Spirit Airlines (SAVEQ) 29 Jul 212021 Q2 Earnings call transcript

Company Profile

Participants

DeAnne Gabel	Senior Director of Investor Relations
Ted Christie	Chief Executive Officer
Matt Klein	Chief Commercial Officer
Scott Haralson	Chief Financial Officer
Helane Becker	Cowen and Company
Brandon Oglenski	Barclays Investment Bank
Jamie Baker	JPMorgan
Duane Pfennigwerth	Evercore ISI
Hunter Keay	Wolfe Research
Mike Linenberg	Deutsche Bank
Stephen Trent	Citigroup Inc.
Savi Syth	Raymond James & Associates
Chris Stathoulopoulos	Susquehanna Financial Group
Conor Cunningham	MKM Partners
Catherine O’Brien	Goldman Sachs Group
Daniel McKenzie	Seaport Research Partners
Joseph DeNardi	Stifel, Nicolaus & Company

Call transcript

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Operator

Welcome to the 2Q 2021 Conference Call. My name is James 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'd now like to turn the call over to DeAnne Gabel, Senior Director of Investor Relations. begin. may you DeAnne,

DeAnne Gabel

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

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

Ted Christie

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

of we together pandemic, with by the dedication to team our Now up the members. Spirit I innovative I'm summer ever to impressed through take the we abandoned grateful secure recovery. months and our eternally move and of as guests. operationally has airports. ahead nearly for grow full with crisis, XX come future, save challenging care aircraft solutions into the all work of and jobs hard proven and course very busy more to the the our proud be This Throughout

Turning results. quarter financial second to our

operational the backdrop an together network industry. improved reporting our among financial and best in execution, the demand Solid with results contributed to

While for on our profitability anticipate first $XX.X million booking we of pandemic. we Based second trends, June, recorded of and profitable both a delivered net will since we quarter, weather loss XXXX. the we quarters the of the in in be and across current of the onset recorded elevated strong capacity. third month industry the due volume congestion fourth airports our despite team at Operationally, network systems numerous of results to the

factor XX.X%. performance through Our doing was DOT quarter an is the on-time excellent team The XX.X%, job Spirit for completion our managing and was recovery. the

details is to deliver it once that, again are continues And still they are growing of but to as our we and efficiency we ramp our to We grow much team further to high to Scott doing job like and gains. There we With attain playing and sustained and profitability more and The over quarterly managing the I'll stage our non-ticket to strengths revenue, Matt of be set, done to innovate positioned. our utilization, we will business to full turn how discuss great model. see costs. is and are the shareholders, a returns performance. network

Matt Klein

Ted. Thanks,

a of revenue trends our and to of discussing explain on season. second be travel Spirit In sequential results I'll as results quarter second team airports Second the our entire taking comparing I'll second quarter but are basis the during illustrate to quarter want busy we this first helps even trajectory quarter Flights XXXX, improvement. to busy. doing today, also care so the other out than each turned guests anticipated. I thank and better full very to for are excellent

that XXXX similar in the load XXXX, on XXXX markets XX% as sequential to operating Compared trends yields as sequential down an revenue June a compared and to as expectations. XX.X% compared in higher second yields better Turning total international on second second This our capacity initial XXXX X% smaller significant in nearly the was improvement less helped quarter result first results. to compared flat capacity. Demand operating June well capacity. Total to operating progressed, was our improvement revenue such saw to improvement domestic quarter than quarter now much the were drive revenues XX% increase. factors, much our quarter

we segment same decline total per strong did a non-ticket period but per X.X%. a XXXX, passenger XX.X%, the on saw segment passenger in basis, segment declined So to segment component revenue per very revenue per compared The revenue performance.

increased we're segment lead for $XX in to are enhanced prouder of Our continue deserves non-ticket working a increase. the result quarter march and break driving to entire customer-facing we is record company performance. initiatives. and the well. investments again teams quarter. one and This result. a to doing and of same improved this non-ticket offerings, efforts, product as revenue record across each we'd Spirit, for non-ticket upward XXXX, compared management We're battling achieve The incredible revenue X.X% these result paying said to to the team per we that basis, $X.XX teams a fantastic continue these the revenue are management on We credit the quarterly you segment of non-ticket but closer our of moving you areas e-commerce Thank while realize in pandemic. on expect this still per to benefits off, this through The from through airport be services a I couldn't lot our revenue and even that every merchandising

ticket up equation, peak while. little and to continue seen recovered for travel have during of yields and passenger periods been will the up largely have likely a Turning the challenge largely to load we've push around and focus side to to opportunity factors The the impressive XXXX. have off-peak be yields a our caught

XXXX segment. well business as further the as leisure travel passenger progresses, in gap per to expect recovery the as revenue we However, to close

improving network the helps, certainly our driver revenue assets of demand is while largest trend the and deployment performance. of our Additionally,

us our that profitably demand guests. reinstating fares, high capture to in recipe has be record positioned addition success. to of allow to cities We very the We the demand picking market of levels, have route This our low very been a to continues provide to remain strong prepandemic we've entirety nearly adding well to been and to value new and our our schedule. track markets network offer of busy stimulate

service of second XX quarter Louisville, routes, added which We reinstated St. past in cities Over we months, Florida; Louis, Mexico new routes been the and had suspended. the Portovaarta, Missouri. our few and from commenced Pensacola, Milwaukee, Wisconsin; previously new Kentucky, XX

our Angeles, Some examples LaGuardia new Juan. of San from Airport routes to and include Los service Nashville

Los Los Cabos. from Angeles We also new started international to service

in And leisure from GusaGalpa, both announced Manchester, new cities Miami, the before service and year. service will some Florida, Hampshire Spirit routes later to And City new feature announcing other President Kansas Columbus. and will which airport start origination to us quarter, new yesterday, second operations begin like operations New Also which the October. just examples joined into during just the of Honduras in Thanksgiving this

sustainable for to pleased in being route to deliberate growing a ensure long network our very we the to While build are term. are general, that again, deployment we continue we be with

quarter quarter and third be to we XXXX. to fourth quarter July third estimate And -- the have factors outlook. quarter, will fourth estimate strong. be The capacity XX% For been revenue for Moving the yields up the capacity we XXXX. versus quarter, up about XX.X% third ahead versus load

normal more by period revenue Labor EBITDA to early normal. Day Our guide is we this X.X% be also $X.X be typically strong. is this books suggest for The to $X.XX year. through or booking point, third different trends which post to of implied anything will to quarter therefore, is Scott. XX% But on the visibility aren't our September limited, seeing seasonality our time September indicate XXXX range closer And in, capacity. in trade here's August billion at will now compared up from The XX.X% billion somewhat

Scott Haralson

and the our and part system, the hard continued members In team. me and I my spirit proud makes hear Thanks, it work, for to of to the travels I team voices want also thank the and their see Matt. their I around commitment team dedication. be

quarter performance, positive adjusted produce to of and demand strategic our environment strong the our assets improving airlines deployment turning for we XXXX Due were operational one quarter. second second to financial few performance. Now EBITDA of our and to entire a only

lower This increased cost. expectation Our Total X.X%. second our EBITDA and cost margin a both quarter for the second result quarter was than operating was better to revenue better XXXX. due the compared X.X% to positive much initial

good as performance shifted cost of better strong at Our primarily and than to performance. expected, a operational slightly rate timing slower to used increasing that due management. events Therefore as was QX, expected, well some cost fees than overall

summarize the million to of the series liability to the placement X.XX% million the transactions, Moving quarter, shares into enter of during notes transactions. our direct on we dynamics convertible to X% redeem of the secured balance leveraged To $XXX and we proceeds XX.X market these a our completed holders sheet, notes. the senior of favorable used management

issued available of million, net while by published that not X% in that interest, the $XX year per shares notes. earnings nor and diluted and using reduce interest position. premiums notes and million X.XX% were by website. of of our for both was to million reduce net rate yesterday materially were After our impacting the our accrued paid payment Details are can XX-Q balance also the $XXX these convertible expense overall run $XX and liquidity of the release net accounting XX% be and outstanding our We our senior of found debt transactions proceeds filing able convertible we repurchase to on result about about

secured we of with We under the the revolving $XXX capacity facility. short-term revolving includes our billion second outstanding quarter credit In in investments facility. $X.X liquidity, repaid our senior addition and million of these to which transactions, indebtedness credit all unrestricted ended the under cash available also

Turning fleet utilization. and now our fleet to

our X of our quarter, second quarter the of AXXXneo in the of were new with second the in During service. took and XXX quarter, aircraft end delivery By back AXXXs aircraft XX we the XX fleet. ended

the utilization or daily of than was average X.X quarter lower for XX% hours the second XXXX. Our quarter

As previously, full to to fleet we mid-XXXX. expect ramp by noted I've utilization

During the additional off-lease. X quarter, AXXXs the we completed of purchase

is expenditure million. $XXX capital for estimate revised XXXX now Our

also we XXXX aircraft RFP quarter, required in frame. for the During XXXX the to an time additional launched

additions of margin order total range billion. recap To and XX% to were previously, positive assumes for discussed gallon $XX This expenses will forward-looking our to in our aircraft $X about between assuming per estimate a of D&A expected our $X.XX million. book the we provided release, the quarter we Airbus. with also XX%. price fuel guidance operating earnings about As of We're we third these EBITDA

little Xs, low first for headwinds previously, by territory. expect anything to XXXX, be growing airline is on better we the it demand happening I'll while closing, sub-X target, still We of bit expected. forward cost we expect With pandemic midyear, CASM likely we and noted ex our the ramp-up half reach unit if in utilization and about changes long-term than don't back recovery will even in, look opportunities, believe and operation in a In of the full and that, to As fuel to our the hand in progression travel a have the again. not our Ted.

Ted Christie

related what, XXXX Low Thanks, choppy. increase and doesn't this would face With has reports recovery to of on high It's cost we have industry-leading And indoor say the course be during the view. covering occur we long-term exit regarding any, jurisdictions the been since or ups margins have All as pandemic, will will impact we But if also our have experienced confident pandemic fact. our same of whatever that changed along, beyond. assumed Nothing historical it we've change There downs strengths DeAnne. margins deliver regardless this bookings. that that, pandemic, in too to pre-pandemic Scott. reinstituting and to the news has leverage learned in back those deliver allowed to quality an to soon policies. we the Spirit feel IPO. and

DeAnne Gabel

Thank you, Ted.

from we ready now begin. are ready James, to take analysts. are questions We the to

Operator

Helane from comes question first our Becker. And Instructions] [Operator

HelaneBecker

a for question very operator. much Scott. Thanks Probably

from mentioned couple move next XX% aircraft the aircraft that XXXX all cause As other for I you're acquiring levels. versus demand deliveries. airlines this were and able XXXX said think years secure looking are to you thinking not to thinking hearing you up. and out aircraft they pre-pandemic How about for we're airlines some they're cost? about aircraft, is going wondering, various of I'm from down Allegiance too if to pricing And Because yesterday,

So about how that? are you thinking

ScottHaralson

this. sort in below you by mentioned lease Yes, the the attractive. good call in rates the know, period. that the lease to this Hard rates too, this we're pre-pandemic levels And really market, pre-pandemic for that's to window. were happen cause sort the or user Good cost for really today. 'XX the market to were of way. Helane. But near say of timeframe thinking of our out lease We primarily morning seeing at what's aircraft to kit. what about seeing term today, or But time a rates previous question, on that in going spot say post we've too good to Hard rates 'XX new we're we're are are the the pretty pretty for in a that aircraft

HelaneBecker

wondering to you're is is Miami. you you. that costs? maybe How Thank how thinking of a low That's think cost very markets. for thinking you. I'm operate It's of I this airport about Matt those which just And your Miami your basis. follow-up, one kind don't just from new helpful. are for And and on about then fares high per Thank an passenger you. know, expensive with balancing I my

MattKlein

Helane question, and well. morning good as Good

to did with technical without in getting just So number years a be lot, took us of along And comfortable it changed decision airport to we where to could change one their because able made attractive Miami. rates, that point the cost which for feel Miami to get us to lease entering general, into structure many is that that our was details. there too structure enter The a for there Miami. their the as a point structure in structure get enter fares, time in very go now airline, a like just with low our there before We the were us leisure be largest able matter And allows cost one the it feel leisure country. low of is cost profitable. and there the fares finally your destinations in was to we Miami about and to of to there

Operator

comes Oglenski. Brandon question Our from first

BrandonOglenski

end my taking morning. back were speak think revenue where from bit And go quarter, good top if that for thanks passenger guidance it would Hey, that more. of level. back the implied a getting But per to can I XXXX, to your to yield for or in a question. maybe imply, little segment the Matt, you revenue at you

MattKlein

Yes. Sure, Brandon.

growth. have top production So the implied revenue the to that's right, at of end basically guidance is ASM

out few last the lot just a important would in and but invest years in us investments continued that would continued how. even even those faster something to on I non-ticket achieve, coming has anticipated ourselves. what little able off our paying been, offer the we So, how we the have up say, talked really, of move we to one we we would during we guests things that be what than knew of and the been for of about not pandemic, it, our a was, pandemic, offer be but knew over actually bit we but we what, It's had

So the too. has management and pricing that and products seems been to be working revenue paying of those off well,

well. go prepared guide the And the it medium once high and the continued demand say labor to businesses we of comes we'll our Northeast, into and Labor start of some that, is by the would Labor Day Texas had we we goes capacity some capacity be back that there of see you start it anticipated places when after have example, period. we anticipating as And to sized in end summer remarks from some One because the would generally. past move small for we a around every move in Day post schools evidenced as move out back mid-August, example in that of be well, year, an move back-to-school, the moved school day, get to from that up say Texas, give the in as to a

year Day we that's summer and our Day. a Vegas we past Labor capacity. Labor this you more of after do of So, end capacity sort into move even get with moved Las Then

X we're once per fact, think In or to I X August from September. around day, go up departures you

starting of build back season anticipation did in up Las to conference Vegas. we that Now in

not maybe we also just can of leisure is the anticipation follows yields back up. some but the of that of some upside with see period, extended where would So, the ability kind that to we guide the building of an hit That's anticipate that on traffic through.

hope So, helps some that. give color that on

BrandonOglenski

And then guess for I Ted or Scott.

been on But there higher like, has where talking that about and investors XXXX is focus. think I be Spirit cost because have could we've sway at a perception lot least, And were you previously lost it sub-X than, of asked and been a pre-pandemic. of cost of cost some or wrong. the back the at? next Scott, are But said, you you initiatives that I to half year talk heard the progress seems maybe you like, I on or guys think come looking can the, CASM

MattKlein

look, Yes. mean, all our about strategic cares the off, unit I It's people of biggest first Spirit asset. certainly Thanks, Brandon. cost. not case.

continued about that's in not there costs the XXX% We're that. the So But are think math inflationary of our to to immune focus. are the industry. happening that situation

in, So, talked on lean finance what in going we're you to being, and unit in costs a fly we'll are airport like six pressure little All that the about sub-X on that's the those remarks, likely and go in releasing How financing where we're things you and be, talked fives by to before. for things, the probably, aircraft, what costs put all on you said But, costs. we're happening. drive number of those prepared We've how those goes to inflationary a going fly, seeing fly mid-XXXX. we've more, those below high labor going then aircraft But, see be example, where and costs in We're going assets. where from to still we things, general, we about far it, unit take depends of there. it things assets. we

fairly fleet financing cost sort fives, we decisions the time, will that high make and over network can hope time. get in we'll dictate of decisions. decisions decisions we sizable but short-term make what And the is But the the make CASM where and number of for we'll will a sort can, maintain, period six So, below up. a continue over unit coming those that will ends years, impact, to that of to,

Operator

Baker. Jamie from question Next

JamieBaker

going being provide costs cited as you're sequential But revenue fourth I it's because the of to it to the the fourth in recovery what mean You robust probably into a obviously pretty ask the moment. I or not really quarter And realize to ton third pretty granularity. changed meaningfully come a relative I That's profitable But you more to meaningfully quarter. helpful. in fourth mean the you quarter, quarter? rare are expecting I you for than generate to in at we're down accelerate? revenue the third. move

TedChristie

Ted. it's Jamie,

guys start. quarter both in little jump today, clarity. has to will continue was I -- and remarks we think than ramp it's mentioned utilization to The in the utilization, But almost airline his second in hours a as can Scott fly. the less give normally X

utilization with that, X.X% with still producing talking utilization XX-ish a percent CASM we're we're ex. level, penalty. And about that So below

the move costs direction, So starts are in as the the to to right unit come down. going airline utilization

So the that's fourth quarter. a I heading think tailwind into

are bigger. We also getting

And into recovery unit going into much right think we a profitable, to I very as hit well. right the we're not provided, the and demand moving trajectory the recovery. -- move at Seasonally, setting encouraged the right that, by we once anticipating third, XXXX, generally expectations EBITDA margin the by margin run the certainly quarter they're a quarter time traditional by we small but in us and what's peak that are cost direction, to rate. evidenced that continued in our direction profitability get up. third that's for numbers, as up is the sequentially as go And but will more the we're of around revenue the total So guide speaking, fourth now we are

JamieBaker

RASM or new or market Just You X quantify of as range. same-store a new guide? quarter the that's a to third a that revenue the way third like mean, the the X express putting quarter sort a pressure a something sort sort new of of -- sales follow-up, cities, activity. could RASM I revenue drag gave could markets? what on same-store on you mentioned What us that? revenue basis, Any you a you

TedChristie

Sure, Yes. Jamie.

new it. around so less year think which take has detail we're many does you of probably you But XX% But cities, caveats service can How is ramp launching I launch. historically, a or little it, may want. I than answered is big so up. tell in the as actually this, we that penalty RASM the a time new that the usually

I as a about had we bit think a new lot a we ago introduced of that cities. of talked little couple years

gate that because, So XX significantly And is example, by be off about Miami, to is large -- X one nearly with, that would us. launch for anticipate a October in it we then different. for say, of I that service. think to The Thanksgiving, don't to we starting be relatively day, which on the do are we per think, up time departures will get we

Thanksgiving However, and before ramping up it's then into Christmas. right

quarter sort know, a new January, service. after in can So you of normal we'll just on say, a for Year's wildcard there bit the always then might you that be New we're not of have the And be to as what the happens anticipating drag, industry. fourth because see

Operator

Duane next Our is from question Pfennigwerth.

DuanePfennigwerth

you follow-up maybe on maybe us help at just you've getting you've mark-to-market least a of what unit once, to below like a about It Can times. feels up fuel question. couple XXXX. on capacity ex said Brandon's ratcheted costs So timing

incremental like Now to you're add. for it sounds looking fleet

how past of cost now? stand XXXX? we where the capacity And your that do to couple to a compare be on on below does maybe in revisions when have your How outlook? timing would unit nonfuel contextualize what So upward you said you

TedChristie

there. Thanks, Okay. Duane. points A of couple

up Even would X-ish CASM XXXX, X heading we have said we're to we said So will on sub a we which probably into points. CASM. be that ex X, at in cost, X be XXXX, unit

components XXXX during post-COVID then or inflationary So we experiencing ex already were COVID haven't talked about getting CASM the and to period.

that So CASM said number to mid-XXXX. hitting sub-X in clarify, probably we have

So clarification guidance. unit on that's the the cost

As capacity. for growth. thoughts go-forward around been -- or our capacity haven't changed at It's least moves capacity, really our mid-teens

a the basis. larger would fact, COVID had COVID set for a we In XXXX, back percentage be not absolute crisis. on crisis bit it us little been the

So mid-teens -- but we to we'll time. that stated and are for our previously return period going growth rate, to a continue of

think how So have we about think growth. I don't changed around things

I get really be more or itself think changed. XXXX little it's metric how utilization. growth growth a we basis think around awkward. the math maybe The on in about as percentage full hasn't a to XXXX back will we But

DuanePfennigwerth

your for don't lot like it maybe I take you're a Ted. given fly But XXXX commentary, in places, any until bar. or why The would a then And at high this to want time. that appreciate those Asia that set Europe you point there's given don't entirely And know leisure-focused to of or certainly and margins? restore one we don't you to

TedChristie

the we will get So being can be happen to margin utilization airline the the probably Scott to use, it indicated, mentioned until as get we -- that's next we a not going to And until of middle it And will back part drag. full year. a drag.

have year, a utilization. going to anticipating a half at of least we're to little regard pressure still So the with of first We're recovery. bit next for also

traffic is likelihood, on There's carry traffic, some all don't we and don't we transpacific demand. all corporate least at transatlantic in While large our and you're airplanes. -- probably. right, But carry it we

in that is of marketplace. the All stuff demand

the the And the recovery, so the which year -- change. of it part healthier. as it happening next does overall course we expected marketplace and And anticipate returns, can that over get is of

that's for in think earlier see And until start to us, is that, you already to we sort demand I taking for overall least, another that So next of the by things running where speak more the of utilization of as at and starting I've we're again. was. think about we're as It it. the component but airlines, up question about thinking really can't time I back it getting way really summer an it anticipate that's was. it think year, normalize. we hit kind when the said I we're why other about XXXX to can

Operator

Hunter from question Keay. Next

HunterKeay

the is can the or the room in gaining port light to outlook So what you for compel of Court for the Ted, Appeals slots you? some Newark now make at victory? FAA

TedChristie

We -- with of we a to number in York. actively what are start let's New larger efforts engaged get No. in

don't there think publicized slots created air and to that managed for this in service beyond won't that's we I which an some But And And we've physical further. to doing how well about regard that's extent have would flying is in can incremental I least there which we are I of. of our point, at get at availability. But the place, so, that doing airport. terminal. that the recently that, with at is visibility Marine been space comment waiver today, some -- on do us award, relocated to be larger the to we

HunterKeay

a you say and cost or decide integration honor that the maybe go another, integration, and contemplating when shareholders, down sort contemplate an you be best of to but would path? of difficult you it there anything in anything culturally, operational course. that's too engaging that related ask one form sort answer, to you in right as M&A, what of IT? if Is consider going you're also But to question or like to of for do I I'd the then know not about you'll what's derail And just M&A. like

TedChristie

and those our think we is what we in complexity guests. challenges have and of to create risk, post Hunter, operational And misses. include will all it airline M&A if risk of nailed form -- believe think regard in and gone, history benefits has are our constituents, things our our you hits which of of do it are M&A deregulation, the all I synergies. tremendous with integration, how have there. and members back technology inputs. over best those and I team been on the and can can And it head But There's also there look the some to the considerations. interest you shareholders

we or think for to on I space, So, and a Right we Spirit. we in position we be. where leadership back take we consideration our that. maintain evaluate into is believe now, that focus would want as to evaluate opportunities all in need airline We're our the today to getting ourselves rebuilding

Operator

Our is question Linenberg. from next Mike

MikeLinenberg

morning, good everyone. Hey,

two Our here. questions

does look, it's focus you to to help XXXX, give Miami, has XXXX, here. I of I to sort points, at do XXXX that now diversification because network your sense in go made a your XX us to a sort XX% you've used anything efforts maybe the you the does getting as and the levels. think, backside them look the spokes were back like But and As of it's of whether add one like XX% maybe it that you're on how you've of an interesting mentioned, pandemic even you've the top it's can call that there, have feel cases, really stories diversification increased, cities of of revenues like or we going if is some I back opportunity to think network. more lot some the your feel here It represented really, markets you've really say,

So any anything provide be sort evolution would great? of shift highlight data that that or could points or you that

ScottHaralson

Sure thing, Mike. Yes.

were and we building leisure that headed towards sure our that upon lot destinations. cities, a we So includes leisure markets, strengths, about making as XXXX, we leisure talk did and exited XXXX

that a bit the way got the execution of in So of pandemic plan. little the

plan we really show able got then once the a we that the pandemic. So it to. way we But we level bit to it that probably took inside wanted another little off weren't and took to

And some of that some quite the based frankly, And on saw competitors is think probably same materializing. where thinking I demand thing. of we our were

our For us, low in the necessary term us costs fares drive long still routes. leisure be profitable allow to to

really doing I even up is then we already so And to thing think were set able within find planning we're pandemic, to the that. on more. And one opportunities

was the America of and we've more we then a another America yesterday back the for and the industry, was that the We serving. number the after XX%. in in capacity as got capacity. Pre-pandemic, demand see second Caribbean results. Honduras be of Caribbean. entire during Honduras, to ago, with Latin with our running that And a if which was only up there's announced Latin number short normalized really, to we And what years happens then now. side Now that to city it a at environment city that around just -- and pretty XX% is that we'll number pandemic, within were XX% our in few we're happy XX% our well, new network. We'll the get But up Yes. XX% nearly stays

we're So profitable as VFR diversify that opportunities which always very for well, traffic us. is find to the looking and network those for

MikeLinenberg

seeing Early just Jamie's quarter heard the about And then of what here in side. time book, kind to second what and of early longer, go ties say, much a in a longer versus elongated And difficult profitability booking we has on just December it months maybe sort realize be ago. from the also booking and you sort X third. into curve frame from Any bigger have can well, much than what out, third? to tell but booking read question a that book curve are had on a are November, presumably, you you're But perspective? been should of that going Christmas. about saw a And you Thanksgiving, I far fourth the that why? benefiting us fact, I versus the you airline

TedChristie

Sure, Mike.

can there's time -- be now what's to try holiday pretty looking at can -- market yields This this I'll and peak a So it's travel long the periods answer. Normally, keep see Because be periods. price. right booking yes, different pressure always to testing just There's different curves the short. those for periods. we within for clearing are far it what's different out

book closer their people Some in. to like out trips really from holiday far then and others

continuing what is There's bookers kind Labor you're of now. I or yes, bulk what those I kind comes far out that of right for after Day. happening the be see. sort in of holidays normally around us booking won't abnormal concerned Christmas. strength Thanksgiving there curve that nothing think there The would you're we would about the to say talking out on that talking of move that's And about has

now, So on we'll as that seeing out right not issue we're have or anything a commentary there's at that Christmas. October lot an be Thanksgiving but call on in more of on all going suggests our to

Operator

Next question from Stephen Trent.

StephenTrent

Just tenured looking? at are pace really the your training, with crew a moment doing your thinking wanted fleet into view quick the that's of just your you one currently When you're to high-level terms flight situation heading simulator the the year pilots get furloughed the their about from are me. pilot on at how and in staff, labor maybe how which comfortable in

TedChristie

Sure, Stephen.

we clarify, crews. of to did not furlough our First any

we've take have working some don't any of bring back. did of issue. and them So Obviously, now in been that we that are position. And leaves, to them

a so today. the as since first in grow So we're been doing pilots Spirit move our of do that flows. their balance They of be reasons this what lives anecdotally is market. because that with the And the and network. to say. have the actively hiring really reading place landing back rather true Captain remains to pilots enjoy have X of We listening we have enjoy here They attractive and And year, airlines way rate. February our to ability growth an network for their rapid the our to to

other oversubscribed of coming we're such actually all pilots And And of today. combination recommendations our traction. very of quite is pilots a to things that those the positive bit that so creates from mean the

to more have next over retirements is the looming is going pilot what ignoring the We applicants Not saying favorable based have everyone us years, few that jobs, than fact and there on in with puts marketplace in in airlines, It's pilot hiring a carriers. less you're at airlines see that show going there. low-cost attractive, to availability, going start happening clearly at cracks at regional put would around us Spirit not it be all but pretty and first. favorable to be active we a And issue the which as spot position. a to

consider be there. to ourselves so And pretty good in a position we

StephenTrent

follow-up. a And as quick

and some you. flight that conversation you're news all by of up have passengers put other what we've the kind of planes for of me, crept the that and [indiscernible]? the with Given that up flight what forgive have at attendants any in stirring Has unfortunately, and your rude into nonsense attendants having seen the the way, with to with

TedChristie

backing we're enforcement And addressing reports reduce that onboard Yes. vast, messaging still some have of treat vast think having active Is passengers on that it lifted we on we're coming last months. the We're is the still the happens clearly, and we up? airplane. a is and comfortable wind misbehave they're making stepped who are And passengers Absolutely. the that. over across space our are concerned the actually their concerned that crews, flight And up All doing aircraft. and crew the aware board issue. all the sale people actively X are elevated It flight publicized all you're have what with minority across that things onboard is right, or of the of federal out that been have board growing all aircraft members travel steam But the attendants on attendants restrictions across aircraft. with that's with with desired XX of operating. taken the more on have communication, those up the our our airlines airplane. ban people of brands. vast, that It aircraft behave regulations I sure way the all effect. And unruly and with way And with our onboard U.S. and that some as activity. authorities lot there of

as to well. normalcy, move So in the behavior will as is here towards view that optimist things more start move that direction

Operator

is Syth. from Savi Our next question

SaviSyth

tied to of given the we if philosophy face I seasonality ago, expecting But went years you year. think, during X shift more day X, did about think there's pruning this response be kind into September? tiling Tuesday And normal will the months. kind to shoulder in a in compare of fuel here Is this of your Brandon. more week of I higher that you're in XXXX, of September that Matt,

MattKlein

Avi. Thanks, Yes.

more have Tuesday, So on do on bit as think a flying. overall a a little -- mix percentage Wednesday I basis, of a we

We are still and Tuesdays doing pull-downs Wednesdays. on

pull It's Saturday well. on some anything is much might reflection like there's that's bit a that really ago, on of we a more as years what think It's more not little a going down have pulled the bit of we too couple was. felt I I actually, little than really think, it off-peaks there a that.

SaviSyth

response follow-up on international had Mike's just market. a the then if to I to And Mike,

also VFR in Just And terms a profiles different leisure markets. wondering change if just those there recently? change, and demand mix is are of of how performing type type

MattKlein

Right.

we overall, more probably little think bit I a towards So leisure. leaning are

cities there's lot of has us got Some very always And definitely Cancun lot like that's a there service. them very, Puerto service Rico decent added ways runs a well. in both amount for Rico a and Puerto -- to more well. so leisure that of as VFR there's of

and Honduras, what into that's added later example, For Gusagapla which will this largely year we service going start yesterday, to VFR. be

come can when they on to focused for VFR back. very we we'll jurisdictional going saw anyone So positioned do the destinations uniquely Jamaica to traffic looking I like example we're were strong. just had relaxed, be else. leisure those that and we're for thing we we where example, in that because think than different as drive can come just sort of another give Jamaica. safe, Bay And be you other also able Montego better pretty got than leisure very, same to back But requirements Puntacana. And we're constantly see more destinations.

we time, leisure more versa. our -- given structure I to VFR us ourselves, to in or we're do great do think vice both saying push We allows any than it's think let's hey, cost at both. in don't So up well

continue best add to opportunity just network. So looking to next to for the we're that

Operator

Next question from Stathoulopoulos. Chris

ChrisStathoulopoulos

earlier pre-pandemic margins targets. question will, sort to to feels like return, you if what back XXXX around the the So just with a going of late

right goes you can variant well perform the way. I to understand control this So to can't and back So there margin comes is opportunity and piece of stronger demand subsides, how accelerate, Is trajectory? to fuel you just excel much here me, will? and want if than push, risk an non-ticket that continues expected, if excuse what

TedChristie

of faster what reality, like benefit in probably, to contributing XXX%. recovers peak. about Chris. that the we're than running we kind be would airline its demand Well, could a expecting Absolutely. any today If the get factor, outstrips And faster

a move would in positive on view have good demand that. a So

We of of it, flip the -- had take only and back quick there moving engine course or retrain to we're we second on case than of get better Not have I to And are side delivery it's can anyone pretty right over airplanes, or delivery took airplanes kind continuing current out of everyone of to taken side for as the -- or on pandemic, to the our just our next who back now. have the the leaves X of hopefully, right alluded kind anticipating. we're The we did pandemic. to we're the the the But of ledger relates we years. and during that. the costs, we're is what it -- over

have so to those And and hire we train all crews.

the We to. have all to we routes want fly to select

airports. negotiate have the with We to

contract our We in have station place. get vendors to

the happen. of that with logistics making associated have We to all do

very the is that working they as as quickly can. on team making happen And so hard

our So feels flexibility kind know I the of of edges don't now. right us think target next we right to year early lot want to of there's late that hitting spring, summer But us be from where a utilization perspective probably for I a by of the around so.

ChrisStathoulopoulos

some there's Okay. markets. some what any to fair just on you think some in of in And you're the on or your off-hour if mentioned the weakness? then I areas my seeing comment generally comments, strength peers? pushing could And your -- you follow-up, speaking, dynamic I notable yields prepared challenges of of

MattKlein

Chris, this Matt. is Yes,

floors sort or even now than The they So in see late of were level, very markets, higher the the started the summer -- you this is call floor the price lowest encouraging into -- sign. what are and summer. the say, before floors, we before spring points a

across floor levels a general are market That's higher. the those the board. lowest statement So in the levels,

So I that's also say would what's development. And a encouraging encouraging. very

week. have going just we're but say, it bit yes, Day say, some definitely end is low or we for, Ted Labor be be that weeks That's once will no challenges of structure we I is past the travel, that What as I little know pockets alluded year. value their some down And days that's just to expect fly. itself the any fully Now decent from, when now, to necessarily something expect. out. significant say, while of work true demand X is we should to to different until and say, I medium-sized sort on When do what travel back to corporate think to, corporate for us it's we're money off-peak all when get a flying small- to and of The say fully what get than is demand get board. on we ecosystem seeing going across wouldn't travel amount that other of get going we of the take weakness. they be that thinking that through higher. we of lot is And any And take a lot there's that we we industry the X fare Right business, the there. we're of come see to of will do necessarily say, period, next saving Thanksgiving. from don't of and to summer high question a I concern business we or and really, be in businesses, don't to of a fully is back. travel as year of terms a summer spring, overall then, how just into, Until happens, out much think, anticipate, corporate like

think trade I kind of bit don't would little to lower versus be say, still occur, be. we to that is seasonality like as know, a than there years. anticipate we any the prior But base we would it abnormal

even see back and years. to go yields off-peak we'll we then few Just take back and that be normal, once into get XXXX Thanksgiving, It Christmas every year, anticipate stretch into we happens and year. in up the out, then for would example, a next

Operator

Cunningham Our Conor from next is question

ConorCunningham

planning to to of yes, elevated So growth have get lot a and It you're of market kind new seems a a you're made total. of an it have with route resuming, just how trying you're about thinking for just new percent I'm sense to going seems XXXX XXXX. announcements. as going you like

how that forward? just So XXXX how planning you're know thinking you're going specifically? that curious announced about just that, I about has balancing not in for XXXX thinking but nothing and -- you're

MattKlein

Conor. Sure,

around some our can share sort we expect or will in details in not that there's to that imagine maybe we're most not cities of be as I going today. new question. So But you XX% answer certainly the that XX%, to of I'm anticipate, you of growth XX% in that XXXX, can tell to

growth to new growing, in dots. to we're we cities be So routes new of going connecting that expect, or mid-teens be say, say, capacity, XX%

won't So network to where overstretching something into to so much we're manage the it's we we more that not be RASM be think going able growth the on side.

ConorCunningham

on it's you Are to But then a Lauderdale Miami And complement may Good. cannibalize on are just know concerned right that Okay. Miami. looking well. now. level? you I some Fort really

MattKlein

to really is to the of now South able serve Miami well. of over The at course no, it serve and gave change of us presence. we there. So Lauderdale. to excited be and to Florida go continue the for going see couple a you grow grow months, in airport, opportunity anticipating about And want how not we're our cannibalizing size being the -- launch the can cost We by are the the launch structure Miami to

that just we'll expect as over to what be depending more it, excited We grow maybe And going then absorb less then see expect into deliberate to on us see I seasonality launch. moving up on time. able of But to and do to come approach. good over And out. time. things of need around things terms for we're be if play some be be that our we according go we're seasonally, some and But the future, to we'll will or happening. to anticipate going time adding. pragmatic we're to a we things more play. and plan, In see how goes we'll open be you'd kind in And We're to able will what's

Operator

question Catherine Next from O'Brien.

CatherineO’Brien

So you quarter. what part by with of record pre-pandemic just, for Matt, help can levels another that versus expected frame non-ticket maybe us reaching levels driven is growth next and Can either this to record you trying items in new inelastic? wasn't far merchandising understand of maybe a maybe that Just being there 'XX? part is products that new versus or little is what to performance relative bit capabilities? what those And like

MattKlein

were well say improvement I'd the we're doing -- confidence the a today have is And on, that encouraging quarter. as the we just got Sure. half very so couple basically better we of that's that went I say that's than quarter. through of as over at what do better went And we couple in versus $X.XX years rate, because years record setting we a quarter that why things in ago. this another ago of better saw and

products in revenue just And to being way. of products, bundled new our services So enhanced offering. manage better the it's able in a a of continuation we terms have

now that with their our add on that's have version So we of trips. popular to to very another been guests

see We're of moving loyalty program of goes So answer. as out continued it, we come of this pandemic come adoption that's right is of seeing on, credit of as what we see the growth of sort year out we And new program subjective program come conjunction But our top the what would we we'll pretty the the something we thought we and we year. relatively improvement the always a timing when anticipate it new. with pandemic ramps loyalty time and this good out as relaunched thought And up. of earlier then as that's card we on overall. that, our traction improvements with in do of along

CatherineO’Brien

outlook what on your of could for maybe incremental capacity? staffing. could on level fleet aircraft bounds then next help MAX also the just And demand? year, us of on level, through your high smoothly that maybe just for depending Could very think you handle apply based And course, upper what operation and growth

MattKlein

Catherine.

So plan on website. fleet we out the a put

we're probably looking sort So looking about you'll aircraft mid-teens. aircraft basis, to neutral is we're for growth that see for target XX sorry, what mid-teens what going it's be 'XX. -- XXXX, rate. On a at of us On that growth be around or for able will aircraft to really at today an

growth, the probably we're what so like mid-teens in And before, to continue XX, term, going think it's in targeting. near XX, that's So said I too. I

along. you'll click So that see

CatherineO’Brien

you're Does that the the on? RFPs -- do include that at out those plan, from XX fleet looking aircraft aircraft incremental the does

MattKlein

It does, yes.

from Airbus, have be X order and Airbus book an or So of directly less or that's an incremental there'll XX direct we around operating so leases.

Operator

Our McKenzie. from question Dan next

DanielMcKenzie

A couple of questions here.

pardon we X target here? that First is is, thinking on ex the growth you paradigm field the in the couldn't CASM guess you the cost sub-X be of over the sub-X, you're I XXXX? way years about X coming sustainability And to year. in the over as can potentially question next a should cycle that targeting coming scale And leverage the versus me,

ScottHaralson

Well, I'll start. This is Scott, way.

the is is -- we But rate component chime Ted And can But much around mid-teens and our drivers think logistics anything. as then grow. of desire is few one Obviously, set, mid-teens and that's of opportunity to we're others I things. -- targeting as vast. growth in. is the it around think, So the a the

approach effect grow supply all it's amount other even and think issues at from us a components multipronged we growth a have just grow very faster, dilutive need much on faster and so mean, real growth. would think were dilutive. I given much faster. it'd we to would the to But to the about for we grow rate, difficult -- the CASM chain I a think the aircraft to so estate throughput of how that And getting is around if crew I be But

I is this for we right us point. mid-teens probably like think So feel the number at

DanielMcKenzie

take over are you're holding related could frame? had then typically time it how if you growth to when for guess does the remind metrics those And unwind? historically, responses what And to? us, then return you long competitive this, what And that to I responses

ScottHaralson

has Matt I'll mid-teens Yes. really that. margins, and and and changed in. start, But sort our nothing's mantra been mid-teens marching chime growth can of

MattKlein

told X I guess, a competition the years Strong lot can far here And about has -- our philosophical been as we've over we've with Yes. better or every us, we've travel bad is fuel mid-teens High those I for fuel there years been all of and what those margins good experienced here, first. delivered with good is question, corporate We for my high environments, for X And us. happens the in instances, single of growth. wax is us. that airline. as in

doing it environment with we deliver competitive mid-teens will so will environment so do will shareholders. sub-X we're we about and through we like, that delivering whatever the our will ex And And it navigate excited and expectation growth. whatever very fuel our going we're expect the through is We'll look for to CASM prospects look navigate returns the that our like. at

DeAnneGabel

please. can James, finish I'm told ahead queue. we last question, have We one more our person go with in the and

Operator

Joseph DeNardi. The question is from

JosephDeNardi

then around what it margin XXXX by point? CASM to what's the And get you on can be target, ex, like of just that for the then assumption maybe will what's the there? Ted, nonticket assumption what to kind get

TedChristie

Yes.

not to be So XXXX, the start if let's is targets just out there in happy but me I with group going recap. throwing

expect the our And around as here We we it objective cost as the we best run in be to our below and will efficiency time $X.XX can. unit hit our mid-XXXX. by is rate get

And by things, can record that those can attain. a quarter. this carry hopeful here of non-ticket, we Well, to that to both remember targets would we So of continue the just there $XX? put we're into that right And way. we're to to And going basically it on get starting expect now. and I saying, I top XXXX, of kind we're out you set

here technology our improving delayed And instituted we and little as really manage alluded Matt a to the have products all that's ability intend added bit. to of real the because we to answer, been We've products. mostly We also haven't just prior add, that in process COVID. a

was wanted program loyalty to we be deployed. it delayed originally from Our where

not to the with seeing, I it momentum those across a And we're sell tailwind think, things, be want combined to ability continued packaged we Our the is today. vacation products where is non-ticket board.

anticipate move we to So to continue nonticket up.

perspective. we've So periods shakes still said as I the How earlier, positive margin heading demand very I over X time those through a out quite well. from XXXX -- But is think environment of a just stories those into are we navigated that done period and

JosephDeNardi

Okay. thoughts And then, Scott, ex is are that growing what some your uncertainty CASM the there trajectory I kind kind this of think into XXXX, pre-COVID, of mid-teens? down around is Or point? at was

ScottHaralson

is what obviously aircraft before, it give we and Joe, so take, haven't we And XXXX talked decisions the around sub-X by 'XX, Ted about through we with XXXX, yet. how as those But a CASM guided XX, mentioned reaching large then we're make age how I've not will we make where that part them, and fleet, of fully we the call to decisions yet. get drive kinds ready of rid finance up, of

going that our and is sort here over do and what idea. goal there. take view. to see able last. probably can time is inflationary efficiencies that of So some sort how medium it's a plan the will takes for bit our a our some this to we X-ish be or a CASM But if bias, be rate little CASM like. if long is look what have that that's the and components we might sort little a is that's We'll that below, run minus we're then drive but may higher, costs probably puts or manage but how plus term. flattish what through few of of And to I

DeAnne Gabel

Thanks, us next today. We'll tent for joining you time. everyone,

Operator

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

may now You disconnect.

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