Spirit Airlines (SAVEQ) 29 Oct 202020 Q3 Earnings call transcript

Company Profile

Participants

DeAnne Gabel	Senior Director, Investor Relations
Ted Christie	Chief Executive Officer
Scott Haralson	Chief Financial Officer
Matt Klein	Chief Commercial Officer
Helane Becker	Cowen Securities
Savi Syth	Raymond James
Duane Pfennigwerth	Evercore Partners
Hunter Keay	Wolfe Research
Jamie Baker	JPMorgan
Mike Linenberg	Deutsche Bank
Brandon Oglenski	Barclays
Joe Caiado	Credit Suisse
Joseph DeNardi	Stifel

Call transcript

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Operator

Welcome to the Third Quarter 2020 Conference Call. My name is James, and I'll be your operator for today's call. All participants are in a listen-only mode. Later, we will conduct a question-and-answer session. [Operator Instructions] I'd now like to turn the call over to DeAnne Gabel, Senior Director of Investor Relations. begin. may you DeAnne,

DeAnne Gabel

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

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

Ted Christie

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

and the pandemic company professionalism crisis, guest efforts has by be in seven strong members brand team we But team a today, business low-cost still to am shown and has our the Spirit before imposed our performance, will of industry. sit once their how model. satisfaction we dealing to resiliency from to industry-leading Together, dynamic of beginning consequences impressed ways our and metrics, of this I our thanks the the nearly and here reach profitability. resume removed challenges our image humbled as and incredibly all the navigated one first commitment I thank As I have usual. time. the business on improving team, with the COVID flexibility that and for of ever more months COVID Spirit have operational structure, go again, the We confident excellent remain sustained our we

to while enabled our a would programs Airlines. Various and find union Spirit to the innovative jobs opportunity esprit recover all I XXXX and savings us participation voluntary worked Additionally, team who a strong in acknowledgment like planned mitigate should de members, take special to corps leadership trends the furloughs. place provide demand demonstrates groups our capture time-off expected. this us to our preserving necessary faster with these to to options through in solution or May than programs The of worsen

also early actions We this of app partners. force team our and necessary help management through to but modest programs in Those and crisis. members were offered painful, eligible reduction manage implemented staff us business to a

that performance one plane quite business the especially back the complex a is can changes further we're numerous on-time on in in since a which Spirit operational light September the carriers. XXXX, second was as months well. ours. completion on-time of earned reporting three March, factor we recovery, during and third network delivered During among among carriers, performance This the XX% and performance most and of we Completion third steps continued the of excel. XX.X%, place the first and better Getting reporting important remarkable first quarter XXXX. factor in our ranked to is to which Year-to-date such of each or guests ranking complicate through quarter for third the performance XX, doing

will average factor October, estimate load For our the we in mid-XXs.

year-over-year reduced clearly what the on is factors capacity, products total more prefer While and repeating much lowest clear that Leisure still is of is resilient are indeed price they travelers history that these provide itself. load are travel.

demand. correct again model and respond tougher will months. likely in This we leisure our best our few as with be are recovery As It we positioned the the over building times past hypothesis since is been anticipate and proven demand has the beginning and have not will saying ebb cost of to structure once we linear flow. crisis, network shines the our to

to over us makes discuss it performance. and However, all details so financial the that, good to it to I'll more changes. quickly done we of With where react have to do to work sense add indications Matt revenue back and turn prepares capacity demand our

Matt Klein

Thanks guest COVID-XX, face of going the guests. Ted. COVID-XX our Spirit standards, high for some our satisfaction higher. excellent by take never want have about to members anxiety in saying guests. value to Despite start you by extra our the additional deliver thank challenges Their team service great of helped all our travelers around I to especially care mile brought by have metrics us been levels concerns heightened to

our guests our customizable focus of efforts; low options; the the Our travel operational health; have on sanitization and we other guests. make enhancements to course travel friendly are our experience guest to And, improvements efficient our extra value service. continuing made; and continued for we and fares

they've the usable The key integrating which new week, provide we program into best the experts itself. received last more announced offer industry, unlock potential amongst interiors, our public legroom. the on industry and our earnings feedback, January loyalty from of business and enhanced relaunching our as on enhanced upgrading loyalty out more seats, model rated rolling features bring we airline. programs, are us seat to have to the We in we've guests program program value comfort congratulated And are and cabin our for in new our

experience expedite and are touchless that check-in guests our opportunities for We improving travel process. rolling by also overall self-service the the out

for of stations, own And allows recently developed and have drop our in number tag our have app their own that to launched to updates we to guests devices We check-in. meaningful guests which many bags. our self-bag-drop shifted use mobile our already a

Additionally, guests' our airport airline biometric aimed facial experience. at the to first expediting Spirit launch solutions is self-bag-drop domestic on

third Turning quarter revenue now our results. to

Our total quarter revenue flight third passenger to year-over-year decreased impacts demand Total year-over-year. due from segment revenue per the operating declined the XX.X% in pandemic. XX.X%

While XX.X% only both expected, segment segment declined revenue year-over-year per Average non-ticket passenger less X.X% per fare and spend segment as fare average revenue revenue to decreased much non-ticket non-ticket segment. per ticket while per $XX.XX. than segment per to decreased $XX.XX, declined

we other because results. revenues so segment loyalty passenger not an reminder, in segments and had quarter XXXX, breakage, per our the to few a brand As such on outsized as related second items operated travel impact

from quarter, in was the with items third the these quarter last third the line during year. However, impact

is doing team our and Our non-ticket driving choices offering guests a great results. revenue more job superior

per network, international non-ticket our increase October XXX% their destinations fact, bands previous we've with to now XXXX, In some network. October international not model. for segment travel versus our is Fitting international restrictions. yet again seen we illustrating to right business Demand slightly of our in expected jurisdictions correlated of our operating the revenue remains but strength still lift are quarantine highly

while a doing we will international destinations, all pace. at pragmatic our So service to bring so have been we back

America period and Our perform. XXXX, strength – our the network our expectations American network international of current holiday for demonstrating versus travel Latin ASMs us Caribbean that increasing continues December network have Latin to

year-over-year. with is down quarter versus compared October fourth quarter equates XX% down to fourth being November and about XX% the XX% October be expectations. capacity Turning estimated to year. each December, approximately to XXXX to This capacity capacity last down

the Day, While situation. are post trends upbeat and Labor encouraged we closely we feel more monitoring by the

fluid We XX% how trended if bookings on is Based surprised be heightened restrictions see October to revenue and this will demand will and we period encouraging. be curves somewhat other the outlook. lengthening. change been quarter to booking have it expect Thanksgiving assumptions, down and materially normal pleasantly for the and XX% travel we both curve for Obviously, it still year-over-year. than disruptions, shorter correlated travel could current fourth with COVID-XX our but progressively we headlines our estimate or certainly As at the total are were quarantines, least search jurisdictional between

no the visit rebound followed a suggest go American remain United in excel demand ancillary happen well anything We will are travel this together our segments be the are with to is there some our have be to at by we to Caribbean our way and mistake on know industry-leading this while strength about part the travelers bit And more and mindful surprisingly, the bookings going serving back friends still core of our little model, that of low public. to of noise these But not more here's make to cost their opportunity to vacation that it, going bring the relatives demand and our and and pre-COVID been revenue recovery demand fares Not with may seeing travel. now And us but bumpy to positioned is we first solidly to we States, levels. Both segments Scott. are recovers segment. Latin among structure presents price-sensitive and traveling network. to model

Scott Haralson

maintained this the Matt members the success for a Throughout in to and I and have last attitude face of of team Matt. the the and their joined a of am can-do months to I we Ted Spirit honored Thanks, all grateful uncertainty all thanking part in dedication be the of organization of our company. seven our team.

quarter third performance. Turning to our XXXX financial

Adjusted share. million expenses or XX.X% was of loss the driven operating expense decreased $XXX year-over-year a by third was loss in fuel both net volume. in primarily XX.X% for million. adjusted to rate aircraft fuel to due [ph] per decreases and a quarter $X.XX This change $XXX Our decrease

as reaccommodation decrease accommodation a ground same last decrease to compared to in volume. year-over-year, period In Better substantial in distribution, such significant addition, were performance handling crew drove due year. also operational the other a lower expenses passenger flight expense and expenses

increases landing year-over-year to flight various Spirit a serves. the volume to significant and increased despite last decrease However, rents signatory adjustments and third airports fees airport in year, compared at rate other quarter due

ASMs we our fourth to fact year-over-year by fleet parked year. fuel quarter due we in keep as expect gallon, measured year-over-year improvement that to same the the next in Our about and AXXX the until see improved to per to part efficiency plan XX.X%

to with Turning sheet. billion of $X.X balance quarter and the the third ended cash We short-term investments. unrestricted

CARES $XXX brand secured by million $XX program funds, initial And stock notes, loyalty we we we participate the of our Upon million of the X% During proceeds. not had received payroll the successful of Treasury in issued third elected notes to that assets. million program. support secured remaining we notified the the offering, $XXX U.S. offering, our senior netting of completed loan the at-the-market collateralized Act completion and quarter

transaction. Earlier one aircraft, was of took two Regarding aircraft, which XXX of fleet, under third aircraft. debt-financed a sell ending secured in delivery leaseback the with October, delivery quarter of was took other debt-financed one the we and we

end will we deliveries, XXXX with two these XXX With aircraft.

aircraft We scheduled XX lease in XX have secured those XXXX. under direct operating are arrangements. of for delivery

million expect We guidance until six these the approximately for which expenditures financing, to In scheduled XXXX, our $XXX use first $XX last we our of $XXX of XXXX. Total quarter to a million CapEx since financing to of not aircraft, fourth June net of the will delivery, million for of related approximately capital $X remaining further be million quarter. or or are estimate sale/leaseback Most reduction expenditures estimated XXXX, $XX are aircraft. million of now the is for net financing. be of

outflows for for have about, other of spur again, other related million $XX $XXX not yet our and sale/leaseback financing to $XX use primarily we for parts. of to million million assuming including and spare $XX As financed is engine aircraft net six estimate aircraft, CapEx, about million to XXXX one million. $XXX initial another pre-delivery CapEx, deposits We'll the

for better-than-expected third million of than better This was due Our daily $X.X revenue $X and of cash the our some approximately guidance to averaged timing quarter. primarily updated burn payments. million,

burn million fourth of will what in our $X day, better XXXX. than per the XXXX, quarter estimate the slightly we daily quarter third average we saw around For be

any raises daily we service, and operating not or other reminder, payroll total include It a financings CapEx average the flows, from As burn financing, program. as deposit net of support cash of of payments. capital impact cash debt the define pre-delivery the sum funds does

have generation metrics, metric, position, relevant, less liquidity we we uses, but that -- more as Cash as Given the liquidity traditional extended gets become fortified making EBITDA working better beyond and cash has are EBITDA near-term a on margin its are and decision-making. our capabilities, capital our fluctuations our migrating EBITDA burn our for becomes less reflect such a important. as EBITDA cash towards burn less sustainable and margin. horizon, the important guidance runway, guidepost

to make is this goal in EBITDA. And we'll As that our adjustments up capacity determining with level down, capacity of an align to example, our continue maximize goal. or

quarter enough is negative industry. XX.X%, EBITDA second which third good in Our was the for best the adjusted margin for

quarter, negative our million, including fuel We fuel fourth to especially the to per we non-ticket range EBITDA strength between million metrics we're expense between $X.XX. solid load will $XXX at operating to financial $XXX of ahead to to are top-tier fourth In And X% resilient, a our numbers and reinforcing quarter Looking negative considerably, expect total seeing gallon times. model factors, of in margin estimate closing, production. a our XX%. is be our Leisure fares. strong travel price recessionary assuming improve low margin the

manage this combined We this sheet strong hard built with a that. and ample us well low-cost ready sets to While crisis. for bumpy to our structure, environment is we're This liquidity. predict, through balance with up

Ted. back with to I'll So hand that, it

Ted Christie

has job In the challenges summary, since March. team great tackling a presented, Scott. our Thanks done

continues for our a air While we not on changes the competitive impact represents negative do pandemic demand a it position paradigm or shift. to travel, believe have

doing Our thank the addressed say crisis. as, possible. and minimize solidify pandemic, great bright. very job our my this team is liquidity whiteboard, When of network guests I fortify this a that to we're and the the future team to in Operationally Spirit Spirit in identified on and have I pivot proud during magnitude Such to issues of and position thought of never still list our many health for great. members March. we advantage to accomplishments our cost the and to our through burn, I'm ways the I cash our that we ensure team, managing doing well-being

Our satisfaction ancillary have higher higher fares are ever our revenue is plus capturing metrics factors. guest they than been. ever And strategy load low

Soon and the advantages will With to recovery. enhance to our our to us our forward it and back that, continue will growth And I resume to the upon attention DeAnne. return. look finding be to profitability in ways to time turn build company's that Spirit ways for shareholder

DeAnne Gabel

Thank ready Instructions] [Operator take you, the to Ted. analysts. now James, are we from questions

Operator

Thank first you. question [Operator Instructions] from Our Becker. Helane comes

Ted Christie

Hello? Helane. morning, Good

Helane Becker

Sorry. Good morning. hear you me? Can

Ted Christie

How Yes, you? now you. we hear are can

Helane Becker

Okay. certain what Not happened XXX% like there.

Okay.

just have or I you of come in taking to good what about like the to did little thanks of my really you're percentage back see coming for And back? what actually question. I mean, sequentially bit nonfuel generating it unit first you're revenue. number two, So Lauderdale levels? just just seeing Could a seems And – down seeing traffic job terms number all, back have that I a Orlando higher guys time of one? on you Thanks. may maybe Fort XXXX get what's line costs to talk

Ted Christie

Okay.

summer during was, – And a seeing its well. your the of the regionally, our around off. on the regard issues our in nearly are we in more our Florida Matt our of of call in So geographic little in as indicated I'll I feeling we has of think and a capacity Florida and Florida XX% and – probably for it I'll to in I'm half focus with result earlier coronavirus. first the activity turned And let the Florida. Scott But edges. having our airline think has on kick going as responded disproportionately That Florida. touches Florida fill bookings relates disadvantaged to and strength pandemic network previous question as to with I sure that

indicated productive. can home that's seeing as comments it anything turn Lauderdale, that and want in we're more Matt, can from state flows in tell into And So Scott over in good our the as clearly Fort to you there? do well. West is the Coast his we down which across activity and Orlando our ads you the and there to been add from and Caribbean, Matt

Matt Klein

beaches to up people No, things Florida. that do there example. But we've parts down from got well remained North would in as open do for of across were up as in country, the for Florida, in seen to knew just seen to they Florida think, as I add opened here of more other things Florida we've here that's I and country true things not the that, Helane And example, open and parts other just once well. once more are in this the there up as

and from was mentioned Ted as feels we're for geography like and the impact there So some early it our holidays feel. that's on we rebounded up well set Scott?

Scott Haralson

ex very that this question. When fixed so CASM costs, Yeah. is operating Hey, pre-COVID. Helane, of about think out lean were this half to already we we the able reduce cut XXXX answer of costs I'll were expenses but back year we Scott.

to and extend. airports every airport rise are expect in having also today XXXX at deficits of will XXXX, an continue know, long at other pressures Airlines the will we how term. to that see to So in Spirit SWB near the And cost. cover Don't in some beyond airline. the here and

ones to to little of going versus the not we're pressures. in So lean some term. financing only deal to the more industry also lease We're the bit a near debt financing with having

to So CASM. going that's pressure

So be that that's it's we levels, difficult getting on to and going say. at CASM haven't to to pre-COVID given up back all. easy But

of these to the about to some really We those can post-CASM, still are to some but help take to. little early it's talk have we mitigate what of pressures. pull, a it's puts But and levers going takes really

Ted Christie

very it a is better a got in bit of benefit. actually year I'd we difficult The recovering as that tailwind be that that. the things we've other feels And And you spent because going miles summer. a add the amongst the money, quite for for like year a earlier had mirror. from and a lot it's Spirit. will forward, rearview only operating in We recall challenges in XXXX thing, But of

when objective else. the our definitely is But we we're seeing there's against to that maintain everyone when other way things across to said, look like deal airlines look up, competitive our the puts Scott And as we at advantage that are industry. and widen here at set pressures how have So with and than the we to takes theirs. better have challenges, similar are going I

or CASM we the as against airlines. exactly. given more or upon expanding And of on important XXXX XXXX, think achievable Scott near-term. What's And is that. know very that so we said, levels we XXXX But in absolute up have whether we not we're haven't that we do achieve that advantage don't other in that's

Operator

question Syth. next is Savi Our from

Savi Syth

good Hey, morning.

look your of with in the understanding in of to October that being I improvement? can if seeing expect much capacity if what the better March seeing basic perhaps and similar change, we're but at kind things should trends of Just approach? capacity we January, planning December, kind February trends in that November, Is hold that current

Ted Christie

it's Savi, Hey, Ted.

has about XXX quite pivoted in day a the August around. in mean, and so. our way or throughout in we've capacity seen So and been tactical course the and – flights I May XXX in flying were XX and flying network July we of our it pandemic you've the flying

saw So about October based we us off-peak experience linearly for behave and One January same good now, very on thing, we've the in the we're and I and February. in how would information we would say normally. necessarily feel means it And leaves. December. way we that and didn't in evaluate September the very the tea November what at Right will signs reading digest been that careful the positioned and in

September to example. you're off way well recovery for say be versus November be where it's where as January same was should should off or through of thing building So not August was your the

I setup. just think different a it's

again. we'll we'll able accordingly. next we're growing in A time where XXXX. this to can to midpoint we'll not airplanes change think the and if back. our us be XX this or to real along and were continue by those So see And adjustments make if continue be then year wrong start in of things right -- And you're to sort our momentum is whether accurate taking year that's closer we of thinking case. And about we or And base is and next we evaluate Plan add right we're going

into the protection. model that got comfortable As Scott a and we've think I built we've of and said, lot downside we're up flexibility

Matt Klein

Ted I Savi think in the that most -- days off-peak addition specifically of January mentioned we'll we think and what is what to those February is in of to add about week be just evaluating how months. to to and

of travel spring with of the is course, we what we but get really on So support going when break peaker to until we then think and what about we back into closer we to those think happen to a as off-peak this period week fine-tune is the get we beyond. and can periods days strategically demand

Savi Syth

sense. fleet kind That had with just you. makes of -- that And finalizing Have you side Thank financing Airbus beyond side aircraft the kind reworking kind XXXX? kind ask XXX on I the of or Is things. or on thoughts schedule the if might there of even of the delivery on any timing? discussions of delivery

Matt Klein

XXXX had deliveries – delivery and And moving Yes, aircraft to of our have of of back where that actually place. able the have we the initial we move we and but first we discussions half that didn't half feel into out XXXX. were comfortable reworked -- our stream front in periods aircraft there the obviously, really

actually with sit plan it lessors. feel is along. might today. where supplement actually been we those as good That's deliveries We direct of the about So all leases from some pretty delivery our operating

our think that Airbus down book would think that flex up capacity. move a But might be from amount lessors So order We to is good might we I I spot. in for. the pretty or the look

Savi Syth

you. Thank

Operator

is Next question from Duane Pfennigwerth.

Matt Klein

Duane. morning. Good

Duane Pfennigwerth

Good morning. Thank you.

required when just your network of back questions crazy a good planners network needed. year network of for Such plan replanners. done couple me. changing your you've job pulling when for So the I a agree a

think long-term planning you that there anything from organizationally is experience about take your year this away process? you this As improves

Ted Christie

answer will and to going to -- comment, start absolutely, a the question I'm yes. but going I'm the I Matt have think Well, to is

close try very going implemented probably for monitoring to how But gives us. we've around our spoiled horrific the a But industry in. in responded. been hadn't not ways for we So route in to sugarcoat interesting general closer because some how this before that I'm in and period visibility has it. always trending maybe done enhanced profitability we with us network is were it clearly airline

thing. that's And think first the so I

I lack focus to at thinking be profitability about is, counterintuitive think in on or we've or is around generation, today thing interesting second places thereof the that cash I where relates optimal is we some we're intuitive which some might what and very while it sit developed some tools too as capacity, think, to be honest.

think placement capacity we've and both be thought ways. I in dynamic We also So about but more network that. much in be about can different thoughtful that deployment in very

So...

Matt Klein

lines That's network really where we've planning in as as been that company in really just most data-driven and synthesizing right. side this the possibly previously. be. that for simply years other a even Duane, just using for we collecting we're falls the it the I we being the through few has about data add of along could part been of time, talking would big And aspects it hadn't and a way come certain we've anticipated

to new have for they're a in of now and think necessary So infrastructure as the necessary in bore that and said, been data as great pieces and it's good now of Ted ways well. weren't we future it place use

Duane Pfennigwerth

the the -- to you're many industry is we along think going on bit do the it's lines right chicken-and-egg inventory that. service. if shelf Like And of not a generate if not that revenue industry revenue. kind now And those as challenge then have just direct the the Thanks about markets of right? there's so just recovery, not for a

So a to depths And specific a this breadth, for thanks some is taking look for questions. markets? as from going in world this invest building is time you the time at the in or forward here

Ted Christie

a will flying the expect It's we've network to question. come back. is it now answer over And October right our from as obviously great that Sure. to time core pull had relates XX, we

evaluation is the believe to So back in the the an to advancement. is needs network mix be. In first where there it of move opportunistic restoring core we

get we always and country there we concept the to of an So But we where to way. perhaps like America be in your we have around throughout looked that. and to and Latin Orange your example is Obviously, are looked County at opportunity that that idea determine attempted depths areas have would or have breadths into? of

believe best So, the to back now step still network the it And to right as around most the flying where opportunistic that -- the we before. to those then has that's for ideas are on the table first be was Because be the get part. well.

Duane Pfennigwerth

Appreciate the thought.

Ted Christie

Yes. Sure.

Operator

question Keay. next is Hunter Our from

Hunter Keay

Hi everybody. Good morning.

Ted Christie

morning. Good

Scott Haralson

Hey Hunter.

Hunter Keay

some use would you XXXs bring not AXXX aircraft? On referring remind you're -- or And demand then little all bit where back you me maybe scenario continues supplementing correct? maybe you is don't said get larger basically Is just and of little grounded. there they're you Would that just those for to the to you to XXX, just you back bit Scott, you kind talk family with and leases? replace about them? if amount better a would out struggling bring drive operating swap CASM Is you're deliveries what that and when a scenario, a those planes

Scott Haralson

Right, Yes. right.

So, obviously. it's Scott,

-- useful period time parked the where yes, are grounded think not are we of the they just again. necessarily today advance parked, XXXs but So, they'll in be

So, when point our because They're planning at XXXs oldest we fleet. we've for think about away fleet. go the obviously, aging to in aircraft are our those they the been some

may out or we replace where that those either whatever XXX or likely have be. XXXs future at would aircraft the into some XXX with we planned point So,

when aircraft accelerated near-term think or those make outright cost of because components and of If matter felt you they about them a inexpensive. there to retirements pretty timing small we really those those if it it's in today So, unique some we own We timing. the those today. fairly was the have marginal that fly an operating opportunity it's

things happens do with demand. what aircraft we some with are on depending can there So, that

near-term. is right So, we as the But aircraft right view change it and those aircraft things AXXXs we're for capacity. flex where may now viewing depending the us the on it which is over all for market

the it's in the that We're all right to ready what the a to are call sessions make to will demand-driven. near-term. are But those going on happen going So, XXXs now. be on not really

Hunter Keay

of Okay. And fly Thank then your you. customers what alone? percentage

Scott Haralson

Hunter-- Well

Ted Christie

know top the the of number I don't off my head.

Matt Klein

We're dissimilar in I've Yes. other the actually not at that worked past. airlines from

half in to on it's a around their own be going passengers So, the are flying PNR. roughly

Hunter Keay

got Our question next Okay, you, Baker. from Operator Jamie Thank it. Matt.

Jamie Baker

term the but not opposed Refreshing to surprising record locator. to six-digit hear as PNR

You industry my -- one of knits. just

what the territory. possibly seeing on early last in to TSA So, negative volume if started last corporate growth side. better? week with Or your screenings week-on-week influence that metric the might on there's of case which I'm into week slip you're figures -- wondering in broader consistent be somewhat a that's if

Ted Christie

it's Jamie Ted. Hey

indicated there So, as that our reflect while that clearly throughout would in way booking we and flowed the Matt's haven't too yet we was headline the ebbed anything and seen trends activity comments course have is and it moved. that's that I think in

we So, but But capacity demand of it's to a not we're that related we're as possible to change segments in may TSA your carrying today flux be sensitive haven't trending point. in just least seen the to at other that that.

the we're the prepared our being wanted I one ASM it. in we that it to remarks and And that think So prepared or careful deal we're to clear watching with we way make we're around always think other.

Jamie Baker

very helpful. That's

-- a and Second relief.

if point just muscles, that using Duane's some has corresponding I'm jumped it nimbleness this was operating your more wondering you're well. Thank Second are specific component -- of point, question thought Again your practices getting that analyzing was whether about of just you. around. but of capacity not model. it though how as What there operate a your to you're always up. the measures thesis. was helpful if your I'm sure quite monthly look how feels is there's I'm part is good We've very about sort or to picking you like some existing that what to much you at curious made best It are operating response a data. just better. you test how to

Ted Christie

sure not practices, call best them the Thanks because of I haven't agree of you and from I'm extremely team them some for somewhere with would proud -- I the think compliment. I would else. come they I'm but

clearly. developed It way that be I think network used block starts building in with a than much own. come network before. has team a make plug-and-play our on to more with the things we've up network And to it the few

less go can the network, to come ends time. being be crew and and heel So up our damaging out flights which Achilles to in from time

that And extremely so, I our well. have think then it flocks navigated there. starts And operators

to practices, being to up So us be than be we line guess, we're our tactical honest. that not have It's wasn't some their aware different on leadership way variety the I extremely it's with union that It's I'm of a running in before. And, in best bid I to of added used to -- worked we've of, close them things small -- the construction. way procedures. doing

up came we think with I So them.

-- So

Matt Klein

peak need year. normal. that larger up travel what and a planning Yes, working be and down part that's be group that where right. crew This every to And, aircraft we're scheduling transition the around We go to ready the groups. position network the can the perspective. they And as even Jamie, very, closely, is than from make between doing periods. flexing day to year maintenance Ted and very multiple we're and sure here need do mentioned, operating the schedules go, And get is and of

We've things speaks our and And for our mention, how team ready this. completion team been to building So, all Ted And and coming getting knows of the here do to think together. on-time factor, our performance in place that. I that's that. those as

have great everyone So see work traditionally together. added, it's airlines siloed off. been been some things to On

is together. and well ecosystem working big everything one Here

Jamie Baker

Linenberg. Thank answers. Appreciate Operator: from you next very Mike Solid question it. Our much.

Mike Linenberg

you, trending two is sense the a a little hear what three versus morning fourth network And to is. short maybe if how bit everyone. could just that's Spirit what give purchased curve Matt, in getting about percent you how it's the booking obviously ago guess, tickets right I and holiday year on we Hey. Q? approach I is of of it within. a if lot seven day season, here. But it are being maybe or a was we don't longer. maybe maybe Good as us sub-Q the know, the

Matt Klein

important, the compressed periods, is it's is as in expectations just I you. up expecting tell it's lengthening, And holiday see, And were are lengthening. even what that is and And compressed the to news like see the that last seeing the this great answer around what's happening. is we can in a that's so, week we've curve and compressed are directionally to for what's see I it that's good question to cannot and started which one sure or to we environment. seeing it's me, that making than I matching Mike, you So, kick happening is said. curves really to more but But you'd that we our in,

is answer. what can that I that for So say

Mike Linenberg

So those this cities your the broad rather to second, when that network. Rica, testing customer given base? who situation out Obviously, is in are about just talk all sort front? look follower curious be what have And it's question Okay, where Spirit take are American Costa doing at carriers I'm sort of Jamaica, you own you great. of Bahamas. markets other just, of do to type important their better of can price-sensitive predeparture maybe a of with something are of we Or then leader, or than on rolling sort COVID kind maybe your on you're a the there, a about And to to context flights processes, Spirit just looking for but a that it.

Ted Christie

Ted. It's Mike. Sure,

now, answer customer. that follower, passed I there testing So available the I in this think circumstances industry figuring use the out is. through the Right but tends what to are in some never like to is to best be the word regard

more things does I these network And have international to of the think and site be testing locations to the it's a a make next step. that and a with the airport step. in to because access the quick require been for they be That We've helpful to becomes or at done -- could conversations just fixed routine. with within looking testing accessible it's available and establishing us, it airports testing a that's So first are there babysitting right been location if regard then, at variety lot today. who the our would of margin

not have I the guests. to it, But be convenient if word it or make it for And our will available we navigate. for word on better dirty we'll way talking lack a had I we so, which with best integrate know bundle for and of a to or more process whether tends looking it us, think don't into the authorities, leader to for to right? airport our make sure, about we be be

Matt Klein

Yes, that's right.

that's So, is anything your more side, than like referencing. on question was -- think more else about generation what probably I Ted and the demand

operationally, of Just destinations in international arrive on before number kinds those checking that a fact, destinations. few would have the we into of that have certain do tests we to, quite even require guests

So couple it's now are for sure the the there good is weeks make pretty tests we sure all definitely some on we make pains to that. a and that have feel right and growing correct. But know under we control of paperwork that how

we side operational definitely the on on least at handle So that. a have

the airports how that side properly. airports, it understand means but what in, with on guest demand we the we're even of with the closely would working to participate get mentioned, Ted in As that hands and does something that's working

Mike Linenberg

Very good. Thanks guys.

Matt Klein

Yes.

Operator

Our question Brandon Oglenski. next from

Brandon Oglenski

morning, partnership Hey. should something got and admit the Maybe really with joke. thanks my the still single get cracking taking for you And program. spice up a guys question. I everyone, about to frequent I'm or Tinder Good flier up

divorced. I’m Sorry,

you revenue me. let's appreciate really on recovering to say margins, you So outcome wait out that's corporate seeking But outlook investors back, we not you cost do do pretty the just still not funny your Ted you be the because that. think breakeven going a here to think as higher for aren't industry we it So, travel to can out? have with as larger EBITDA competitors guys? same or to markets get

Ted Christie

spent last So mathematically to time bit Scott versus not it's that I've to me they on to even evaluating other you what our and are, question. or revenue unfair he order revenue a reference and need when seems inputs heard yield. or some also of And to has a position works. be year's great the because a carriers here But which fly in me it referencing little the follow what much be could to the get to we've will to how load of how percent lot you're thoughts break that capacity plan market

breakeven with your of perspective. from Clearly fixed example with XX/XX yield XX% you so even break And a a impossibility if variable, I you at think, fly you versus for can one an that's flight, could revenue.

hurdle XXX%. needs it be. produce and cost we today, back leisure want So above a traffic can And customer that back much fares that at rate, is outcome? way clearly that trend the breakeven our higher is can know factors do be better profitability prevailing load Unfortunately where breakeven these will where we EBITDA prevailing that The on to who are into we market. have results fares or today a eventually question low-fare eventually be we be, carry capacity what to and see will considerably carriers we positive do to based the and that will higher always when our get we their at therefore

think be Scott I a have and rationalization navigate So to you… what there, in there eventually it. to would prepared will we're

Scott Haralson

Yeah.

I that push to a cash that call-through amount to business to with high on think little a has bit is very fixed do, a of difficult further capacity. airlines that as any limited it's get breakeven

And about around in order point this reduction. and of your is breakeven the really EBITDA higher the you're math works yield if talked capacity we've margin. to revenue handle before, almost the that critical you XXX% to way That's As so reach reduction is can of the proxy for is that your you your in flying best capacity, relative need component nature where the less your you right? fly yields your

reduction also yield. previous corresponding could handle the need you that you in would to same a capacity Now but level

point. So reduction in you either in that reduction EBITDA or yields margin same capacity a to gets breakeven

get you start capacity makes difficult are and than it it cash reduce and lower numbers, if Now you're yields to more to previous that to breakeven. having more

breakeven. they secret down, or already need get very will of what to learn either has do. that or industry think the both I difficult the yield the learned know them you and to dirty With is cash the capacity that's So to little

Ted Christie

capacity our to a base that than our is breakeven else for ramp fixed is and to us And smaller clearly for because back anyone the yield previous us gets to smaller. get is it

Scott Haralson

So said a is hurdle point it's rate that the Ted critical lower.

a is So you lower. just total allocated covering variable rate to should cost higher allocate, naturally smaller. included The expect Spirit the carriers than cost rate more just fly fully hurdle And low-cost and the carriers. between is

we'll to low-cost math flying cash So breakeven profitability carrier and ultra-low quicker is work. those. the more who's carry fly to We're and is to an the way we'll today just leisure will That's way quicker. the the likely get cost And be math as works our travelers. set

way playing out. the that's So just it's

Brandon Oglenski

the Matt appreciate of thorough no your I change if or going does moving you a that. environment fee all I versus that if a forward non-ticket? that your comment on that. dynamics also think was ticket lot I change I there But And the you or on non-ticket follow-up in on with competition at can up ancillary could mentioned actually response. guess revenue

Matt Klein

Brandon. Sure

the our fees are of now the like waived rest just industry. right change So

So differentiation is right in change there product zero. our right now. now And revenue basically fact fee no there's

of So up fee non-ticket when slightly headwinds I about talk no the face change in revenue. the October rate being like that's year-over-year

understand a they're a a sure away And great to large collection So great for and talking job is be with still fees however, piece job in having that assignments merchandising making when something really collect the to are well. that it's about of what a the that's relatively for sure purchased we've purchase on. do success. just about the based best bags to Overweight a at how charges price -- yet how as And which things we that's that that, airports job about been we're seat the lot we've to bag just going making think our done a we gone of also think of we understanding good process. doing is those when while, on and

that us assist the technology And place actually some we're will of in over in putting time too.

moving that forward. I know question, if that's how non-ticket thinking perfectly but about answers we're your So don't revenue

Brandon Oglenski

you. Appreciate Thank it.

Operator

question Caiado. Joe next Our from

Jose Caiado

Good thanks. everyone. Hey, morning

Ted Christie

Joe. morning, Good

Jose Caiado

on Scott the for sheet. Question balance

completed You at-the-market equity your distribution.

the debt raised chose not loan. federal secured to $XXX You the consequently take in million

raising next time are with move And make? So addressing being? you you to capital for the the balance it effectively maturities? now what's needs your Is XXXX done sheet need

Scott Haralson

Hey, Yes. this Joe, is Scott.

So I think you're right.

is Obviously, done we're short where balance what think to good feel see of maintain a the sheet. on wait-and-see term. about today. in we're the the the with approach pretty been sheet I recovery. We balance the able happens health We've to

at as reasonable a a we considerably. our Our That was goal about capital. bit level net leverage is thought not up little reading but from XXXX,

CARES good a here. and the us Act the capital bit So equity provided of flexibility

So we feel like the spot. balance sheet in good a is

We yes, see plays forward, going think production side and EBITDAR I that out. about balance the it's as through other think the reduce going to from time we in said like you that need maintain like EBITDAR net and or were sheet be but we'll to leverage that's that Now But we'd able to I come on get how okay over to production. the this to going spot, position. decline

that's profitability talked the us. owned. to We term back leased it going to And be in about more versus really get trigger think change important we near an fleet. as So for we financing about might how the aircraft

extra pay thinking about We net in carry idea the actually term. is will may the little down So position. may I an leverage the higher be by capital think deployment cash important. a But to debt. not cash We short balance start

be of down going more to carrying There cost but debt play cash. coverage, will paying a either down. just or will So we're net little with be leverage

So it's really about net leverage.

Jose Caiado

it. Got

level, How moving Okay. I for salaries and we a quarter? follow-up -- us that quick for capacity time should May the for assumption think Thanks next out about secured given the can might from summer? for help we modeling just voluntary savings just next a the in line everyone. should you base your quick levels that then XXXX How employees that. XXXX, about flat you high Thanks you've about then the be fourth was a third forward? for Scott. by think quarter. through also there the And you Still And to apologize. case close that at if question and It wages your

Scott Haralson

Yeah.

takes a So puts of and here. couple

We're did to than we're So our going XX% QX to little more a going in for flat QX, about in airline in around fly by bit QX. probably QX be SWB. in we

a did QX, we in leads So have do considerable than from had in but benefits in as amount well. QX we QX have more we

maybe $XX having haven't -- correctly and we little modeled of benefit that to leaves So to -- is a bit and the that million is -- not number is not furloughs we said. sure make a said

fourth play of in So about that we that the half because number won't actually in the out third quarter. had quarter

little bit flat well. increases that by there So mitigated SWB capacity as in a quarter-over-quarter number is

So year, when haven't we next completed we our for XXXX. think budgeting about process

it's reductions say. we But to grow the be difficult to So year. in the that we a some we will again. airline of beneficiary force planning of have this But are

to So can costs those. we're training fill increased and that sure have make crew we going to

may to year see we're I rate. may think So be think But XXXX. ASM last an some we to some on I basis normal back benefit in We going pretty run close areas. get ASM on that

Operator

O'Bryan. Kathryn from is question next our And

Unidentified Analyst

morning good time. for Hey, Thanks everyone. much so the

Ted Christie

Good morning.

Unidentified Analyst

Good morning.

excuse impressed in, hear me -- me? projects that is non-ticket non-ticket those and light well demand held the non-passenger, not Hello? So gap fare. you it purchased? strength. growing has me maybe for guys in especially been coming of passenger non-passenger to the how and ticket just once been Can back I've just this between per Is that's inelastic non-ticket average excuse

Matt Klein

Yes. We just heard some music.

Unidentified Analyst

Oh, yeah.

DeAnne Gabel

last the repeat Can question. part you of

Unidentified Analyst

Yes. Sure.

outlook. then expect terms underlying a there. lengthy well that or I driving and of what the purchase been with purchased, quarter, improve are strength for question question like revenue the realize systems really to is, is for I your to fourth demand this seed into be loads in the the or should basically COVID, So expect we also getting assignments is just has inelastic fares is guess just the demand And ticket been once should own an in acceleration seeing products things that revenue as these you increase we better? or once non-ticket has

thank you. So

Ted Christie

by including definitely But sort comfortable products our of big on years we're -- a understanding floor and definitely better yield much understanding better demand that front how product products. that. we revamped of on what's experience, to helping of say certain seat feel the further And want I'll now try inelasticity especially has guests the I choosing Katherine. would value. there's all part winning for some I -- think having out is this there, validation what of our there in knock optionality as that And of just we're right what to All to drive -- you. them in environment, that app doing with. guests job go mobile supply say constraint recognize a and experience out overall, that ancillary because I as that a Also right travel they understanding that say, our now. is there's level a their is the booking just want would right our

So technology involved a continues lot improve. of the to

So, it's not just also environment. understanding improved. demand products the of has It's the the distribution

ancillary think when the traction revenue in continue factor In it about fare. to the terms well as as load passenger overall production as we quarter, of good we sequential to relates see fourth

to would marginally seeing we ancillary as see add And the itself. the passenger sequentially good are fare improve that So, related across strength again, fare board. the the to improves historically production we that I

itself. act So the we've pandemic of normal that a to passenger the would we after tailwind through as additional seen return We pandemic. the improvements further as be that that tailwind to the should to fares worst a expect get during

So you. hopefully I I but for thorough tried be to it caught

Unidentified Analyst

great. for out And just much Thank if you That one quick maybe for Yes. I fill was one so can Scott. that.

airline sale/leaseback airlines looking generally Thank more what like perspective? terms for your look right strapped. sheet everyone. market add attractive that this the much it Is now getting expensive just does more so are lessors from or as as to getting you financing are balance like given to more looking On option a that bit an time opportunistically, are growth

Scott Haralson

Good question. Scott. It's It's around. Yeah, moved Katy.

were the additional capital willing COVID I put process crisis not early in work. to in to lessors think the

I open most U.S. So think the like especially Spirit, think like money tough. seen going credits I towards But up, sale/leaseback us it other of carriers. to and credits for good navigate market is was we've the

opening we So that speak. market is up as

the go-to-market pre-COVID a this higher think year, the going that either them numbers to are pretty pretty or little I to year with close. next that or rates bit to seeing maybe we be So expect by we're competitive an And pre-COVID time be RFP levels. than pretty early similar late we

Unidentified Analyst

Understood. Thank you very much.

Operator

is question next Joseph And DeNardi.

Joseph DeNardi

Okay. morning. Good

Ted Christie

Hey, Joe.

Joseph DeNardi

model you in your a think incorporate aircraft Ted in points the couple at little I'm an see if broaden of as the this that's you and out business target the lower maybe more opportunities attractive used path? bit opportunity for utilization market's some wondering there? all to Are still of been I question the past various traditional a the more markets years.

this all changes curious you see Just if that. how

Ted Christie

Joe. as Well, thanks --

ways, still that bright. have take our an Scott flying that As kind earlier new type has to low aircraft. I and thought And alluded But We regard about do aircraft. think reason markets. not Scott have variety that being the window look a asked We forward, to very different official with robust to the of stimulate sits we're we Because for -- schedule question still as larger new as be a in been on the that conclusion as with we is deliveries see when about answered formed used you we opportunity and very honest. know can XXX be in still not model delivery do in of fleet which we have -- we of to. it utilization was

significant of one airplanes press be be is where well. that's our the the past, in tailwind over that's will that, picking about the done think will side the our efficiency we've the think going to advantages I the core on marketplace in our I move of fleet a time. of that than be the And neo-powered. that Because probably holes doesn't going have that, industry we because a faster lot of get focus. rest that be fuel to So us as will of margin talked percent And for new up

around And in that those continue. should there so, at I we -- look thoughts some airplanes are there sits expect using our today But unique in ways. think at would least to fleet, we

Joseph DeNardi

think as most you do or once or airline And kind you you the does if maybe happen reoccurring as something a again, all maybe Got that Ted it. potentially about to that Thank That's to and Scott, the be generation, Do look what this just in you post-COVID, you this needs like of and structure? the helpful. it then needs see when incorporate maybe capital specifically that or of to see do you. factored it kind as structure factor capital in not doesn't same this hope do even in into the magnitude.

Ted Christie

Hope comment. is not strategy. a Yes. I'll just make a brief

in this a as while we a So, bit We're away new sheet we each little of And learnings. Scott think earlier take problem. digest now. little the right how more probably liquid it we say about of for from maintain heard one things balance these you that will we middle

to that. feel about more or or it's more me be So to I little say frequent it think it's possibly black natural for bad we But hard or whether a we'll than not what swan probably bit good would -- that a careful. be Scott?

Scott Haralson

agree. I No

managers business mentally. look has as this us think scar of the all to I crisis been of a

how It So business. think you the will. it about changes

across finance conservative balance of Tomorrow a think sheet, this for about for meeting difficult the plan likely industries, If the up group balance different sheets. management how we the I to locked a see this. for people a Board you'll lot room like might And yesterday. to of Very so, nature out that crisis of that That of think this crisis right? any have to we or would story. have a meeting is brought plan magnitude, get our was would we

throughout we'll the see we conservatism so, business And likely expected.

Joseph DeNardi

Thanks, Scott.

DeAnne Gabel

James, our we're -- for completes time joining today. all think Thank for us. I you

Operator

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

disconnect. now may You

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