

Joe Caiado

is now, domestic first Ted to Thanks when field economic time whether just curious near support of those things like like strategic you’d right new sort I’m mean, partners, something or for offer up whoever airport sort of very stimulate is with question that when international Or Or can Spirit morning. a is for if fees a much. the the doing attract again? to demand destinations, to presents one crisis something wants out going recovery maybe pick out Spirit attractive help position seek for or My Matt, to opportunity that that Good or even very I a airports terms market normalize? this? current that’s back-of-mind Hey. does just them strategic go it. the a RFPs in it airports and that hidden during and consider that actually

Ted Christie

my that segment. leading be we mind as the travel Joe. in – that we on mind that burn, clearly, it crisis using of of prepared I of as will focusing at the recover, network – mentioned of the end as with front front obviously thanks begins Well, things. travel that economy what’s we types navigating expect those the enhance front said, And of liquidity, is our that be for question, to that. will cash remarks, believe to Spirit now, right But the What’s segment

thing our opportunities in think the wake about it. last at component I about evaluating crisis, that first is of of the morning the and So not up and a throughout the I course this night, while thing think

will industries, business that so there expect And – broadly will smaller. And we be get we believe speaking broadly, the with the opportunity.

And exploring at or even geography, fly are gain or so today, capitalize our destinations areas one, looking to were access or expanding that us upon it not of ways quite us the our or international, that thinking but partnerships there first airport be for about for difficult do, large to in one previously whether and to our frankly. we existing Again, franchises, leisure the think way we can we unique something that in it’s how is not pursue projects.

will think I all are those materialize. on we the as the expect happens So and list, that they recovery

Joe Caiado

Right, right.

one, very quarter it. layoffs or – furloughs the Thanks, a if Ted. What’s need the missed I My your Okay. funding fourth after second latest and payroll expires? just quick question, apologize thinking the for in on

Ted Christie

am I sure.

CARES is does covenant date right bright XX, September where obviously a Act expire. the line now there at So

as fixed-related think evaluation do. rightsizing do segment to this kind period we rightsizing I’ve what the of we’re would begins the how so? as leisure we we and/or a still are recover, fluid could until We we included like And other and in time to thing. need talked about be that, mentioned of attempting of sort that to navigate to that in of do fleet expenses that

regular our accepting We fixed expense. are navigate have work of thousands reduce help with leaves groups provide actively voluntary in and action company the taking us that been and the discussions organized they flexibility, to with crisis employees voluntary

nimble, allows do think and want down bit to single continue all post the still fleet XX. before we table, us the closer are those I a that need being you’re the But the we reading small, larger both digest to and ways an call. sides, action because from now, airlines. September, we’re game a little look involuntary to a I film be summer up we think right to than mitigate information has make so honest, Being while sure to make seeing we on And the type, been at being that little a bit more for

Joe Caiado

Got it. Thanks, Ted.

Operator

Hunter from is [Wolfe question Trahan]. next your Keay And

Your is line open.

Hunter Keay

morning. good everybody, Hey,

Ted Christie

Good Hunter. morning,

Hunter Keay

you capacity your if down zero? rate to a Scott, burn what time, daily be months your had would growth cash like lead say three to take

Scott Haralson

business baseline of for $X fleet talked a generally about burn be we’ve levels the of at day. will the Well, today’s around cash sort million

So could a we’ve that talked – fixed variable we about component.

be our half we’d of So about operating expense.

a that’s think probably number. I good So

Hunter Keay

Cool. very Thanks you being down. then about utilization That’s helpful. And a talked lot.

as I twice short-term. or think referred it to you’ve being temporary

pre-COVID what those gap occurring? is level? So when hit happens lag between a big pre-COVID the capacity Like, what actually there the levels first? you hit time when two I is And and things your utilization between your Thanks. guess you

Ted Christie

threaded just how slower which I’ll Yes. is interesting part we’re of kind long into your this because is call, sure long we’ve the about. whole period first, try of time that the of not Hunter, been the question discussing how topic is it’s an because the like recovery

Hunter Keay

recovers. a so on really I’m like really it’s clear, not I about it’s demand mean? just view what I’ll know question, asking just not really much so Ted, Well, demand – Ted, cost a question, your I’m I’m – when you –

Just we’re so clear.

that You get can know day. about mean? the So I to per what you XX.X when back utilization hours lag

interrupt to you. wanted just to just Sorry clarify. I

Ted Christie

Okay.

recovers. you have Sorry, the I go interpreted the it, when would demand utilization up

Scott Haralson

He said XX.X versus hours or XXXX the XX.X hours capacity.

Hunter Keay

Anyway, hours day – just hit a I’ll one, It’s capacity basis that Yes. It’s It maybe the ASM – what to that’s And right. happens You wasn’t demand in question. you. be first? though. or XX.X XXXX first? you intended yes, is per hit leave on there. an Thank it

Scott Haralson

we’ve XXXX. taken moved Obviously, since The deliveries. fleets

utilization. to ASMs, XXXX So can have lower to get we

Ted Christie

period thing that’s – because of we those It’s the count we demand. production shoulder the parts. of in on lag and still because to time to the to the would to made to the I But airplanes, this we’re believe are it, I’d the the that would return to to or utilization get navigating decide is going fleet by down And – not we I working whether ASM decision decide which in that keep the only the the and we extent guide down, that’s airplanes. our haven’t yet the add, keep we Right. all was this when said, call. true bigger, that the all are And part extent

Hunter Keay

Okay.

you. Sorry Appreciate to Thank you. it. interrupt

Ted Christie

Sure.

Operator

Helane from Securities]. is question [Cowen Becker next Your

open. is line Your

Helane Becker

to of so, were headquarters building? through consider would going this build if your we to it once level before it crisis you time. some for the land know operator. much, I that should which I whatever Hi thank you much don’t. upon Do know to I normal? the apologize is get very you own get Thanks I And very you probably team, pursuing and and this, selling back

Scott Haralson

Hi, is Scott. Helane, this

land. do yes, So we own the

the to would land the I generate cash. to sell So think don’t decision be

of facility I what we future really is that going think be. to decision it’s think around the

change to could then decided plans, obviously, we it. sell sell. we the If to we decided if down we continue wouldn’t So path,

think So I for it’s don’t cash. generation of

Helane Becker

how people some changed Okay. that things where fees group I’m kind to get has they’re is, and of the my thinking ancillary other And then once among level one your future we again? are going to what look some to you’re is fees the about of peer of wondering afraid and unrelated those question of fly not

Matt Klein

Matt. it’s Helane, Good Hi, morning.

Helane Becker

Matt. Hi,

Matt Klein

is actually. have seat closer with and bag that we’re hanging to what’s demand, today, makes once we into So sense. charges got relatively in our right the if in a somewhat normal there normal, been in situation charges real stable any now, assignment we’re that it’s interesting environment now although They’re nowhere near in

normal seem those our way customers are continuing ones, of So charges a to part in and there. it’s it’s model, our act core our be to to model

think that total that to the for out overall still and on guests. revenue structure generates mean is going provide for services you’re have fees, referencing, discussion. And up If always one to you that there say, the most the think change us a we’re if overall perspective that is our I one we

the number it’s future. would come of today. it’s normal time, way a still would as would benefit that So do extent change in in world the Right the back not a run, be anticipate evaluation a we’re period we are of going our charges to an we a that of of things now our so benefit make It all long customer seeing generation, but already in with in to the service We to for then expect always think charges we today, revenue be to change. been our may and long-term the we we’re relaxed. relaxed

Helane Becker

Got it.

Okay. you. really very Well, Thank that’s helpful.

Matt Klein

Great.

You’re welcome.

Operator

[Goldman And question Sachs]. from Catherine O’Brien your next comes

open. is line Your

Catherine O’Brien

for time. the Thanks morning, Good so much everyone.

CapEx, on couple first. a Just

but although resulting maybe could So with million aircraft CapEx on that there you seems else against And was called quarter? I that? moving then you million I delivery, did XX-Q, there. $XXX a $XXX guess be being to we for other how I closer be agreement slightly end probably netted last of up my Is math, for should first to XXXX about million, a a thinking question, XXXX, little aircraft XXXX CapEx in target Thanks. that in defer something getting your clarification, have XX bigger-picture your pieces low. there than in CapEx reduction out think $XXX larger scheduled AerCap to total? just Airbus some

Scott Haralson

is Yes. from the Hey, year, the think Catherine, really, components PDPs. – one so I number net the of this the CapEx of

So this if we this year. of have you year, CapEx remaining net million the to PDPs about $XX for expect

XX that’s book. leases difference it’s a from the because maybe those different bit So order our are of little deliveries the of your we in direct XX XXXX. operating that In that not have, XXXX, lessors are part

XXXX trying the you’re have think Airbus really what So of CapEx from we about. during that six to are

Catherine O’Brien

should be And we on it. side non-aircraft Got about the for then XXXX? thinking Okay. anything

Scott Haralson

more For the a of we’ve than non-aircraft million $XX remainder CapEx. little of this said year, around

yet. thought haven’t XXXX about We

So use next we XXXX barometer plan for but guesstimate XXXX CapEx yet. of year you as haven’t for or can a done a XXXX, our

Catherine O’Brien

what we your XX noted that could just how just going flex but AXXX big you should earlier, be be I return? in fleet? thanks did for the that again And more just lease get If think XX or in? to Great. mentioned quick all a one about you have one it forward event also fleet on you owned maybe thinking fleet is the smaller time. I want Is you to to us decision know the help Okay. – through fleet dependent, sneak you just can will demand

Ted Christie

for question. Sure. I’ll one. Thanks take that the

I the XXXs beyond first I those think step as alluded that of the natural to, own – course. So utilization, are we

of can So today. burn partially airplane be can fleet, be aircraft can be the if they there fleet today, those there’s you’re they just XX in they can so are they talking about or zero-cash and retired used, parked

our actually So the for be are – sizable the a that’s which, we size going of global percentage fleet. airline of to

returns biggest any We the think I returns. lease have in Lease scheduled So the don’t that’s component. near-term here.

think of this we’d on fleet first. focused So be aircraft really sub I

Scott Haralson

Yes.

about almost have end we And as – So return unencumbered. a Ted the XXXX. we to said, fleet AXXXs XXXs. And XX, of own we we four our – of really It’s like lease don’t have the until unencumbered the point, have well. finalize XX% don’t

give assets flexibility. that So it’s us the the unencumbered

Catherine O’Brien

Okay, you much. Thank great. very

Operator

question DeNardi And in from comes your Joseph next [Stifel]. queue

line is open. Your

Joseph DeNardi

good what and all going? Can to the I BofA Scott, at how card, I this. potentially updating you Hey, And co-brand the program morning. they economics or the think conversation are been? Are progress Thank update the of know going of initiatives. sensitive do And nature think approaching continued forward? your on were card that’s you. co-brand things slower has how growing us those through they’ve being environment? the to And two a the maybe rate given you smaller differently loyalty with

Matt Klein

Matt. Joe, take question. it’s Hey, I’ll that

So of in reality to with America overall ready now. terms We’ve of I things the Bank a and our of would slowed some the to getting as situation actually technology going on of discussions extremely characterize is And productive. stable right program the very perspective development that due everything go. the on and

have about that work line little of indication So just the due got time long pacing forward. it a we forward. an been I our the not right slowed answer And move we Things to now just the move way. going will we’re on IT that’s really, lot but The a down item the out desire is overall, to it thinking relationship bit great. of now. everything same CapEx is of right about lack approached while And pushed purposely think short,

Joseph DeNardi

demand customers, of what of as you past of did in COVID? months? talk maybe the airline about spend that of older the it. kind not in you’ve learned the anything can and as off terms just and just And Has you And Thank shift customers your just then terms effective – what’s light are demographic maybe Got have over marketing came on turned you. back? in few that then of what’s of your portion turned

Ted Christie

Joe. Yes. Sure thing,

base. good will people of tell exact What customer you, So I’m get the the have on the pretty to of down not come I on we but though going our the do pandemic. percentages, aircraft directionally, is into have demographics ages the handle a during

the changed of around is – other household So along consumer things some we’re as those traveling on we have also components younger those lines on tracking average like becoming much bit. can, and as income board. a little And

us. expect, we’re And getting the to surveys. continued, as income along seems you’d experiences actually better as have a has lines, days with in of pandemic are good cases, those But average down willing very As getting well. like little household that age, been And experiences share information younger information. the more good. terms It with our these the guests as bit their or, some in come we’re willing with has

Net improved in during Promoter have, Scores Our time. this fact period of

goes to guests run good just and operation show seeing as are our that it to that continuing So a well. matters,

Joseph DeNardi

Thank you.

Ted Christie

Absolutely.

Operator

Your [Bank Merrill next comes of Andrew America question from Lynch].

Your line open. is

Andrew Didora

hear Hi, good me? morning, everyone. Can you

Ted Christie

hear you. Yes, we can

Andrew Didora

Great.

you came revenue of what So need sort think sorry to to decline, trying type just sense but like do a cash earlier, you this if burn of Any missed I to order breakeven? reach get there? can you’re us for in in if guidepost revenues break-even guide sense And cash looking sort proposed achieve to burn that June of I guess a a giving you maybe give give where of forward, number? uncomfortable

Scott Haralson

margin an That’s about Scott. EBITDA is, cash is look sort The is ongoing in we breakeven this the sort of generation Andrew, question of that your way thought Hey, revenue. on interesting it drop number. technically

revenue had in be cash a as estimate. EBITDA XX% you an reduction a to if breakeven XX% So you could withstand margin,

a a capacity. if your amount declines point at that you’re of to than So especially I revenue think any greater fixed going if of amount of take number, below business, have that number, operate smaller corresponding to you asset

So think from got longer-term to be be. to difficult what perspective, get breakeven. zero would you to margin But cash EBITDA at number a I say that

Ted Christie

than margin And the our majority to that only thing vast was we the of crisis the the airlines. EBITDA could add going higher is into

definitively it returns, percentage that whether revenue what all same without fair hard it’s say the or capacity as a trickier thing. mean knowing we deployment that question, we generate the So first be stable to of is to you and that At of with one will with the expect sort cash.

Andrew Didora

a Fair number? you enough. to willing revenue give June Right. Are

Ted Christie

like revenue mean You decline...?

Andrew Didora

yes. decline, Revenue

Ted Christie

Yes.

sum in I So yet, thing about that amortization of depreciation, monthly minus haven’t neutrality forward But stuff. the that given outflows June, period, and minus think Andrew. and inflows we of – cash obviously, airlines the other your the cash your of is all bookings that month way debt, cash of we kind your defined any all data expenses, for other one – have

all for June was which time. in coming good pretty month, demand the the So and airlines doing setup in booking at the was we because were were definitely July,

So performance think return important what’s based analysis relative you And more to of already to we’re a recovery, the on in I shows be that the is it the there. the ahead traveler. leisure going

Andrew Didora

other Okay. Got been My answered. questions lot. Thanks it. have a

Operator

Partners]. question Darryl final Genovesi from your [Vertical comes And Research

open. line Your is

Darryl Genovesi

everybody. good morning, Hey, time. Thanks the for

Ted Christie

Darryl. morning, Good

Darryl Genovesi

by I still have the know costs. restrictions carriers Scott, were out but you second able other moratorium with, but same or your XX% of operating quarter furloughs Ted reduced labor barely XX%, your under on take XX%, to this you their costs to capacity labor QX deal budged.

the could specifically? So I the understand hoping moving you us labor on pieces was help of some service beneath just

Ted Christie

Scott as jump well. in start. I’ll can

the costs yes, flat So despite labor basically fall capacity. in

we the growth is labor went were think other period. that input because up into this I airliner volume heading a

property have bodies would we than we the on So year-over-year have otherwise. more

voluntary we course, of of that offsetting programs So lead that’s built quarter. benefit of I think the saw. And those the throughout the some

probably how segments but think making bigger rate more is and company’s travel carriers the leisure international have components because go recovery on that So we’re we same of not this given much business to like of with temporary. set and much different opportunity it’s and benefit the it being permanent up, basis a we full and demand its a decisions, resume didn’t determine as in run market. is this I recovers, growth long-haul And through a to are of travel there accelerated eventually get larger profile how more maybe

between a I And where as you’re are also Scott? to be disconnect so maybe we contributing think could that else. what perceiving someone and

Scott Haralson

Yes, agreed.

increased total for So people, probably XX% around we overhead year-over-year.

did the that help going P&L. And that to had of areas a that some we the disconnect. had so in little spend us made to intra-quarter Plus, us other a some we buy number is moves that money of flexibility, driver we be the on

And itself in we bit the second third So inflated quarter. the quarter. in that replicate were little a shouldn’t

Darryl Genovesi

where Can you just say you hours? relative are your on to minimums

Scott Haralson

You mean average member? from crew an

Darryl Genovesi

where guess goes. the think maybe you would too. rate makes sense, and do be That’s that And good, one the most the exit probably that so. Yes, I

Scott Haralson

Yes. minimal operated Obviously, we first for of all the quarter, second airline. a

going estimate be some We’re to together. third but four so approach the quarter, adding that of I times we’d in still minimums, the we’ll size be would

Darryl Genovesi

lot, a Okay. Appreciate guys. it. Thanks

Maria Cuartas

call Thank you. gentlemen, Ladies and our this today. for concludes

Operator

this disconnect. now today’s you, Thank gentlemen, and ladies conference. you for participating, you concludes Thank may

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