Spirit Airlines (SAVEQ) 28 Oct 212021 Q3 Earnings call transcript

Company Profile

Participants

De Anne Gabel	Senior Director of Investor Relations
Ted Christie	Chief Executive Officer
Matt Klein	Chief Commercial Officer
Scott Haralson	Chief Financial Officer
Brandon Oglenski	Barclays Investment Bank
Helane Becker	Cowen Securities.
Mike Linenberg	Deutsche Bank
Conor Cunningham	MKM Partners
Duane Pfennigwerth	Evercore
Hunter Keay	Wolfe
Stephen Trent	Citigroup Inc.
Chris Stathoulopoulos	Susquehanna
Savi Syth	Raymond James
Jamie Baker	JPMorgan
Catherine O'Brien	Goldman Sachs

Call transcript

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Operator

Welcome to the Third Quarter 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]. to of call Investor like Gabel, to now Director Senior Relations. I'd turn over the DeAnne And DeAnne, you may begin.

De Anne Gabel

future and reports to no could comparing from including Ted. to over earnings update not with refer and results to non-GAAP There the forward-looking our in Also factors Scott call call Thank be senior guarantee our With will sell-side Haralson, forward-looking statements. be the Matt results you, We in the our SEC. of the Quarter actual file current available our Chief being of joining performance. duty Commercial for statements any This cause statements, risk Third Officer. XX will other risks items. of our reconciliation us session website analysts. Christie, discussed the significant which room be all Financial Presenting of prepared to Spirit to differ A Officer, archived that, turn reflected our to recorded forward-looking Company's contains that this by Klein, leadership is that in on periods expectations call are James, and today Ted our a on for those are and on measures. XXXX on Officer. discussion a question-and-answer we will In is undertake welcome adjusting materially exclude the our uncertainties based be Chief Earnings are today's Chief everyone the release, third following Today's our simultaneously today, Executive replay I XXXX Please special remarks, webcast. for our members Airlines days. there Call. quarter our team. on call website

Ted Christie

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

past again Spirit the they proven XX time business. months, team best that and the the our have time members are in Over

part in irregular predicted. own Unfortunately, issues quarter of of continued adjust together played But anyone indirect a July current time may to their loss delaying all strong nothing take and pandemic cases operation challenges. surge The impacts being $XX.X with than our the solidly variant fuel XXXX staffing of profitability. third our started for with longer Higher very for off to could Spirit. the direct the a quarter have lasted near-term near-term Delta return view have prices, long-term in It and to our sustained have about million. environment Third changes some profitable. August the to industry restrictions, travel led

that report benefits. has and guests' and I'm Airport. ESG say the previously, we As one look of at pleased our our commitment wages our report. service being that recently we we've And resuming time, reached at notable airports, following to to over agreement, showcases favorite includes indicated the I'm of Fort challenges by Lauderdale, Fort International in agents one our represented agreement earlier that and Lauderdale Association this ramp month, announce been which with a Machinists tentative to Workers, staffing with competitive levels most Aerospace adding capacity our of ratification also of pleased staffing sustainability levels forward we our destinations. our inaugural meaningful back appropriate leisure published initiatives. advancements to The to of

helped want more Spirit of Before to most and care and their shined the challenging of of us Matt. days details Operationally, quarterly am over it to guests. on take operation unusually recover to even an and dedication our the challenging and and say summer And pride Spirit the now to I it over I discuss how turn team. Scott proud Matt was our I performance,

Matt Klein

circumstances. to shout-out of perseverance service in our thank of and them delivering for members to I Ted. appreciation the the team quality Thanks, echo their special guests, our regardless

third our to performance. quarter now Turning revenue

strong off. initiatives pleased well line to quarter I'll The we reminder, the another offerings declined increase. compared improved third results, are investments again segment comparing paying component in non-ticket revised the customer X% a nearly per-segment is and per total same the XXXX period this be to our mid-August. yet non-ticket remain management passenger enhanced revenue an declined increased but compared merchandizing, segment to operating once basis, saw XXXX, with passenger X.X% record revenue in revenue On Spirit. given Total in X.X%, our the compared very results We non-ticket revenue This with per revenue quarter XXXX, revenues year's increasing a how period result $X, As extremely same product facing and with segment for in same XXXX. per guide to in X.X%.

Turning to were strong the equation, passenger period. summer during very load peak the the side of ticket demand factors

variant However, cases. the in were driven by quarter, half average load bit a factors COVID-XX part of than expected rise own softer the for of operational issues the second and our

to are and a have the be. we have we negative of has a performing best [Indiscernible] markets, good service year. changes. smaller level Elsewhere we one staffing than this quarter on Mexico. to leisure the will constrained Lauderdale like job until meantime, In the third done impact we fourth currently the our desired our achieve the operation quarter, in of as is our the great it VFR the have started appropriate Fort would In results given is through communicated that routes. Lauderdale we our we previously, managing of to Nevertheless, levels the growing right resources, support especially decision As there. in in team the can a staffing at network, time And bit Fort

And XX [Indiscernible] nine to Miami to Honduras. brought soon our new of launch also grow service We early Spirit with service destinations, will in destinations. October, to which announced non-stop we to

expand our And network for guests We to more exciting places. have continue our well our bringing more network, as as are we very next growing an fares lineup low excited be in to we footprint. to planned year,

targeted versus XXXX. This estimate related the will spread with up quarter, reductions we is half For the Fort Lauderdale, XX.X% to other fourth XX with quarter than more at initial our network. than now points XXXX, throughout lower fourth half of be percentage the our capacity the that expectation

Moving $XXX Taking our compared holiday periods extremely quarter encouraged now ahead periods. healthy. about by be And trends seeing indications that outlook, And travel to or search $XXX quite range flat fourth million and holiday loads will implied holiday we're are quarter fourth all the account, the the guide into for the yields of by to are travel revenue the all the to EBITDA we periods for revenue for is peak XXXX. peak Scott. here's this

Scott Haralson

by our entire Spirit to team. want Also start saying to Matt. things Thanks,

many the worked period, or to support summer the professionalism dedication. they extra and Over so with jobs their performed usual of did and utmost operation them shifts duties outside the

to member a under the XX.X% expectations and to amortization, turning costs a due aircraft financial and a XXXX operating our to hiring, mix at of volume, period. the compared slower-than-expected rate as third and increased less operating Compared crew headcount, to cost EBITDA to costs additional financed lower volume, our rents and faster operations in was performance, little came costs than increased margin adjusted than in third improving of greater quarter airport flight higher landing incurred flight expected Now, primarily X.X%. of a due in pace lower higher due was result mid-August, quarter total positive better shared leases, a This our XXXX, depreciation to anticipated. fees irregular

our capacity cash the $XXX under We includes quarter million strong. X.X ended which available and with Our in investments, balance of unrestricted facility. remains revolving short-term third liquidity, billion cash, credit

aircraft, to the quarter, ending aircrafts our during AXXXneo in quarter we third X XXX with Turning fleet, delivery of our fleet. the took

also sale completed XXXX. transactions We deliveries our for leaseback through Airbus

for aircrafts for through With the end now XXXX. transactions, delivery these all have of in we financing scheduled our place

lease addition, secure help In operating aircraft meet growth our additional XXXX. transactions capacity we to direct completed through targeted to

we aircraft. Pratt Whitney engines another December as coverage executed this In aircraft associated GTF agreement the power with in Engines order well addition, Airbus fleet XXX an as announced XX we The placed IAE with earlier with ordered, for aircraft for XXXX. options for & agreement week firm the to our that

the fuel. the the fuel-efficient fleets In and industry. addition to long-term engine our agreement We is competitors part passenger efficiency Neo latest currently offset prices of especially like engines, we greater be facing engines. today. of comprehensive entered we ESG to a our new most youngest fare and seat service all high goals, fuel GTF airlines. our will fully efficient, with in But helpful to the fuel impact our but combined more are we Increasing existing already to our than because up cost we would efficiency. for pipeline fleet ensure our order most the it's of fuel continue one order, is Higher fuel rising of price the to also less than other fuel of P&L, aircraft, into this in per need a to And maintenance move leader competitors, have all operate density on environments

quarter, quarter that's Said million prices, For $XX fourth of today's equivalent than we at XXXX. gallon fourth will about X.X% estimate ASMs better the be our about the in fuel per differently to savings.

of fourth million of quarter about expenditures, break negative forward-looking our assumes capex even. of for between a -delivery we for in we operating the expenses million continue of release, net the capital guidance This to deposits billion about $X X full-year To $XXX the billion a to provided million. we $XX XX XXXX, our total of to including estimate total earnings Regarding estimate EBITDA margin will pre recap $XXX X range million.

$X.XX, per and are a XX We of of assuming price about gallon million. fuel D&A

hit shared to previously we full XXXX, mid-XXXX. we Regarding fleet by expected utilization

utilization. still full we to However, labor led to targeting XX We're stretched timeline uncertainties returning later our And early or to ASMs. achieve now this pressures, us about costs. of billion we airport due the out pace The growth sub in inflationary once increase slower and to XX reach XXXX to staffing $X.XX produce expect pace and resources till slow to target ex-fuel particularly has XXXX have CASM full utilization. of

targeting we anticipated. below still remaining than I'll When the ability strength business our model -- gives fully are confidence leader. unit hold, of producers allowed margin closer to ahead, the to it's has what among and to low-cost So best has in X in to With period. challenges our while In back the the confident closing, navigate we throughout that, us a best deliver pandemic, us the originally $X.XX, ex-fuel financial be business, taken but be that cost has and and resiliency hand likely it will the the recovery prolonged Ted. again, we're the among performance still to recovery the proven we

Ted Christie

Thanks, Scott.

staffing by of Q&A, believe August. by in primarily was move Fort IROP I we confluence the from of learned factors have you to exacerbated caused We lessons know many disruption about issues, may Before do questions the in Lauderdale. a

As crew the IROP our many which we to dislocations, stressed experienced ability unfolded, recover.

going there never takeaways are perfectly a adding from every us to we're areas when but We to our to can believe addition at few we for No better happen. to solve all main quickly be recover in be additional it The are airport we are to beneficial several recovering when more helping other get airline variables that does IROPs able could review in can, occur. disruption. staffing, positions avoid

Our current few opportunities is we heavily have last do there And more. innovation. if a on recovery the We've over that manual are processes process are been exploring several even to helpful. automated years reliant

but [indiscernible] been them We're scale, our our structure. add it have is on significant don't have making to believe we time few any crew considering of a will if effect cost a Given we changes, more some also

As changes and small make the our continuous flows a time. all is exercise network how review a carrier, high-growth we it to

fact stabilized that we finished fourth are are in performance reliable The due this the our operational and stress utilization. reliability the We for throughout intended, quickly changes dramatically first to have have But are we quarter in in changing environment was network in on not our without Yet this XXXX as our the crew the operational schedule when year flexed we third in on-time a demand That enhance the that targeted of reductions schedule XXXX. record This believe in completion working in XXXX pleased adjust is factor evident sacrificing efficiency will proven performance resources. the pandemic. planning we and with instance. tremendous and of operations we put and network to operations.

we leader our higher will environment be term, or believe in among the in margins reliable remain us With the operating the produce the that environment. than that priorities An XXXX increasing making with We growth, to support operations, and for back maintaining and low-cost what are which we to XXXX. moves network ample DeAnne. opportunities margins include: able In growth the Spirit inline, that continue in business. while continued to staffing better, in achieved best to near will post-pandemic position for

De Anne Gabel

Thank you.

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

back you James, If additional put to free queue, to we are in have ready like. questions, the yourself if do you'd begin. feel

Operator

you. instructions]. [Operator Thank

Our first question Oglenski Brandon of comes Barclays. from

Brandon Oglenski

for to remarks up and there. guess follow taking Hey, the your Ted, I good morning, I closing want thanks everyone, with question.

For were. better viewed weren't some we where you cost even generator. then have targeting but off-track operationally. being sub-X maybe lessons say, do or you square lot worse, Scott adding on guys aren't X still than is as where lowest The were are closer up coming we investors better? two Spirit look, you like, change CASM, of be, said a you those to And it that but But things little actually costs. you thought would CASM can profitability hey, we're I we still guess, bit to generate how even to it where from levels going that, comments a the

Ted Christie

as still It's it's of sub-six. maybe Well, the about. what CASM range thought being the we to relates it within

pressures severe a on originally the labor, that real, we've we inflationary Principally airports always are concern experiencing more than true are probably more little pronounced I been that before think but was well. as a anticipated. than

think the than to with performance with more has it's summer. our it So operational do I to and that reaction this analysis to Company's do

the course now speed at -- we're looking this what it which team, evaluated units, we're deliver efficiency work. reliability can we is important. So say an summer, the have flows. design for Those that changes, to a think that way hurricanes that I interested indicated there's make I network the that up We as network comments, come output of enhance coming able bumps. ways very to sort more still that the that's as network. my way of we experienced ways with the going excited be be recovery to about the was happen. with in importantly, in will in we're us And probably airplane always are throughout most same going Florida, live weather. we what's the help That both going and when will and network Spirit and run summer crew There'll we I the both while more into be going thing. very to a about flows, exhausting And create it's to out and I'm reliable to the

I we'll that even make going So little that a that are better think us have in to ways probably regard. bit some

of that. benefit cost part being So a

echo So what I would Scott said.

almost to facing the think cost -- we're about inflation it's Inflation’s structure I very airlines and aside. every encouraged face leader. to inflation today, continue the low-cost going like we're taxes be

Brandon Oglenski

you full just, keep utilization target? At do if with schedules. even you some achieving to that's yourself to profitability, what sustainably levers delivery pull black? Company back built-in response. fleet in the get pushing of your hold can What appreciate Because that I point accountable from sustainable the you the

Ted Christie

accountable that make always pandemic. individual profitability are Well is the looked evaluate had so And going to same are sure remain of we the we pull, first, forward. route performance. the We're been the business, delivering to And would've levers will XXX% that's at we We're the growth the our always going true. going to can levers prior we intended. true that that ROIC to

perhaps And If years way, that we're were why we credibility true. well do I today we we'll the as opportunities operating that public that, we'll prudent that And course delivered ago. we've But levers consistently committing true. by We larger, which Look, that there anticipate I the being to. that than forward. both I as smaller. mid-teens that's X we've fleets show looking either not wrong, to the rich, will at of have managers. to continue we're are could there's to we Company's as growth the margins. the we're hope adjust. be or adjust are they is And committed richer that believe in we've if necessary we'll some being wrong, wrong do over think we're don't going existence, think the direction. so And And if rate But been market for better

Brandon Oglenski

you. Thank

Operator

next Our question Securities. of from Cowen Helane Becker

Helane Becker

very much, thank for Thanks Hi, the James. you everybody, and very time. much

transition to guess going year. implication another So the as think I about be guys it's you XXXX, is

you that incidences So Airline. about what stuff correct about that We can in happening. all staffing issues. weather the other #X, on, hear like have position this you of bad quicker recover It's stuff understand you're so or airline and you then how as where But my attempt you you not a get the the assumption? the prevent I you. and where don't #X, Maybe want you at question. and hand, And is ahead from operations personally. to happening on don't industry. be that. so saying Ted, Anyway like Don't a a that's unfortunate the people think

Ted Christie

up. for Delta the the that year. last part, don't the time to the summer, We variant is. as what despite the moving right impact XXXX than believe the year. still the a direction in going expect flying is viewing transition in next capacity. We're I continue of it line and right same at Well we that were delivering margins year, We're know first year. more still viewing recovery we is better the pandemic a the label We're as as

ahead call to room for of be. to a probably difficult to where in move had do as on So can, to faced? phone all this that the do different I today to the we're leads And It's prior we broad way going impacts unanimous to the in along year. would think want the that is not second I on a people we as been which be months that is, issue XX have was that how expect you recovery which agreement all get have to pandemic. best raised, it we've to quickly than It it going back the we and the But have forecast. wide-ranging we our be past environment to it

the we've so that. we recruit, And we actively hire, way staff. been from way learning The we way the

have we it things those we of without it. into ahead All from. going summer, and doubt this missed our of objective getting was learned And

So we're what little bit part taking is of let's our of a come for little period the the reason at that foot exactly bit in. you're which suggesting, here the that we do can a see gas looking is of so time off hiring

Let's for capacity layer ready in for we'll build of example. And year, as next to get necessary. base the the summer the

feel here people will market it's normal. normal been in labor I specific move that some So be lives more Lauderdale, The market. about true starts that been a the more labor subside economy and to begins adapting more to become Fort that. their and moves system. going that. throughout We're And ready to to virus for I again, do but the to our also will and tough mentioned start believe we're normal recover that's as

Helane Becker

you. Got

helpful. very Ted. That's Okay. Thanks,

Operator

Mike Deutsche Bank. Our Linenberg is next question of from

Mike Linenberg

chime Hey, made you question just in and, this. good everyone. comment here. morning, Hey, can the Ted, that Scott, one on you

the bit recovery the and at best when advantage extreme. operations, think things just taken the remaining it's release. on through changed your low-cost ULCC, be based is went here margin think would when downturns. model, business, a the leader as the your hold. have been with you us and least we little LCCs, it thrived ULCCs you quarter model maybe and move I I'm that when among also the And But inflation That's it that larger be vis-a-vis margin about to the and historically, while the going has sort irregular comment among low-cost realize I September labor really usually in carriers best this that taking labor area because LCC perspective the producer about from longer. has outperform. that from maybe big being the a the like And legacies. the for historically, fully about a the aside a maybe of statement would When producers Just just cost leaders feels I bit historically was model the let's the

I'm of the through maybe here, went -- or there's philosophy just just shift kind you. downturn like it of X-XX. I'm if a we or conservative, just that. can't GFC mean, no that really comp sort So bets, we in Thank your I your and maybe on other hedging being thoughts is curious you're against maybe this

Ted Christie

leading performed Scott perfectly. course you've and and can you in Hey the pandemic. Mike, thanks for the question good the in. jump go up set of I'll But throughout and first because bad have times me When

for things we If the IROP last you margin true the remained credit, of quarter in so the at the look when that look give of the now, can't amongst at the started to best benefit margins actually September in business. too. performance year. And come me you been removing then the We've if back, April period

and in if So what a is has confirmation we that always be true future. revalidation true the a to expect been anything, what of of statement

would -- Scott you So what

Scott Haralson

I That's exactly say. would what

year, the out think look X we everybody airline, and it the point. margin flying Again, that the that of or back you in last months. go you were were But to case the think you be was it XX I the the of way future. last we're the and all think at their in over quarters. I when predicting last decade, saw quarter figuring And saw of of but over the the top X producers over the pandemic outside we I in X%

Mike Linenberg

Thank Okay. good. you. Very

Scott Haralson

Yeah.

Operator

question Conor Partners. Cunningham is of next MKM from Our

Conor Cunningham

Hey, you. Thank everyone.

bases, inflationary changes, changes new a potentially pressures. also mentioned lot. network and staffing, you That's So increasing to crew potentially

maintain are XXXX your costs down lead drive example, levels. perspective. get to you you that other you advantage that to that what on to to just and out, CASM on your peers. you you everyone going costs cost has said and cost there's are put So and for to some leads but they able plays advantage confidence back If do why to that to plans have be else. United you to adjust a your that adjustments, doing automation compressing maintain I else to are

Scott Haralson

to and There there one at to a them try time. [Indiscernible] are a few get things in

So you about, some airline every of every that hiring. we crew mentioned double-digit that growing that. rates reinvent And a the you things our that We've for in year. the do We doing talked while. means at been and bases year or two

forecasting bases So a for lot it at is of so [Indiscernible] crew bit just and somewhat the the hiring, This all-normal We're us, at do but times, been decade, is all accurate moving time. historically, pretty environment. this more a last to This we difficult point. more really been now, operations forecast. simplified that's little around right usually good and we've it's definitely over it's interesting the unique a business

forecast behavior, really very rates now labor right airport to rate volatility, labor point. at difficult have We this

area. in movement We will of have a lot that

So But that heartburn, confidence news that some of because entire things range possible outcomes. affect cause these just variability does the our is industry. does impact the of good the most of right? It

to something have of affects so else, relative for the the cost be The did should a industry. today So But One part, maintained. little problem. aircraft everybody's advantage as unique in to that for the to entire digest is than these, That's us past. good going it's are all financing we're our is us. we most that we labor airports, everyone this news thing while the unique and differently

Scott Haralson

quote your plus unit United, they're times our what X mean, And on costs. I

think And I'm expecting you're settle levels costs, advantage unique going continue around cost has see own to unit So out, I once come widen. not components that the are. them things we their our to to but everybody to

Conor Cunningham

base example, economy, with in the your other I better rampant driven it. day industry, offset lot throughout process historically increases. for appreciate higher the appreciate all part like out the all an It a about Starbucks in just just there's higher than the costs fuel general. that as ability you for I ever case general discussed push how pricing. Okay. just with are the -- Why unit been in before base hourly thought raised there's higher has just pricing with now employees general? by towards guys cost general, well, there non-fuel wouldn't of to time. for for pressures changed Thank of the offsetting given pay how seems fares in And be assumption you. fares McDonald's then in to that average they labor now a the

Matt Klein

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

supply So fares speaking, will and based on demand. move generally

would we As upward give now. demand anticipate happening you that's an continues to improve right that I see movement. would yield I example can

traffic. traffic, that traffic satisfied and that to So and while days of those we recurring our are which not fair kind off with, also look of are of departure, of we're We lot yields to start traffic improve base form. firm, inside are X a of at that a base seeing carry we share don't carry seeing from yields low say, a we start seeing we starting to especially you if and

coming of a off that an yield pushing base, we're while be to successful network. increases through have we the starting been and that's me to we're indication, low in So

as shop yields to is that our is Another going thing more is bit and be of fares are bit And have confidence time actually RASM will if moving to in will customers in little short-term I actually means a I and mention they're balance general demand terms that is Thanksgiving and that confident from deliver and tell network good to and fact term. perspective seeing and that shopping see the an rate actually, will conversion well a versus why fares talking more expect that a fairs little would building and little but strong are to s and of a deliver is move that what what we moving longer comfortable just is, around we we're as a too around, that our starting forward network. in snapping continue happen we're to and the indication that over counterintuitive, here what just Christmas, from seeing expect customers over them the up. some fares that improve you you're to continuing our up, bit supply little fall bit Well, Christmas. a more I think -- Thanksgiving in higher. Instead long-term. in quite news of and to we're are And to Those and always, our this the little taking demand nature; margins we're more, see we we're which

Conor Cunningham

Appreciate you. Thank color. the

Matt Klein

Sure thing.

Operator

from Evercore. Our Pfennigwerth question next Duane of

Duane Pfennigwerth

there what an solve example, margin absolute XXXX? is about any goal goal like for plan. fighting taking an easy absolute for most focus For profit sure fundamentally on innings, operation for? from drive feels recent targets. about is the for in capital settling fleet the there things from about of share early wanted I the I'm fleet a that discussion sort. was and profit discussion Thanks thanks. the of attribution trying absolute it's any with to meltdown, to the fires in -pandemic us, or changed? should include to you're a this down willing your been from nature allocation, if solving wonder conversations question. you'd the ask which arm's the It Hey, would length, But organization be arm's I plan and pre right, Has with length Board you [indiscernible] has post if And

Ted Christie

Hey, Duane, Ted. it's

Board the X-year very aware much of Company's objectives. is the obviously So

our assets. We route margin a which Company's aware the, and be objectives, long-term cycle guys business in opportunity and are consistent. shared we've planning They also as to We you view it's earlier, of think with with the I said are market market. the I opportunity long-term well large

on you they believe things those deliver So to and we us expect I like much can. do,

variety and comment pandemic. was to about there's lowest that airlines best than of presence, segments. it at important So even cost large what's network perhaps board. it's our your other is we're prior But cost different fare to suited lowest fleet whether our different or us and is not I out it we serve market And and pre or -pandemic a products with those level. structure or our the current plan. there as explore our know And belief today the to that important can post-pandemic the that's and to opportunity larger Again, believe the to

Duane Pfennigwerth

But I a bit from And a cost then we've out appreciate little a hopefully basis, that margin thought on from this hypothetical Is XXXX over about And year-over-year the and on of just targets framework thanks capacity, you're from and any a basis? a thoughts. where not field. on question margins capacity just a that year putting for your a perspective. RASM for RASM, Ted. But hopefully there maybe CASM. year-over-year stuck talking in thoughts, structure, been to out

Ted Christie

point. present year-over-three-year. way start make sure some get it. and the right your clearest I considering we'll But going the We're we digestible Yeah. way. presented to And the way you point at the most most

Duane Pfennigwerth

Thanks.

Operator

Hunter from question of Next [indiscernible] Wolfe Keay

Hunter Keay

year? morning, Hey, good everybody. now, profits are next expecting budget you [Indiscernible]. the Scott, in right

Scott Haralson

-- still we've number a scenarios. of have in we process Obviously, today. that Well,

looking are still trying for this to to a QX, middle I of scenario bit generate profit. we out less Hard say point, little looks at ground unit at XXXX. what we're figure much do where of a think revenue a for we like sort

number at of have a we So this [indiscernible]. scenarios

Hunter Keay

overhead? you, Okay. it? year Thanks. on do you another then you you how spend do how measure do helpful. much And And one how Scott, -- That's each for

Scott Haralson

at people. a you depending -- corporate on is components, of of the guess XX-XX fixed. the would talking It's On overhead? of component -- way -- variable get talked And those XX% overhead and it that's about overhead generic change variable how a expense we've I I really are time say I you the term. of component But really really would departure. and big sort and our think I sort close that's it's fixed really about expense. component. overhead, What in over And you're to primarily mean, getting about that

Hunter Keay

you. thank right, All Okay.

Operator

Our next Trent question Stephen from of Citi.

Stephen Trent

for thanks my much morning, Good everybody. very And taking question.

envision that you. you And a what just participating I some really X, you more downgrading you. second Thank in carriers to carriers Aviation, you s new Spirit extent any in launching noticed to either pipeline? versus Puerto the Mexican about the target? that buyer quick or of some as see two could long quickly, opportunities U.S. advantage flying Mexican north think you service ostensibly of type when term, Vallarta question the Do M&A, launched for the Just bound. to over [Indiscernible] a southbound those give one’s FAA

Matt Klein

it's Matt. Hey, Stephen, question. I'll take your first

I think second will take your Ted question.

here. In always for about in there over leisure opportunities develop there's VFR flying opportunities for quite how traffic And best be and terms We've of and the I there. time, lots been we time, Mexico in think there seeing general, can we thinking of we'll network see, we some see traffic Mexico.

as VFR over traffic well. I For it Ted. turn will then And to

Ted Christie

I'll relates to Stephen, believe what we're the we is pretty to M&A, before. and Yeah, here. We that. as excited One it big. going be go the the with I we've reiterate, about consistent we answer extremely opportunity think And explore thing resources said have it's organic to think

we it's to at the to want to interest around and our ways upon shareholders. best be best on are Space ULCC capitalize Today, can that our largest we so that. out way best figure the However, return in always we to the looking deliver

So we're excited in about always time what the but same we do. very interested can organically thoughtful, at

Stephen Trent

helpful Thank Very much. color very you Okay. guys.

Operator

of Stathoulopoulos Susquehanna. Our question, next Chris

Chris Stathoulopoulos

Good taking morning. question. Thanks for my

in in remarks is prepared press transcripts your a in XXXX the the and way XXXX. to releases back good and response sound response of what So, what more some at happened your structural look We that versus was. August

OTP system address that plus there So that to plus canes weather confidence of curious order initiatives confidence critical Is investors when And can into FTEs this. of around higher should guess, KPIs that's would part expect, is these executives going for looked won't a an proxy, but that have come could at we reservation we avoid what the the similar also, if magnitude the of IROP magnitude in haven't it, anything And there that top there scores. gives put a front now where or committee we and breakdown, and that demand Spirit I rank get the changes see is I'm is, XXXX in that shortages I you this. X this? at you've place of or And parts Thanks. to XXXX the the with anything -- breakdown. can see we that to but say, now tied not saying in as third completely be network you

Ted Christie

Okay. those, I'll try Chris. address to

reaction versus we XXXX. in First, in this experienced the period current what

adapting were deployed the XXXX, we measured was What's as Scott reliability, network, in earlier, they like, XX% a And learning's didn't So year. And grows we pretty and summer it, it. reliability design of front XXXX, that I clearly XXXX, and necessary XXXX. is network different we're enough by from good to Company's that XXXX, indicated the took and Company what in to enhance XXXX, making get while at the them actually think changes forecasting this successful. into and is, looks the

Now our We I'm by had little willing done weird better. better give to was a But if team; should should say for planning to a guests. done a bit we should -- despite this by perspective. better me have credit airlines that, of done you period our we have from

crew constructs, both our got gets and make do and the have flow. which bit I As more do the little basis it's about So we see. us? out it complex. which back we that how the come right will in basically, network. What apart think happen, then And aircraft I'm to sure more to network some how how and going for leading operation, it, wins And the again excited it to do it acknowledged you to network earlier, plan network we're said, both form we the of more the real we've And we that the design, starts in that's a and predict the recover irregular tear we aircraft in react a that, way place of an robust indicators faster? happening? like So an importantly, are gets have extent putting with bigger,

concern be red become have unique exciting investors all evaluating there's decisions. good going issues of the assuage a I for that avoid important can to some in circumstances. would what's inputs? the And we them may early And faster. us probably that's that us is to perspective evaluate to then August. believe but them because because from recover team from And I And concern, by those I using inputs, I together, Then what to multiple think right automation led really ways to non-events, very and is, of more and we're your so that that are will well help each yes, set yellow, a do like what smaller not make want data one we we're which think as green, our we takeaways and I to understand

are We is that. reacting proactive. think But and have can been more teaching this growing rapidly relatively we I process what And to that's be we us.

KPIs. Now that relates to as and it measured. is how

has a played or on good by our performance, been And out performance. insignificant years producer incentive. performance. pretty short-term an and that short-term our of five are measured of Company's four operational the on-time because not Measured well in on-time incentive last we've us We portion the it's over already for

and focused summer. guests do this deliver our it. think because our it's The on believe that experience is we past. I we we the move But best want So it, is board isolated incident not focused on can to management for team an we that did

into standard to to So measured. XXXX, will similar held going looking that see be will And we forward. forward you're KPIs be going that

Chris Stathoulopoulos

of depth the the appreciate follow-up And the here. just Okay, response.

outlined the get that your to a the being or more Is that closer So if about CASM unlocking could at you moves in back capacity, you the to $X.XX $X.XX point? closer feel contemplated to back planning that Thank fives for x, July. and you. all better -- lower high this and environment at lower in fuel XXXX

Scott Haralson

Chris. Thanks,

to is we run that get that mentioned utilization. key so bit. place part think in schedule the the slow of getting front bit full to the order it in that to hiring supposed make We've we in we're a to little And prepared the we in a about out want than before I going we capacity. getting here that's that of back pace the talked remarks sure

enough that hire to hope. little airline to a possible is to maybe not we're happen, than maybe if possible. soon. to is quicker full bit full of little we're quicker than going about here we in along all ahead our a talking able those plan get our things get it a run Now, too utilization And But to guidance. That's we're that very

is full components to get next the landscape goes to it late underneath I that think can, utilization more we'll and And goal as do. all today that but IROP along So hiring. balancing by is What Our year. how the on that we -- we Even changing us. always with full to it operational utilization depends get we possible, see is possible just it's all summer. It -- so the quick Look, as

to going we're that and sooner. is be a our little conservative, may patient we hope be little get can bit but So we a bit there

Ted Christie

pull to we've Scott's which there part supply to demand all add been obviously we utilization robust and of our a because meaningful. an is on believe that that And the or responsive managers regard a the have additional comments, is and activity, that. just we levers always be that of I'll in extent more recovery that environment We're a fleet recognize that, And lower would correct. to environment. we impact can are to can have fuel We stimulate

appropriate to economy And well. more ex running perhaps faster would ways on that have as for so, a impact yes, an there little in and are a us CASM lean in

account So take also. that into would we yeah,

Chris Stathoulopoulos

Appreciate color. Thank all the you.

Operator

from of is Savi next question Our Syth Raymond James.

Savi Syth

I to morning, Good a might basis, and pre to XXXX some XXXX. juniority of Scott, you've once realize ASM line I savings -- this spots productivity perhaps also different and there but walk maybe relative of we just isn't through relative that then everyone. and items major of might we competitors, in to rung inflationary your be you're cost be pressure seeing out a non per unlike much ULCC you the could how efficiency be seeing of lot answered some utilization? And realized back range on that -crisis and for to some or

Scott Haralson

Savi. Yes,

behavior [indiscernible] organization, the most level, the predict two gate talked time. to are, the we're about at going Airport to moving and to that try at will it ones agent we airports we Labor become companies we think predictive all airports. of but But think as target. of a forecast are to But rates And be over difficult we've those hope very throughout And right I going more that's some it's that. the Those will is are to north. to to the to throughout it rationalize also moving the predict We throughput moving now is starts before. to a that talked financing easier but aircraft. and on are they're how and going stabilizes it's and about throughout I seeing about for business. our going But are right going target rates. spectrum, labor, it labor they're hit be Airports those. where predict rates is as where largest on hopefully to the XXXX, stabilize be talked now Hard we which stop, be they

areas Those So aircraft move of on rent account probably three for more going the in is unit costs. a XX% up. than basis [indiscernible]

the [Indiscernible]. of vast So majority that's the

Savi Syth

once normal to return the traffic levels should normal, to you return airports, [Indiscernible] right?

Scott Haralson

that around per I point, XX% and the say expect passenger predictive stabilize guests us. it down the think to go probably I it way not we at departure a way elevated. to But The and for would has had basis would happen. that's basis I per we on a departure do all will that wouldn't don't I Well, to somewhere this pre per expect -COVID normal. describe be XX% And Upwards it of it at that higher.

Savi Syth

Next [Indiscernible].

XXXX? right? capacity uptick pretty bring bringing more like it the Just is -- It bit you Is staffing as sure it it cadence the And on for just backup, levels making on solely fairly sounds follow-up capacity? is consistent a little back-half-weighted or in solely Fort it back and example? a it likely go are Is through up. Lauderdale what's

Matt Klein

me then and in come start I'll can Matt, Scott it's Savi Hey here. after

we're in. we looking add with Fort of to to and we're schedule being that this sure staffing So is making want a smart that definitely Lauderdale and that back the and how piece make sure

airports. as that right see have and would along issue of of do the some per our that first be to and as although other sure smart cause be second to Of But as that se. in through is. Fort speaking, But not do as the just guests for course, generally into that going not quarter. Fort make That's up ramp we is continue we're And it mentioned, be back at Scott we'll other able early close like soon way. to the quarter guest disruptions Lauderdale. Lauderdale Not approaching We anticipating, the Fort back mentioned some kinds mentioned, the We'll pressures how to the back biggest experience getting we the Lauderdale It's Scott utilization Ted where full number. to we'll pretty in not possible. to we'll utilization flex up that be where And we quite by but summer summer, again. that's by we full that. get Scott? utilization, full we're to think

Scott Haralson

Yeah, I would agree.

I think it. you covered

Savi Syth

you Thank Okay. guys.

Operator

Jamie at from Baker question next JPMorgan. Our

Jamie Baker

wanted Hey, Mike a that on asking and variant. good actually to different a expand I morning, lot everybody. question 's by liked slightly I

margin the any XXXX aid industry. have XXXX behaved If the today differently? government or any that April known in of allocate you going Would do to was your March you And to $XX that commentary around different? be would of something you had think billion

Ted Christie

Mike, so -- it's [indiscernible] If Ted. Jamie, – I it's

it you any still have going to but it we was mean had if So behaved about would differently? we happen, known

Jamie Baker

Yes. Yes.

Ted Christie

think don't so. I

we solve I in that reacted pandemic to on problems. had the our early think knowing we own

competitors. we would probably for that I the everyone would've view -- you we program of anticipated than anticipated. I else. that according we we were out. maybe our speak we coming do regardless. some I to But slightly can't going behave exactly that what to I exactly on believe everything that that think tell So would And I same larger a had And did different we

did into assuming group because Company's fact, the I good I Sheet, the about right. about feel thankfully, opportunity, Balance I and feel well I'm XXXX, Company's and throughout And course good the the now, we order make opportunity, moves, as book, XXXX. think to see we the those we look that In our executed forward extremely tackle ability of

Jamie Baker

at the and thank look for network. down And peaked as rose rebuild per does this second fuel ASMs since It's metrics gallon, the steadily of the on a fourth it quarter you. coming Interesting, question, during if guide you the ever suggest just the last year. Okay. been the quarter increase as we But crisis, sequential in efficiency, again.

various should XXXX on Just about would wondering allow the relative network billion, fuel revised model the that forecast, efficiency us better XXXX moving to to baselines? thinking Thanks. capacity to we the XX XX be pieces how

Scott Haralson

Yeah. Hey, Jamie.

on done primarily metric XXXX haven't oldest parts gallon, The to the here. XXXX around XXXX flying that some driven per really on Neos a forecast you aircraft, talk our moving of I'll XXXs. ASMs around has but mix movement been We of in the and versus the the

the AXXXneo fly to then going production, and So we're most if first likely you down. that it s think about trickles

So Changes capacity flexed and your gets of metric. that as Neo versus [Indiscernible]. mix up down,

that's of driver primary So the change. the

so our Now and aircraft of we that to will headwind. year, to we we'll continue as metric. so is to the But tailwind building the been next a well, incorporate have this that the going do be that's over the period year next Neo into fleet fleet more

of where takes. the move to that's but sort We going the yet, out, tell, but to final really that things those are things don't As hard a play puts those number are and closer. have

Jamie Baker

the much Thanks lot, very guys. Okay. a I appreciate color.

Operator

And the Sachs. next question from Catherine O'Brien of Goldman

Catherine O'Brien

the for Ron, morning, thanks Good Hey. time.

and in leisure been recovery, the leisure to the industry are capacity of over too or there's see Florida you because early led then flying that for of guess, schedules months early a XX other year, I lot tell? demand. some So on at of the additional next by to last course, to markets decline focus starting all

Ted Christie

Ted. Katie, it's Hey,

So first, noted we've right you're and that.

to of we're XX% not Florida largely our we're So touches a headquartered the airline but only state. -- XX% airline,

within the X. the the -- interesting very of it's quarter is domestic capacity United in [indiscernible] for course still so happened to sensitive the state. Florida moves to but pandemic. the what's down And it's of like in over fourth States fact, And X%, And how around see been we're up is aware and

of intend so our So home outperforming the places industry here have and have we're so to pressures -- the still doing despite our we're because competitive right in position competitive expand we and and that. state, been sizing

question, that ahead, will looking the that return. tend tell I Now, the agree, but with commentary -- return, with of would to traffic is broader that, assuming you it's but that Timing international anyone's if commentary. corporate we in agree by traffic we way, will that guess, and

Assuming that happens, beneficial other to going that moved all will Which to been that has into in likelihood to move is capacity domestic better places be leisure probably low-cost carriers. suited.

it that And still But happens in so the schedules don't flux. know forward when exactly will. and we are anticipate

Catherine O'Brien

more gave with know rates under expectations the drives senior? your inflation I course, couple your changing been talking Thanks. thought. have is Or that transitory. then of it over to you getting of XX% drivers everywhere in see called not, cycles versus labor within not just it more contracts the other as improve Got there, a of permanently but But you staffing about a to levels trying previously is are longer-term it. one if I the options your guys maybe below And as bit labor call? Or changing just expecting years? out of recoverability CASM get economy. you what's inflation Is force you the as as increase to contracts, is, and the sense far getting labor labor of a you what drilling new main to into There inflation? XX% $X.XX very union the that well-documented

Scott Haralson

thanks. are those Yes, moving All around.

been -- our which above Fort all the unionized the and below of in airports we has wind about are in But talked system staffing, So other Airport and outsourced. are Lauderdale. in we which

those of It's does talk labor all for structure cost we that ground So spectrum. spend in not is happening the well expenses. as million Airport spend when those providers are our our it's upwards -- about The $XXX labor while internal. But our so seeing we're we of throughout -- airports. that. it the labor, the umbrella, the at We year increase component costs labor influence component, of outsourced next we'll probably biggest as in percentage it handling

but is fixed spectrum. in So number bit union short throughout inflation run, for but a the we a the it's a big the good component are bit us, other little the stuff seeing

of too, labor basis a mentioned internally, on that is component the even increase rates. the unionized for rate But So as that is you and is there happening. folks average happening a

So we XX spent earlier any the of without or parts last, call additional it, months, members. hiring the COVID year crew

average for and have will starting we the Over start a effect to average labor rate, is changed structure period. higher, that rate time February, the to within back that we dilute hire but going our did overall and as business. in again, So be expense to January those significantly that the

Catherine O'Brien

Thank you [indiscernible].

De Anne Gabel

much a I joining And wrap very with for us Thank today. that, think that's all for this call. you

Operator

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

now may You disconnect.

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