SAVE - Earnings call transcript Q1 2022

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Operator

Welcome to the Spirit Airlines' First Quarter 2022 Earnings Conference Call. All participants will be in listen-only mode until Q&A. [Operator Instructions] I would now like to hand the conference over to your speaker today, De Anne Gabel, Senior Director, Investor Relations.

You may begin.

De Anne Gabel

Thank you, Suzanne, and welcome, everyone, to Spirit Airlines' First Quarter 2022 Earnings Conference Call. recorded webcast. being is call and simultaneously This A our website this call archived on will be for replay of XX days. Presenting Chief Scott Ted Matt Officer. on Christie, Spirit's Chief are today's Executive Klein, Commercial our Haralson, our and Officer; Chief Financial call Officer; the us other are team. in senior members Also our leadership room joining of

all to our earnings subject adjusting half expected The regulatory to turn is call to exclude XXXX, be will And today, that, reconciliation Spirit measures. There expectations be the of and completion quarter to of conditions, Following in statements statements, with on based review into that will statements. merger of on for session differ the be Please and release, not materially with consummation over from Ted. stockholders. analysts. those XXXX. on guarantee Frontier refer the I a of the could to process current X, reports February a are the our we the items. performance. our no which merger forward-looking special and website prepared cause the remarks, Today's reflected risks is periods the for future discussed comparing to approval In close second to customary update are by Group results factors the question-and-answer the agreement undertake duty and pursuant actual on there XXXX including by results the uncertainties forward-looking closing of of merger to risk discussion entered forward-looking significant We company's file first in any available contains SEC including our our satisfaction that with Holdings, non-GAAP

Ted Christie

strength we and March nearly to XXXX passenger everyone exceptional April build the We joining on. saw total strength compared versus De throughout demand and were to stronger. revenue XXXX, very XX%, Anne. was in March segment today. quarter saw the up pleased with mid-February per even with the from Thanks, us improvement Thanks for

excited we are seeing. a period, We As that quarter strength since XXXX. we peak compared very head the and Very into into will demand is be robust which the XX% TRASM XXXX, summer the second are translates second to by TRASM highest we've estimate quarter our up between XX% the encouraging. we seen

with and and buffer head-on we Florida no take other them some frustrating sourcing our the our to meeting balanced. will we felt pilots. issue while more that our contribute, the it In are but have want meantime, our coming. Before provide other. service FAA adjust it appears share of and Matt Spirit of and for Scott thank details told operate members can first to couple an and in traffic guests they all I difficult performance, The staffing Florida environment our have exceptionally our in should this continue months quarter air issues. We an their team for address control operating challenges and see network need summer this to adjustments personally contributions, are the the while enhancements each week their we that But of last industry our patience expect crews, until carriers for been until summer has clearly is us rates these It large elevated, to participated that sure to make we shape. address given had have been we we presence, appropriately attrition the

a on and don't track concern. and see staffing hiring pilot is training we Our

hold. profits While demand recovery disappointing, our expect as QX QX we performance QX, beyond takes and is this in

in achievable these and the to unit tied three, and Frontier. all performance Matt, discuss merger it four, very are operational corporate months. And on with quarter the next a focused and over cost reliability first the widening record to to performance; second utilization and five, specific financial and intentionally gap; outlook. network strategic is to things: to the enhancements few and I'll peak one, business profitability; are our Matt growth; goals and Scott All return Our XX quarter two, and items hand now, believe non-ticket over we closing you.

Matt Klein

joined team. I is care Ted. Ted Thanks, thanking in guests Their and dedication unmatched. Spirit our for the to commitment

XXXX million now down Compared our revenue to revenue quarter RASM Turning XX% to first to was first up quarter the X.X%. performance. total total was $XXX.X XXXX, and

per this midway year improvement XXXX this while the growing in X.X%, total simultaneously $XX.XX. than yields but a of March The increased that the March through segment dramatic to we per non-ticket revenue revenue saw compared first loads a of basis, and X.X%. was was segment per quarter a XX.X%. quarter, record However, high accomplished and passenger such segment per segment increased higher to passenger decreased capacity XXXX, On component XX.X% TRASM

per XXXX. that's on-track piece done anticipated quarter a of to outperform second the now. merchandising large the And of corporate Our products. lot and And was until don't second has beat is achieved business given traffic, the in is We ancillary dynamically amount great record of team it the job in has recovery small that the a are segment business what there conference we the that carry of missing benefits and dramatic traffic, non-ticket the environment, leveraging will sizable our we of been carry that ticket revenue pricing upside a but in left capture significantly and and quarter improvement do XXXX. of to demand still

crew our resiliency how Ted are are the will we approach recovery. which aid in and and referenced, we network bases Regarding adding our changes to changing operational flow to more are to the we aircraft, network approach planning, our network build we modifying

Florida we we Spring couple moves but easier disruptions and that network been flying, in XX. lot over enough have our in also back a when these cities begin regional critical schedule to in schedule We out are make should more It's with more saw it impacts took our only to a have confident to April we on which did of weeks, mass effect break. change isolate we like

Looking ahead versus our the quarter, we second quarter estimate be second up capacity XXXX. approximately will for XX.X%

ASMs. fly year For full we the billion XXXX, expect XX about to

between as like the head we this quarter up estimated abolished $X.XX regional period And period international from we be is range to our peak Scott. billion, total ease. In another perspective, $X.XX which when here's testing implies to up revenue jurisdictions summer will in a to favorable, positioning same will now into revenue quite and XX% there the Our XXXX. second to and XX% closing, be is compared RASM requirements are while leg billion environment

Scott Haralson

the team challenging thanks I've a start family. and Matt. a also have Thanks, prouder to to Even periods, Spirit their entire Spirit delivering professionalism members experience maintained never been for want our saying part our by great team. are our be in I these to of guests.

Now XXXX performance. $X.XX per reported share. turning of financial net quarter first to adjusted of loss We loss a an $XXX.X or our million

expectations. more in margin in-line with our capacity quarter to more XXXX, on and negative was XX% costs adjusted first Our our XX.X%, fleet. of aircraft EBITDA operating Compared total XX.X% the XX.X% increased

We throughout the much continue cost inflation labor experience to of organization.

incentive and facility. together price in to primary wage XXXX. investments about cancellations, than same variant's which in drove staffing gallon we expense the As a under offered pressures. quarter. source per in the omicron was of unrestricted various cost flight to XX.X% in with cash, programs on remain early million $XX in These $XXX period cost was pay first of levels available a result we position. the additional of minimize liquidity the programs, the includes the incentive of company's Fuel higher the credit short-term passenger the January, paid a billion increased We additional Fuel leading quarter. quarter liquidity, revolving re-accommodation with From impact strong capacity $X.X ended operating perspective, in our million price

debt had quarter, capital made we $XX.X including principal the expenditures, of purchase and million. deposits first of payments During net $XX.X million

purchase we the expenditures, year related construction just Dania will Lauderdale and which approximately our estimate training of of million, new million For $XXX Airport South Beach, net includes south of in the in full Florida. $XXX the be headquarters deposits, Fort to capital facility here XXXX, our including

our Turning to fleet.

took we with aircraft, three of the in quarter delivery AXXXneo aircraft our During first ending the fleet. quarter, XXX

to expect We AXXXneos delivery take year-end. additional XX before of

between XXXX, to corresponding negative billion, gallon $X.XX operating to will price to second of of about us quarter $X.XX pretax assumption capacity X% the For the The our cost range the This of expenses will per margin. billion on fuel total reduction in a of $X.XX. quarter X and the impact points the $X.XX ATC to issues we of assumes with margin X%. estimate negative X

our other quarter Maintaining We advantage we believe Our some have will XX% quarter CASM our plus second still industry fleet we been about have though when quarter over with Even of industry, of carriers in to cost for pillar pre-COVID we the the labor levels. ex-fuel to the in outsized profitable our in the second is the an pre-COVID costs lowest second compared be our XX% the our important utilization model. first could utilization. industry unit quarter. of had about the impacts of interest had

CASM to XXXX. grown has quarter the ex-fuel absolute our the fact, first difference versus In compared larger industry of

level gap. utilization get demand the that and airline hit near that the to robust it go in are bases the ramp turn our back Matt process confident production, we and to we lower caused after to utilization grow XX% future. network our return closing, and time, confidence being with and making full hand just I'll us back With planning the react to to give profit strong our ability the end-of-year and With to the utilization that, us the along As operational the levels and investments while of will changes term, back full environment feel pipeline, expect short have resiliency with then pilot our with the close-in corresponding capacity the pre-COVID infrastructure new rates maintain year. changes are to the of crude our pre-COVID discussed, to non-ticket we network Ted. improvements crude or necessary to even full in to ATC challenges over along back we the in this a the around In about implemented utilization, airline

Ted Christie

Thanks, Scott.

As committed high guests. the up deliver operational we to gear are season, summer and we for to value busy our excellence

we deck I'll review, Board that of being site we points. the slide Airlines reasonably because very consummated. proposal decision the start, proposed X, we JetBlue a Frontier pending our Now, status Slide Airways to you hit the unsolicited determined proposal' I'd transaction to Directors through does by To On of a unanimously high merger capable our 'superior after with received constitute from our of JetBlue our thorough is address the proposal. not not earlier and posted like IR reject on today. a JetBlue's walk Board's

decision, clear the is two-pronged whether me value first did let the capable our is First, Board the a hurdle, with economically clarify. evaluate than superior. by reasonably provided offered is of it Frontier consummated proposal superior price JetBlue could Because second under agreement a merger definition standing the being greater is which it of Frontier. and deal evaluation not The of alone the the our which of not first is whether Board's whether

is acquisition NEA more and airline is to determination review take After merger allowed was number Spirit discussions, the it the American persuaded at a X regulators? you competitor virtual and particular, eliminate carrier JetBlue a step part discussions providing determination unlikely or interest an legal report of ULCC Board's carrier. we and with well-populated would was JetBlue JetBlue deal. contrast, advisers, by talk would likely to including to and consumers. stronger creates as and regulators needed airline. well. that core, Spirit eliminate JetBlue vocal the no. data legacy As to In low-cost, the high-fare of half with DOJ ULCC by much are anti-competitive back, In largest if the combined public ULCC capable a competitor of aligns of process, was, buy A approved consummated? Northeast it's an advice in our alliance its deal undertake that proposal be a that which with would we synergies JetBlue-Spirit a be high-cost, come key be already JetBlue's a alliance one and could room that should its And this extensive JetBlue's from informed with reasonably a a then gating fares Big its advisers, constructively and make proposal acquisition and trying receiving would anti-competitive reduced economic reality JetBlue, Frontier and a eliminate being suing opponent JetBlue expected from the would form be increased against the the capacity our a low-fare The over will its formidable as also and engaging

attorney talks of to impact believe be on as You Big effect', their significant is don't to need we carriers. on on defects the an way but JetBlue the that issues here. has 'JetBlue see about modeling antitrust X, based that JetBlue pressure claim legacy of the the putting and overstates economic

with Spirit and completion that four-week investigation, an shareholders. So, advisers determined JetBlue's JetBlue's and a proposal. Slide undertook of if thorough review Spirit economic period. Board an unsatisfactorily risk between antitrust a protections degree you retaining of of extensive represented that councils to end included At JetBlue's our over and high our experienced well as proposal as the dialogue consultants economist for This inadequate turn aviation our X, prominent, careful

provisions outline how covenant requiring would any obtain clearance, reduce a action reverse risk. completion take including to JetBlue required termination propose regulatory We to we abandoning April proposed closing to at the on we So, went fee. strengthening a JetBlue to NEA strong the to and back regulatory XX, substantial

However, NEA American. with JetBlue made clear number and it those their instead preserving one rejected was priority the proposals

and the and is it that we opposed be on said, sued also of six NEA commentary DOJ deal I any in Slide believe approved constituencies by to Spirit block it remains to and strong JetBlue's Columbia air sort NEA American with the of have competitive. believe many long the grounds have publicly to District approved X, as is is the and on so to opposition in Airlines while would NEA. that unlikely suing of The DOJ's NEA stretches see airline General the As you'll states sense common a existence. the to JetBlue block It the public an in Attorney's Spirit other NEA. acquisition travel the and be DOJ by JetBlue

to you So, Slide I'll have skip X. now

this As company's based observers JetBlue pointed have deal the out, either, supportive shareholders of performance. on aren't stock

concern However, our blocking pursue whether to I JetBlue from wondered deal Frontier continued shareholders, with fact, despite goal. JetBlue's the combination. to Spirit-Frontier has in their clear disruption is, have

deal. Over of the last lot seen parties a on comment third month, we've the

stark a Frontier-Spirit commentary agreement You'll greater Slide risk. competition vocal Slide substantial you U.S. to that third-party from there X, arguing This is been consistent in has as market and significant certainty, see a X. all, on a and great combination driven industry informed faces completion regulatory Spirit such closing JetBlue and participants delivers in contrast by the scrutiny that merger on

was So with delivers which that superior, focus our we now Frontier understood, the believe transaction, the Board all determined that which the we to fronts. JetBlue not proposal return means on

Looking and winning Slide Frontier a superior guests, team be continues of Spirit is and combination a XX, Spirit formula, and members for to clearly, it a at shareholders. transaction

$X of and United Latin and and ultra-low the consumer cities billion savings even profile consumers the it aggressively, accelerate JetBlue. fares innovation more and to X Caribbean, more combined deliver growth States, it For America compete investment dominant in communities, including travelers against in stronger and major to will destinations communities. bring company The Big underserved and across the airlines and annual financial to as as more more the empower especially well will

our also career Frontier. will opportunities of more stability team with We members better expect as our and transaction a have result

the partners. business In Spirit the direct expect to the additional upside fact, airline. of opportunity Frontier of XX,XXX Spirit combined to and and add in And jobs company's thousands and jobs both of by potential at XXXX, the Frontier participate shareholders have

that the two offer to shareholders before JetBlue's transaction completion airline JetBlue time, of is because the I to Over pandemic-induced a important that to lows the Spirit for could said, process. is all-cash profitability. years the As minute it economics. be take close, event understand opportunistically to share It's that in will want continue. on airline illusory the unlikely could timed the consideration offer recovery the extended the regulatory an up receive in That I price advantage JetBlue in of that sector due the per risk. shareholders mentioned, proposal touch

recovery merger upside ability synergies. the consideration, in unlocking shareholders from rate includes proposed to annual run and $XXX pandemic our from the gives with benefit So, Frontier, operating stock which Spirit million

steps, So was transaction with advance XXXX, the the completing all said have of of and the to we terms second consistent I'll continue it back Frontier first next announced to half we Anne. merger turn to inspect towards close in in with when what the in With February. combination that, De

De Anne Gabel

Thank you, Ted.

question to We yourself for another ask limit If related We welcome to one from one question. follow-up. begin. to with are to ready take analysts. there you now time you the Suzanne, is requeue we're ready remaining, questions are that

Operator

question first Pfennigwerth. comes Duane of the Instructions] Our from [Operator line

Your line is now open.

Duane Pfennigwerth

morning. good Hey,

You but the think it on if why your your approval the this comments puzzle. and can in this piece we important rejection If of something NEA you you the the at is deck, obviously that you'd of more with slide an some maybe be is in value, like covered wasn't read NEA odds. table, the comfortable such expand on face sounds

process went over and So, about you piece? important weeks think the puzzle the can just you you what you few NEA is talk the such learned last why through, an

Ted Christie

Duane. Sure,

important actually I there's think pieces. So, three puzzle

we by think during anti-competitive is one. core, of its witness actually airline. and is seats, admittedly, lower-cost, is as synergy stated benefit -- that extremely that to can when a us odd on of us They transaction So a number deal piece again, is a we particular Justice of vocal at transaction period objectives and us be that actively say, the mentioned puzzle they higher-fare us, they've are close is JetBlue department's time. a stated ULCC, that intend an stated as a of acquire would challenging strikes That and we in second to that the airline plan clearly, in that lower-fare have capacity-constraint extremely comments, would a being view lawsuit, expect as which a that, that they with sued the suitor given through for to fare we I come it at that I their higher-cost, Department transaction we challenging might and increases. And to our remove a the level, opponent strategy.

file we but that this that given is expect we of only department stop during review would they to the actually that third period or that XX of could given process, time, it, objectives expect the during transaction, risk course proposed of that not months state have longer process The we that own would take about and JetBlue, regulatory business XX, here. that the of impose our suit concern

flight about of attrition that. of worries all quality have We and and

And so, don't look were that or adequate in to whether that fee we we reverse sure it being cover to period, that, order during know us that it. risk for risk admittedly, for to and address how a we make termination for compensate compensated but we is or that's substantial felt even not the to asked we

abandon to to regulators, by to have to to we that to do And get to going to your that believe is approved would in need anything power which include this that, repeat, water adjunct as provision. we would you said an you're JetBlue, NEA. So acknowledge a also commit the you hell-or-high called

to those things. commit no of to that, three you to and all need to said substantial a reverse termination In fee they addition

reason, moved it we've that with the And decision be for and Board on. that to left we was inferior an so, believe proposal, our

our would take the NEA that of would shareholders that and clearly we so is problematic, but rest the yes, strategy of is the risk the all and So and overall to bear risk. need discussion the

Duane Pfennigwerth

detail. watching expect Thanks about Ted. When milestones be you the a of vote investors Okay, here? and kind just talk should process other for? from shareholder for you what maybe Can would

Ted Christie

Sure.

course SEC the is as advancing shareholders So during have from our working which in SEC of comment really period, the document, forth during been this you also Frontier simultaneously it been we've can we approval and merger those comments. transaction, the has the with SEC back groups-- good news the and is see been of which the to period, our publicly S-X filings, all first soliciting the reported resolved, we the and is two on believe tied on we've and proxy

now. that So, we're we the right process very at end tail of think

days rules a your effective, document of the XX is shareholders So, maybe a solicit that meeting once effective moved can we happen after you merger shareholders, probably way then work date is the And and anticipated. finalized quicker that SEC from merger vote within a little goes along schedule which that the XX and proxy. bit can than it and

And that early in obviously the to solicit we probably body the approval Department need Justice. had So, June. we We happening approval second in anticipate then that from March. filed sometime is of

the that, on Our submitted to initial forms needed them the HSR and with with we filings filing regard that that.

as very optimistic think in that we're here, have year. have And back we second referred those, as resolve a As answer the to all resolved and deal questions. and pro-competitive issues. closed sometime expected, to that their we work of half everything satisfy information working request story tell we're for will and this them And been the get we've they we optimistic can the we received it's a of February, department stated with we we second that with more to fantastic in we need to then a and we

gating So those two out the look to items are next probably for.

Duane Pfennigwerth

Appreciate the thoughts, Ted.

Ted Christie

it. got You

Operator

Raymond of Our line the next question Syth Savi James. from comes from

Savi Syth

everyone. morning, Hey, good

Ted Christie

Good morning.

Savi Syth

level that we planning grow lower anyway? capacity? play think grow Does kind Or kind capacity base? quarter it really you're the accelerating given you've to a similar Just curious those kind plan on the fourth the laid in constraints you about XXXX of able catch-up out. gives your to of QX, comfort to you're were growth addressing of And of the you to quarter, should capacity to along over the off just What summer? third how that from just lines,

Ted Christie

Savi. Sure,

able adapted ramping year, at where that and beyond So, things half meet established get of was had place XXXX training, ourselves actually on the to that to up making and in throughput to those we of that if all of work in throughout was a to objectives to of discussion back the second about last infrastructure airline doing be we position and and comfortable growth pilot very by industry that early are we look and a well. course our the working there enough lot sure hiring, feel

regard earlier So saw aerospace flown was year Florida, would being how with managed this absent any our in interruption to that we schedule. we have original

I versus fair the that you is second, to and from fourth what think restrained and would otherwise probably So, it's slope we artificially say see that quarters the third, fly.

In fact, you notable, can around the core of see during from our profitable publicly business. adjustment, months, filed is for schedules X% a pulled we when out summer our to which we especially made somewhere the X% pretty period very

more So, second into probably a that the at of year. gives slope a little is comfort rational you half that it bit heading looking I probably way the little more glide the think

factor. we see things So, anticipated, and what we exactly that staffing well and so a as as our initiatives underway take working will don't of do we and are hold? the other expect limiting that pilot Clearly, flight attendant necessary being

and this investigated the again things Admittedly, our the we've and confidence based Secondarily, we the us looked issues, of as our want productive see targets. is and ATC experts it to additional reacted crew from see really little for very core, we enhancing start taking changes in April. gives lot between operators. a as game kind enhancements Matt very and in will business, film. the the to is a last we hit we in airspace making as all anticipate work beginning extremely we of mentioned, but exercise of and what we summer. are with a experience throughout for network network part growth going was the summer. of we've a similar there how tackle us, when will valuable here effective be at change give been a We've airlines in Matt our network which in And these learnings my mentioned, that, to core I been week believe want can a in on number effect very third be Those are reliability optimistic making more think of that prepared how specifically. mentioned debrief We that But Florida the for all have other management as around to FAA, meeting remarks, then and And us. we and

that represented resolve proactively might system, Center definitely they much concerns the with stations every had here their perhaps in in alternative those and Jacksonville issues some but airline So, resolve where in to working acknowledged were they throughout they on been was there staffing-related other airspace. and approach finding the working they airlines more way also have and ways binary otherwise they to quickly

to what to be giving have to work And we're we more addressed. continue around problem with understanding So, us We needs now them. it. options a between and going sides good think to engage the two actual of the

year. the of sure look, will exactly assumptions that this making into all all the it just on of that described fourth ability mix quarter face it the we planning are we looks confident I grow to so of And like them, our kind while used us to those things can't to give

Because into we do daily growth to aircrafts obviously delivering percent, of grown XX% but made which may the reference his course times, next way get is a as numerous mentioned be pandemic comments back fleet to XX-plus the XX%, growing is, the aircraft the I basis. we've utilization-based. the ASMs which is we we've utilization ran been ourselves thinking How we're has about we that Scott really hours Scott the looking way our aircraft to on think fixed of Now the cost per airline year, pre-COVID, is burdening even throughout it in and business.

more is year fly normal first utilization to we think translates our will we definitely It that what part what but things should year. as into believe about, key under So be be. early you That you of it year I new lap will arrive we growth at back will next these that a head will the and that. full we're the cross of the on as look start today, talked we all getting in because and flying of rate to skewed quarter year-over-year help the basis

Savi Syth

less makeup impact does That's kind of you're to utilization? of of given the up just the impact helpful. or aspect the Does of that how And changes making productive if where the on I might utilization, makeup that productivity maybe or less it? kind rest How that pre-crisis of versus utilization the kind changes network you've follow does mentioned improve that, of even of greater the the utilization? that network change kind kind operational reliability, of

Ted Christie

It's a bases, for some that question, you changes which to an that because would described, this great want way crew example, types those from of that trips the assumption the themselves, away base their of easier airline thanks pairings head-on. or would reserve There would include easier how make leading we witness Savi, they interruption, adding makes are be crew the changes. and the we changing to tackle for repair, during to long the times

lead is, that our may the the truth actually conclusion other ways. that today, band-aid matter or be productivity cost of You through structure, to might The cost-punitive. in lower that we

of which With than net. you all our ways ways today little And on you some of day to you you're piece network way of kind savings in have at might. you that aircraft a actually at sparing We of neutral optimistic may somewhat the earlier bit, distribution because and view address there minimum, the fleet and origination block will it same do to start little have then better. that in and a the perhaps crude produce productivity, plenty are we stretch have or to structure the more as as otherwise in the really a so the flow utilization you in utilization, we're flights together buffer probably crude a of will maintain may, really is things change, utilization the your probably overall enhance the But ratios cost reposition and issue. remain reliability changing for our higher cost perhaps means instances, minimum, today team reserves, we cost maintain your existing ways to we part the intended buffer the form systems have higher in this

Savi Syth

helpful. you. That's Thank

Ted Christie

it. got You

Operator

O'Brien question comes the Sachs. Catherine Goldman from line from of next Our

Catherine O'Brien

taking cost CASM might Hey, all And going you've can to On you changed utilization. you're then, some trench in retention then of bonuses given seeing on pre-pandemic prior about into also and bonuses Thanks. the to across give at large? just we're Has economy should spoken the those good due structure just just topic. just inflation impact morning, color stay we the proposed the the think industry to on us at [ph] cost everyone. account getting And the the merger? forward? I paying sub-$X.XX at that calls,

Scott Haralson

continued labor achieve Hey, move for Since Thanks Katy, it's us Scott. make sub-$X.XX for up. to have rates that CASM to labor the last moves, the of to going projected The on it difficult our ex. ex, question. CASM discussion are level rate

I think may little a the outsized be impact that. industry bit the on is seeing we of it, but

estimate a at to be $X.XX low cost today. So call probably I of number reasonable around little to looking XXXX CASM probably points X.XX, of at with ex CASM around for those we're rate XX it, looking run CASM think With ex moves, say, of we're XX bit a a pressure.

in I in. additional cost sticky, of non-ticket that And QX $XX non-ticket that's of fares And than the affect how comes throughout sort sort about that question think that that do if there's year. levels? increase good inflationary portion in pressures. grow to pre-COVID XXXX remain So, we We're decline. does and higher so where that's logical number of margin the becomes, even a to a will that, will we And on likely next the revenue to return think offset need

let's So, of passenger a if $X inflation. XX and about non-ticket $X CASM increase, we points of a passenger XX% that offsets of say, say, keep

fuel if improved margins equilibrium return fares XXXX would So, and from have to period. pre-COVID of sort been slightly not similar, if we and

the do to So while any CASM we're the expansion margin to looking a margin non-ticket If can that to versus idea provides levels platform gap and then the cost. too, be levels, inflation. that improved industry. the good ex is that the were margin to the and we're work us, bit is always had we that obviously, minimize pre-COVID news return news, is But at total a to But a path growing increases going possibility. its becomes cost has for everything good fare for taken real on hoped a unit accretive we absolute going unit least at pandemic real

Catherine O'Brien

maybe my helpful. And plans. for question on That's the to really just then Thanks. Savi's second, a follow-up in capacity contents your

the pilots plans hiring. spots? then that target. the you hiring but in true, vacant picture guess those you're to delay to shouldn't that of in ahead utilization backfill for had can to that's hit pieces attrition success filling new be I time. much of earlier a so elevated Thanks you if moving think I there are guess trying training the picked Just that attrition? the year-end And just noted You up, call, having that your getting hiring

Ted Christie

at Sure, end Katy. correct. It's is there said Ted. the exactly What you

we attrition to the we So, and flight it, the ranks pilot ranks, particularly associated adjustments and issues adjustments work. at made saw increased and with attendant those and

and a this at and adapted stable we're appropriately year, course in And we the quarter is So, meant to attrition had leveled assuming incremental did is them earlier create over have here year. a you're simulators, We we the in get that incremental more first We trainers, number that have it There's add. training training attrition while things going. that levels, second in does we which has devices. those in more needed flight There do need needed on seeing to we slight much it more things declines right lag. need and do of to more off. and things all we to fact, that this elevated we

want to that adapted fixed our that We make way there for the that It's in us obviously. to schoolhouse and over a sure to So, retain here keep the tackle the are we to we that everyone adjustments long and system. in we we've comfortable, meantime, were ways worked. But disappointing, term. the

about nothing buffer. into So heading ability saw from issue. to our hit do summer the us summer we to to changed constraint numbers. supply a those schedule more we sure because making floor of what on-track had were enough with last created staffing that again, We for It's well to admittedly from fly our

Catherine O'Brien

Thanks. Understood.

Operator

question MKM the next of line Partners. from Conor comes from Our Cunningham

Conor Cunningham

for you thank everyone, Hey, the time.

a going it Even second. seems Just you the move back with the for when to NEA Frontier, forward you're against to regardless. likely be NEA

So, just can to we're you help at the access Interested product just your additional you speak airports seeing in to your Newark cost biggest something you're would just concern if inflation [ph], like great. were in be slots price be with that how in Any that and alliance? would interested? given that And there general.

Ted Christie

opposition and Sure. I comments that have the made on We've American is lawsuit JetBlue its that. pending been in There of with public a DOJ the NEA issue. on number to anti-competitive a and between [ph].

I that. As a said witness we that entirely it's be likely may earlier, to

So, I've are slot-controlled fair is said. that. in attention, be it itself we that wanted going just we're make sure joint to and adequate restricted to I hesitate elements that more the airports, the a than that. There or extent, that share. or I and is the however, say it even make already divestitures now code received to interest that traditional of the to a always in akin number a are believe there to comment in It's more merger alliance DOJ what a To than more it actually in venture doing

positions our over Despite In one. fact, fact, and in approach positions and Newark the the will which start we're be eventually very won believe initial seen those to on right in and that, of awarded as to, been to desire to you've take about public litigation believe we we us by DOT's surrendered Southwest. the had a late, low-cost we a we carrier, we've

reason what are go. matter be we believe if clear airports, constrained in is, place that Spirit outcome in think should pretty So it's there positions number been or I available one any event, the to the no

Conor Cunningham

you until Okay, a long go just your right rates another you I I but just over everyone the up are is, term? on through shouldn't I realize industry is your know when said the And just the And knows, great. assume shortage, think about pool as the long-term of mean, we contracts pilots, you're I pay implications year, next bot reset. now. there's why comfortable But with public, Spirit negotiate the that on closer pilot compression mean, in we carriers why long call for appeal could could case grow be the to think, you with in to than to Spirit and I I again, term color. quickly Thank necessarily a near any so not the Like wouldn't additional for mean, everyone. the that term as -- additional the but asking very be that's not. seems the be any over network that you. maybe not I'm color,

Ted Christie

Yes. that. appreciate I

significant marketplace, demand a a actually make many closer of a for few would they X,XXX you. over number don't pilots numbers answer at lead I've could is airlines, looked a know, history to this, you that a XX what demand So to XXX-or-so how tell the I heard being and pilots like supply contracts the tell marketplace look, believe where of out And have is to all a I And the of conclusion. what we But demand commenting year. the be those is disconnect way in necessarily the history most tell for licenses marketplace time. years, the was And that data can a thousand in demand pilots supply and year. for that last XX,XXX given pilots change years. And on and United I wouldn't and that actually back pilots on I that would ATP perhaps over a there are the pilot you received that, the Airlines, pilots and heard versus of majority the that current the shaken the that in there perspective from argument pilot you that, notably pilots year for PASI. the between I

to people licenses, interrupted pilots admittedly, There that a they closer did applying were lines and in private get for dip asking license. year. post did instructor applying flatten more and of because think they were FAR Now put us for dip, a Unfortunately, the in and But of period. there average getting XXX, trending up. and were And again, to more XXXX. the that that it all more get because XX,XXX place experience the ATP their can post apply closer that before pilots to was people longer I none implementation forced to get historical licenses, pilots more awarded training hiring COVID people mostly line licenses being to pandemic the off, a of closer

that back good demand I who be a People to trending past, coming I will confidence a achieve pilots, again. you or is there to data want now give us work. good more are direction, lines now world that pilots the saying that once anticipate in be like those suggest year. you've be more to and that So want is that macroeconomics actually think probably profession. And might all normalized pilots which in we experienced the be to we interpret could closer to it This XX,XXX rates, what

remind how maintain our that that unit still of no advantage a rate and you work will or inform matter demand we of lack be And speaking itself impacted that out and over the But hours. what. so help might broadly cost compression supply time, business and by period thereof pilot will the I

arbitrage that that scale B there majors scenario, be Our point I think because the technicians, units, And the at our that to enjoy getting And that extent is prohibited pilots personnel, the which very be a are the per is end from the as attendants, under dispatchers, second will pay, today push is would at majors the us, today to aircraft. are than compression we our our benefit ground right. And efficient cost happens all eliminated paid. And more of seats that regional to lowest majors. of well, which that's important pilots, remember. flight are in more our our overhead more perspective you're where they that

to number consider probably to a inputs I of there's you guess before So, jump conclusions.

Conor Cunningham

you, Thank Ted.

Ted Christie

Thanks.

Operator

Linenberg from Bank. Mike Next Deutsche question line comes the of from

Mike Linenberg

Hey, it airplanes expensive medium with are that airplane. forward? how XXX cost much as I'm maybe of -- sort like. sort on fact have a things good unit irregular relates on and core is -- talking we sort if possibly -- these about maybe with that of to fact AXXX that AXXX Neos for guess as going fleet the are Neo-type XXX AXXX think is morning. Matt, your operations fact does Neos of that disruption how your of as you happy a Any curious the sort of biggest the Spirit the thinking with enticing the as or faced, thoughts given the airplane. some basis scheduling I being of kind and focus I just the that And just about to one I in off-peak, what have airplane features right the and evolved X re-accommodation airplanes, on here. on have some and actually about X in and thinking were is I'm the focusing the and airplanes. the of off-peak given the that and costs, mix issues when the the many it you these seats seats rethinking

Ted Christie

evolving over demand there's then travel part. sees X resilient start, have a love fare airplane was I'll the that. is of for Ted. I'll untapped that Matt how it's low-fare as been most our reinforced for true pandemic, question And anything, demand reason travel. low ton Mike, demand And there's to least, of There's he low of the But the the relates comments course like in a it at add the network. that because last leisure of right any tons Hey, There's never was now. mind and if travel. course, you'd let months and just that we fare that considerable

additional there matter do. no at is becomes we It a critical, place market in is facility under do airplane And the today, hopeful more either can absent the side. and City, we're large York on that is add slots markets -- just course, we're add any demand airplane. in that So to efficient. which securing is flying where time quite frankly, to more seats there you constraint in can of capacity what us, New like we

the airplane on But going to we It's going and footprint, core XXX the changer. be always a be extremely our the more powerful Neo bigger be airline able on we're Ceo. with the to XXX is the be going the a seats our to more better Now, carbon XXX -- put than range, an version of going to game part to That's fleet. of is XXX. it's Neo have

without actually the Ceo XXX today, pitch. seats level configuration add overall operate more changing we can the Neo, So door we or XXX on the to it the because seats comfort with of XXX

airplane. excited going efficient, and it's It's to to be it's more to So we're do. be going better what going a about really

to want So to add that? Matt, anything you

Matt Klein

disruption, I we've dealing would in fleet only this. do have add, with for a the of had XXX small time. Mike, the We've we been long some that when kind

So downgrade very prepared well a if our are airports from of sort XXX. we to to for do do some have a XXX a

we'll back airline operational we're then normal or put together put cancels We the a matter have likely event, there end something that doesn't in an going we sort place. for then larger, of us. is -- doing place procedure the do take a and of aircraft hurricane a Everything is of like will to pretty two. an have size say, day weather the If anyway in an some or up coming, think

too much to those size well. isn't matter the So aircraft in that's not as going of events the

Mike Linenberg

the back guys helpful that on that good put just to then comments And that just I a you made out. which some That's slide you deck, Okay. the to is answer. wanted of in go

and in JetBlue that. that you documents the the DOJ to been disruptor, of where effect in respect has record, recently stuff, as concerns right, with the with the point even JetBlue The if and whether with Maverick, anointed it's it that I is Just will. you an DOJ NII have some think public is past, the the there industry

some the where And with effect a this respect out in some called they've to like or of point the of markets. had so JetBlue has that ChepBlue -- fact the urinalysis JetBlue, overstating to you legacy with benefits DOJ difference JetBlue arrived that differ? What on do the impact the have that conclusions about DOT do say Because at to you the of that say, you respect talk and versus, further carriers. we are But know don't. But of passenger that are where areas you have you having enterprises or in business. space. you of even can participate of they that the there of in up mentioned a guys on lot I sort that a plays there small move guys, where medium and that effect big play segments as SMBs food the don't JetBlue meaningful chain,

any I'm -- probably So it. just I numbers to realize on I but maybe Thanks, I'm curious, color appreciate it some off and you or call, has have that. go

Ted Christie

Sure.

look, analysis done you to that was hired the then because we So all bore analysis, won't us. and economists into it there with was extensive dig independent I for

going is their that as in talking and analysis back that they decade quite JetBlue our summary effect last a the of a that that comparison which period the in seats comments the referenced somehow JetBlue perhaps larger. than structure point, with of significantly where us their few a than industry have today. and They're effect into happens ULCC effect remove versus has strategy would are JetBlue take structure with market. it. to legacy the their is lot with and it's I we're use have and assertion lower about exists as part or JetBlue they what is the ULCC effect. As lower a they you frankly, earliest their the they What well, have the we impact. allegation coverage at -- quite a that legacy in The my when starting acknowledging of of a be is larger out the they remember, JetBlue the deriving different that the And clause compete than point fare And carrier, the effect first -- markets competes have carrier and our while was an as can cost carriers legacy completely all, because is a

So talking that's what about. we're really

Mike Linenberg

everyone. Thanks, that. for thanks Okay,

Operator

from Jamie JPMorgan. Baker comes line from question the of Next

Jamie Baker

try Good quick. everyone. morning, to I'll be

the that guide, profit half back axial revenue assumptions at there. guide? obviously and into root we some what's second But CASM the of can The fuel

Scott Haralson

this -- gave Jamie, We and expenses assumptions. Scott. we Well, gave op is capacity

out a third. under quarter can in So But second ex sort you of and sort that bit to capacity the aren't in the do of little some guide. us math giving full will flying be the we I likely think -- gets pulled CASM a we

call to So and in then the then Xs I a a is from it benefit think return in first to year. what in pre-covid of, a of you're CASM third, bit and and back mostly going to second of the see I'll the and fourth low we'll next utilization sort escalator second

So that's sort of linear extrapolation there. works probably

Jamie Baker

just Sure. is Duane are raise Justice Spirit used of on this offer And previous that typical are ignore on table. JetBlue more And meaningful sort deals. the for through has earlier alliance But fact the and aside of your the in Northeast the lenses then I flags illustrative there's if the going that purposes big maybe call. and realize did that red and merger, any direction caveats. those those we when But the review was frontier viewed for a the set

it ordinarily that to way not kind on least issue when of at your wasn't if just again, other at it was were you if didn't there the illustrative if an I'm mergers lawyers the NEA analyzed end Justice an frontier that's analyze an flags when and just question. red going saying the offer So have you past. looked no has But we're where -- argument the table, in up. there

Ted Christie

Sure, question yes. is Jamie. the And answer Thanks. the to

removing raising that their perhaps airline, and they've given a the new which -- So and DOJ, this number very aside its what at cost make admittedly fares. which that both as setting higher clear capacity NEA, to lower administrations, airline a has that's prepared enhance buying objective fare, the in competition. Remember prior problematic. my this a Duane, approach, and trying lower-cost even it I'm to And made fare, clear we view higher X is than to problematic, setting this is core, answer administration

they we as divestitures clear the So will way, view issues to be it By considered. resolving traditional not that as such problematic. also, that on made mergers approaches

Jeff the and there's for this shareholders. So flags with risk. believe when we Remember, we were And a course that of tremendous we the were XX, we not throughout which regulatory bears number we yes, needed we and much strong our shareholder. that risk why process that comfortable who to Spirit risk, red back on there -- concern why had had a across so such April is went covenant of

Jamie Baker

much. All okay. you Yes, thank very right,

Operator

Our from next Becker question the comes from line Helane of Cowen.

Tom McCaffrey

McCaffrey Tom for Thanks Helane. is This much my taking on very questions. for

the your of combined Just of customers part on your entity you Did merger. you question another JetBlue review, in did -- anticipate as lot you acquire a quick the staying and analysis if do with pivot you to was customers the spare be sun other -- can low-cost carrier typical because silicon -- think country? those customers legion will do deal or likely the be And approved? another or more to

Matt Klein

and low our our expansion decade, X or years is and which period about, over Well, maintaining and low X the alternative core JetBlue of product that I the over is of stimulated a core the like is what of over structure offers ours, And we've And grown growth different very product, our think people time a fares. activity. our higher that but what last offering we've product fare on remember, their the learned we've airline and fare a product. is from fold predicated it talked

will assume less travel. would economics simple people so And that

travel It's all about on Are so, going -- is out whatever. travelers and for may which again, they're traveling, going you travel to reason relatives. or and that And there about people. the that destinations? you're I who's -- is airlines. on pocket, types and going? travel Spirit Are the again or Alaska I paying specific JetBlue not leisure or American on oftentimes visit again, United mean, believe things Those decision. don't They It's that your buying friends it, of of to where which you leisure affect or own your

people So less what happens I travel. is think

Tom McCaffrey

one since President on anything for Thanks or in any trends just customer demand Day you some more data that And Matt. maybe I providing Would like could surprised squeeze any demographics. seen you the in. mind if color you've Thanks, the maybe color. on of

Matt Klein

Matt. this is Yes,

challenge was of flipped through we It's build further as or a one because yes, strong. tracking to almost we It for a on change, And trends have becomes team So in trends, where things demand longer February. trends quickly make they're has up as switch it things the either down, revenue to demand demand, was went close saw short-term well. management And out. medium-term those. adjustments you really like light always then to come starting those when tracking we saw trends or and

we Very analytics. that. that we there that really, way get we've to we place we're along a to just is faster got So, had from Part the the we comfortable would and that but to seeing some get demand processes is with of than to, We production of we internally to anticipated. changed been knew that today, non-ticket frankly, adjusted the things improve trends our continues continues adapted. here that quite great quickly and what's

extremely which lot put in Just than also it's it's news learning yes, on we analytics lot was processes the demand us had -- stronger, because sticky that curve came the based It and but tells non-ticket improving quicker for and the a been we revenue of great anticipated, also is production online production. is been what a is that that on place.

we like flying in then of compared that is depressed about I'd the that some thing And South today network the it and normally. bit has great. been the that's been been just add have to America to where international So one a international has of our regions also some -- Central to

panel but somewhat the want definitely production. drag don't on on a I being So something to there having it, a of -- results revenue having it's are over-rotate

network. as peak away summer South go periods. and months under in through bit to move Central a seen been into in some that little for few production we've and we But more the expect of last We parts of America our of the get has the what terms the

De Anne Gabel

Suzanne, ready for the next question.

Operator

Our next Seaport Dan question from the of comes Global. Kenzie from line

Daniel McKenzie

the commentary. clear It's you the to Hey, $X.Xs was merger you hear I morning, ex you all ex might like half look at and still of Scott CASM low to XXXX. first thanks. possibly guys. sub-$X.XX and $X.XX higher? for really Is something messaging, announcement, of CASM the in Good today really look or helpful. on Frontier? Prior with outlook the ex Have Thanks started emerged low what CASM reasonable

Ted Christie

Yes.

about that and any sort then you about cost know talked cost of combined Frontier think place. today in and there's translation. can haven't talk some of the We do Spirit But unit things I we synergies

would a could the haven't we the So, extrapolate look unit you like. think I view formal given costs but what on combined from inputs,

Scott Haralson

we've fair to there toolkit. to million of business. industry between about the the available are direct $XXX we what say, its unique the it's cost the is business they're pressures And to to think synergies compared that be expect public Dan, offset rest it, that I can been the has it combined those ways that seeing of and the industry around in

create way that's to ways would ULCCs. think it. combine about nothing to the there's I best that are else So and pressure anything, there think two If create efficiency to

Daniel McKenzie

night Matt, see. related going Can more look is you to business another to concluded at And that you're the of back script, on upside at? revenue really willing a another to to this, elaborate last look the something way to that premium Is I good ULCC ancillary a second or that? go. on take taking the that side come.

Matt Klein

Sure.

revenue second board. start can with I premium of So on terms the in piece

it can So, we it. to the is which revenue product the profitability aircraft, aircraft. about frequent do a it's on a do because it's been think cost product think and to seats you have the didn't right have perspective, our want. big aircraft been from part long as right total still how Obviously, on the like drive on on on the know management something and product. that is properly that couple do accretive the on on aircraft had sure we'd and aircraft depends that of reviews the more We something seat the front we we've we the it board, we've we aircraft. unit since job when as line, view our customers it's It's we on go have we revenue definitely the make for product product a have to that ULCC, production thing if a there the We why is that benefit decision it why we time overall. through bottom for which it's still have we long That's as us and because the our

relaunched, we've to loyalty sort and for In revamped about we're terms program. more there's and see with of now to non-ticket this we of talked our think happen a come, while where little starting traction

our card well. there program. have and that a partners of starting Bank partnership of other place we credit We're co-branded America traction is our very partner, on with see couple Our to working there take new

better our there analyze online. and products there's So we time, better to management we think also and processes we're ability continuously think continues benefits of get as our the merchandising to know revenue better getting that at just improve data continue and the at we just real to just our more and

in So, confidence and where go and in to there. beat the see it us we're from we the gives that's set where we'll second what of going we we're then see just lot confidence QX we a seeing quarter record have the to happen

Daniel McKenzie

number a was look that a revenue Very wondering big seat have great front good, if premium yes. I I guess, actually product. the I purchased expanding with is now at That's that. of what times. you'd

Matt Klein

you of do make we for capture revenue we because exact that you the when what of Spirit. trips fly product just for whether have part leisure And today. is sure wants we your on to all that premium were is revenue why to is or That example premium on an said a there, is business, Dan, why can what product that that's going

Daniel McKenzie

Okay.

De Anne Gabel

Suzanne, question. we for you, Thank have Dan. time one more

Operator

comes of Stathoulopoulos Susquehanna question from next Our the line Chris from International.

Chris Stathoulopoulos

on for Thanks Good me morning, getting everyone. here.

keep one it I'll to question. So,

look have cost here or had So, would Scott, years a a deep dive included your say, two I'm microscope, peers at so you look at Ted also and or which guessing network operations. your to

airline to get a way, there And than your and you in place learned another is guess, your DNA address costs? network changing operates? you related ability the ahead of that, do And that? Or of situations utilization may that respect more approach planned? the to perhaps your structurally Given perhaps said to can with change to stress network have plan effectively what I points your the stress Thanks. how would in

Ted Christie

Sure, Chris.

disruption. issues we time. Florida Disruption weather it in way is add gets that more can that the might network it best start, and challenge resiliency in a have. But from to adapt is it way actually to the There I'll tackled So, the the bigger, to the Midwest. recently. problem, replaceable is make the the in be of we point Obviously, Scott the all the as weather good structure there to bit. a I issue more that Texas, and one, about the had face. recoverable happens we're it way a you be is recover will its which and think which is the in airline makes The little why way create expands But event being able we've has thinking

same backs. And airline means that airplanes they is make leave more That where from city to depart return bases, more much follow network to so They more start a actually two. Once you and do the that that the eventually and out or pattern. same [ph] to and and crews solution to they out flight crew you within naturally enhance with back. the follow start

we, able And of you of when you're obviously, decade them. the been Coast. through the flying over isolated the course, an move and these Florida, and have Florida So learning and rest the system. enhancements will last those the changes to kind Northeast the West issue the continue in But from to of Midwest remove disrupting making have without

I to ways as business in problem well. the they're optimistic, that's the where infrastructure of in work redistributing the today, where spend making extremely more That's going we're we the resilient. it and that just So, maintaining said just do kind it cost before, tackled. we're They'll we

So, Scott?

Scott Haralson

really historically, drive we Yes. as would that sort company, the be singular I Chris, add, cost is of would lowest a as we only one And thing other we could the would and mature outcome.

the our process the the risk think of to to range outcomes. I that, dimension thought advancement of drives a outcomes or really a which fourth is

that predictability So, talking becomes resiliency of more what in business. about the a Ted's and outcome a

about our where what is those added predict good things. of time feel sort dimension that network the fourth sits, recovery and ability and we So, over to to we've

that's term. near So, the cost important I that added think we've structure the over stability an element, that of

Chris Stathoulopoulos

Great. Thanks time. for the

De Anne Gabel

talk today, Thank will and everyone, Great. you us you, for soon. we joining to

Operator

concludes conference you participating. for This today's call. Thank

You now may disconnect.

Spirit Airlines (SAVEQ) 5 May 222022 Q1 Earnings call transcript