Spirit Airlines (SAVEQ) 3 Aug 232023 Q2 Earnings call transcript

Company Profile

Participants

Vivian Taveras	Investor Relations Manager
Ted Christie	President and Chief Executive Officer
Matthew Klein	Executive Vice President & Chief Commercial Officer
Scott Haralson	Executive Vice President and Chief Financial Officer
Conor Cunningham	Melius Research
Duane Pfennigwerth	Evercore ISI
Scott Group	Wolfe Research
Jamie Baker	JPMorgan Chase
Stephen Trent	Citi
Thomas Fitzgerald	TD Cowen
Michael Linenberg	Deutsche Bank
Daniel McKenzie	Seaport Global
Savanthi Syth	Raymond James

Call transcript

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Operator

Thank you for standing by. My name is Adam, and I'll be your conference operator today. At this time, I would like to welcome everyone to the Spirit Airlines Q2 2023 Earnings Call. All lines have been placed on mute to prevent any background noise. After the speakers remarks, there will be a question-and-answer session. Instructions]. [Operator you. Thank

like Taveras, now the over call I of to Investor Vivian Manager ahead. Relations. to would turn Please go

Vivian Taveras

Adam, webcast. to everyone earnings call and second being you, is simultaneously XXXX This conference Spirit and recorded quarter call. Thank Airlines' welcome

it Presenting we will Officer; as Chief are Christie, on this today's replay of archive minimum a Executive available, our website Chief joining Also our other Haralson, Klein, Scott Spirit's Commercial our senior call and on for is our Officer; of soon leadership team. a of Officer. As call XX Chief are Matt days. Ted Financial us members

expectations be discussion of guarantee are performance. our remarks, that not on statements future Following session current for based a contains there and forward-looking analysts. Today's will a are prepared company's question-and-answer the

JetBlue to that to, any significant could by We differ but from to forward-looking reliance factors duty those these be There statements, risks reports our investors in no undertake and the in update various not file on discussed and acquisition materially risks including, actual with statements, not to on forward-looking place related SEC. and of statements. our Spirit the should undue other forward-looking contained limited results cause uncertainties and risk uncertainties

In special comparing all items adjusting results exclude today, we periods unless to will be otherwise noted.

XXXX Investor please and For Relations quarter non-GAAP A the release. ir.spirit.com. to refer GAAP, website tables of of under reconciliation on an in which to section our the reconciliation second earnings explanation measures is copy provided our these at available

Spirit's the President will Ted CEO. to turn Christie, now I call over and

Ted Christie

start entire saying today. recent Fort for their negative much in the rash our of and here and the network joining business thunderstorms Spirit thank and partners I in plagued to from minimizing you the thanks for our want guests on months. us area and our of Lauderdale and everyone the dedication that and Viv, have commitment our for impact team us caring across to call by to Thanks,

negatively And while of all our reported the weather DOT operating air were and initiatives. plethora metrics events, traffic control the impacted by quarter for a

quarter Our coming XX.X%. was very controllable for factor at completion in the good,

X.X%, to financial below for Turning above strong guide. and points margin initial our the was XXXX quarter pre-COVID RASM X historical Total quarter performance. about Operating our was second well averages.

peak resulting for levels. in expected, period demand However, built we the summer as lower not fare travel has

disruptions ATC towards These to weather trends peak weather are dramatic seeing while comparing June XXXX, period time, We exceptionally of continued a same at away difficult international into continue strong to demand the pricing and July the demand contributed a domestic fall. Inclement part to and of are long-haul the in also the international. demand and TRASM. throughout these expected and regions lower shift and near-field from in

and season once domestic. international ends for a towards travel back fourth However, expect shift the to more back in the kids This mean environment travel pricing quarter. and go school, normal will periods peak holiday the demand we summer demand should

I outlook, details Matt second engine our with GTF quarter you issues Before neo about our the share forward powers and to want Scott our further fleet. and update performance on that

caution, sits at neo week, beyond from set which Out AOG ground of discovered accelerated is issue XXX begin refer engines an plan is we XXXX. of abundance initial today current the QX Last Pratt inspection, seven primarily had recently The XX we engines control or during that above and identified had aircraft. on were This engines scheduled Pratt aircraft that of from XXXX to neo the disc quality them, Whitney for has current Labor QX group. shared up in seven a service we to this and to a in RTX pulling will manufacturer which after between and removed on as Day, engines an told these result & as being aircraft of of produced service.

through does revenue highest significant United operator For Matt service during the noting discuss more number planning of the in purposes, Day of on we produced is engines GTF-powered nature impact of the neos end are that reduction of close-in with assuming these the in the XXXX will is the seven be this XXXX will impact It for to have the additional Spirit a year. detail, schedule Labor post aircraft but of period. September. the worth largest out States

on our mid we having Exposure operate. the to not be We Pratt we is this X,XXX in late scheduled issue the before X,XXX removal but inspection has September it already for Timing by impact the additional that should engines believe be how inspections for on is XXXX. likely margin. XXXX. need and inspections for yet engine will ones the us of the of engines X,XXX Pratt some September, for of has next known, the may an to performed very end to is are know material identified indicated unique and many

be net incremental impact may smaller. So the

in However, learn more we September. will

still should the for maintenance confidence to have year, to by an neo temporarily of the the significant planning of end and removals and six the aircraft. reduce same discount Throughout That are fourth our have previously engine aircraft team managing through said, assortment is had second at quarter. due see we about of least issues we seven gaining We discussed. a four service currently number unscheduled quarter, the disclosed of and out assumed

engine which means of XX aircraft in removals short we as scheduled the while the of equivalent we time large least that service at we XXXX. of most life-limited neo And should unscheduled of XXXX, during unfortunately, year, a enter part, a next have ease will result out have of checks as number a spike

word make new aircraft engine airlines another keep result you of to their assumption to posted a our issue latest intend at This as promised the for of development. have The will by that the in we disappointing RTX as We'll This, has hole. yet. we those doesn't unknown now, and this frustrating and additional are issue new further engine ground is to get course, updates. planning. any reimbursements of of include details use timings issue. And take affected them as yet we and neo

Matt, over to you.

Matthew Klein

to while a a challenges. Ted, team number Thanks, of job special members. involved our managing We and guests carried all thanks and do volumes everyone weather record great a to numerous the continues high ATC navigating the and

$XX.XX, of and brief a billion, was quarter. provide up quarter our a with Total points $X.XX year-over-year. was revenue demand XX.X%, color revenue second start factor expectations. was capacity XXXX, I'll year-over-year. our Total up for some the quarter X.X performance environment result, to of X.X% the short on of total increase for QX a the on was down XX.X% a on overview XX%. of of increase but second XX%, strong X.X% third Load nearly capacity a RASM Compared decrease RASM

basis, the travel number were summer summer well passenger trends per the what increased earlier per year-over-year move XX% year-over-year segment knowledge on quarter increase made into to of remain of a to per with trends the about On a stage segment $XX. revenue X.X% decreased second longer $X XXXX, basis $XX.XX. Non-ticket and the of period. heading the we year, or coupled peak intentional record segment flights on in Based we in over performed to exceedingly a strong, of seeing the

aggregate, pre-COVID in averages. line quarter, second the historical routes these performed with in In

were have outperform to in anticipating recent had However, similar past. results those what we would experienced they averages the we and

In addition, network. lower peak summer had anticipated, fares across to into the demand leading not did build the we period as

GTF associated revenue with quarter the second of our at flow balance results, regional impact. had split the along Ted guide to change mentioned look and Whitney. revenue cancellations just performance, we a schedule engines elevated for variance & a Pratt was in due to in with to XX% approximately described our When domestic make miss earlier we demand compared as haul revenue regarding general issues quarter September significant longer I was the above, to that between of the the

our day hours' on on to from the the to XX select to This less the Under scheduled remove last the update a seven required fleet is network. lowest event. before contribution the we update notice. would circumstances, that expected we aircraft than put flying September received normal available We have us

However, we as in our offer new time already that This results schedule. up remove in have since isn't had schedule otherwise an for we we flying built didn't could relatively set of operating easily commercially an flying lines to effective that this to as entirely out situation, sale. build out exactly would

revenue reduces removal capacity lost to nearly revenue original due X% did engine new specific this revenue and QX issue, this we will which which remove neo of is the penalize AOG We on we AOG X.X%, X%. issue, by top approximately issue production expect planned estimate in of the for September nearly by

to out top do but we schedule continue in smooth resolved. October, impact line So will revenue these until our expect to issues the are

guidance. third to now quarter Turning

the domestic difficult peak We the demand forward throughout expect result than demand of shifting to trends the and as America to third the long-haul operations throughout the ATC. to Caribbean and U.S., quarter of normal due be carry continue weaker and in a international very Latin to the weather

in total the this down aircraft, with and down Taking we increasing equates to $X.XX $X.X range year-over-year. the quarter. will to as the XX.X% additional third adjusting unit being This as billion out-of-service revenue X.X%, third for between well year-over-year XXXX down estimate XX.X% quarter capacity X.X% account XX.X% into billion to revenue for

And over with that, I turn it to Scott. now will

Scott Haralson

guidance, few changes. Thanks, our Matt. QX results After and recent share briefly details a I'll about discussing our fleet QX

at late we than April, Fuel billion. gallon line the widened price lower, per expense the guide came guide guide. oil gave Fuel to Our higher fuel $X.XX operating expectations slightly our price of second gallon. costs board, improved our Compared $X.XX, spreads fuel was for driving at our average estimated. quarter than $X.XX in modestly million. were across gallons Nonfuel expenses a the $XXX.X crack second were in in higher quarter was but better per of with prices of end when estimated crude operating

driven flight expense basis, liability driven benefit derivative inflationary average came of mark-to-market with wage prices, to year-over-year offset the and convertible On due fuel we in the better increases than a volume, associated aircraft the to primarily additional more valuation a expense Total estimated, XX.X% related by decrease rent a in noncash nonoperating fuel pressures. notes. XXXX lower by

in change excludes potential give the As it when mark-to-market our guidance, a non-op we adjustment. any reminder,

Liquidity cash capacity $XXX quarter end of facility. of the unrestricted under investments and second and was $X.X which credit our million, short-term cash revolving at equivalents the million the includes

we AXXXneos for will of the be ending capital quarter XXX full estimate about currently second aircraft, with five retired total AXXXneos, expenditures aircraft that We the of AXXXneo quarter, $XXX took fleet. XXXX our During million. of in the first the delivery three year and delivery

other our remaining drive Looking ahead engine to the of harms the the efficiency. that availability third and neo issues, neo production quarters, with capacity our development issue, fourth overall disc new lower together

However, results our will for on likely news operations. a for at even fleet into attrition been in being and positive assuming available the be level would QX. we of note, has year frat reduced remainder and than more overstaffed continues aircraft And we this recent QX pilots in have pilot The required for fleet the by means utilization early full carry less this of XXXX. lower our and attrition

With on pilot fourth CASM that and aircraft be due longer as by the ex in being issues now be QX excluding make-whole core at be should caused our The the utilization drag attrition can neutralized utilization is to by we AOG on margin closer airline quarter, expected to no the core back and full drag airline. AOG commitment. isolate should margin run to production. AOGs, viewed is look RTX by the The a to rate

Airbus recent the of to some Now discuss let the order me changes book.

XXXX, Early XXXX. year, given in were delivery part for dates deliveries delayed and aircraft piling of up this we XXXX

expected has continue these XXXX. In addition, would it that delays been beyond widely

our decisions orders new option XXXX some push had deliveries orders and needed of that beyond. Airbus and to also few into backlog likely own their us about that made. aircraft We to AXXXneo will of been regarding and be clear has also order limitations a production

of slowdown few previous and growth years a in digest near-term, the de-risk give the need business growth. chance to we to Also, general the of a ourselves

Given broader make agreed all At the our following that these of only and the aircraft of to extended changing original deliveries. total a day, orders our end commitments. into things future of XXXX, started the discussing changes the of fact reevaluation we without number the we

two, Number and of And XXXX year the us reduced up and our decision aircraft decade. and level we in slower and by the XXXX. we timing gauged between option three, XXXX XXXX. the between orders retiring and One, of timing and commitments provide by XX we consistent of delivered of half AXXXneos AXXX, smooth for to AXXXneo all deliveries the to deliveries the our our deliveries these direct with moved back the Together of changes options. the a of XXXX remaining our lease near-term smooth be those one growth

A of Airbus. and giving lot believe are to which with us growth for of Airbus aircraft we a partnering meaningful And we order we and to as time moving stable would these appreciate the mix teens. predictable agreement the view positive here, in both beneficial At decisions, fleet rate all Spirit parts a to high produce most make together we made the these book we the XXXX estimated Spirit. us changes

neo engine However, issue. that about was the before learning latest

be may capacity a will on understand before few plans. fully XXXX our impact the be more months It we what

estimate negative we third total to $X.XX negative margin between our We estimate will will ranging Looking X.X% per billion. average quarter, ahead and operating gallon with X.X%. $X.XX range billion fuel between to operating $X.XX expenses the cost

guidance included published quarter our ir.spirit.com. website investor third at metrics update today, are in our copy found which be Our can on of a

staff, The to them and ATC to I professionals, control been I airport recognize months our personnel operators. and our a have Before quick operations weather operation do give back staff other it have shout past the environment to support been ultimate crews, wanted hand a center difficult out. few Ted, and and I the want our the

for I'll over So now closing it to turn back remarks. Ted

Ted Christie

Scott. Thanks,

fleet hindsight, we would largely improving are due decisions some been underperforming that made high still coupled have QX. second of of coming to to run possible have on potential pandemic. utilization. ideal supporting is are intention return to penalizing of progress at face with how with our more pandemic. being is we acknowledge That, that but out of we with of This our us and factors was clearly network to the are the the utilization. a coming willing cost attrition pace made quarter pilot In to challenging for contributing operating due reliability contracted the we XXXX, slower of in issues margin been deliveries. operational full struggled the are impossible and Although conservative overly of It out during tight We this growth our and the we the

past July which that in also August than learnings we expected, and XXXX. indications back our and are we for infrastructure the are help flown have for peak full XXXX unpredictable. that few productivity issues we volatile June, better have opportunity. and scheduled will years weather the Labor, part of has It in than But a on hours great. days of Pilot in means been and optimistic some over we and the resulted more year attrition is QX, trending could missed rates

utilization no our achieving where full peak in growth Nonetheless, well improve fleet, pilots, is they assuming our constrained attrition our pilot for stay by bodes which rates are core further, longer or QX.

GTF utilization We weren't aircraft the we from out achieve volume some missed fleet with yields could entire that not on June believe holding being if approach higher to in out believe our we full service revised In did by for we due we have issues, materialize, fall. pulled and we for passenger and year-end. fact, our burdened July on

challenging. predicting accurately new Not pandemic surprisingly, post has levels been normal demand the

our and including to believe Day this flying, nonpeak network answer. changes the post holiday, We in we tactical variation week demand maximizing are revenue which between more margin environment, peak making and Labor is of the day

AXXX the should expected up through in deliveries and including more our benefits the us other and XXXX the decisions with in of and drive gauging growth XXXX efficiency we and XXXX revising retirement cost more variant fleet made, deliveries all beyond fuel to deliver of aircraft in AXXXs, growth. early demand The the beginning pace to have allow line

in can is often. quickly In the thing that the airline career I dynamics conclusion, are plus change things my of business industry and over One decade constant. two learned airline the that have

pivot operating especially better airline, The will to to domestic-focused favor, sometimes we positioned answer these things is to stay lack current believe not I now efficiency to still is our on. the and a and while to simply is of change favorable the Sometimes the capitalize taking be productivity. setup some with are answer steps in course. and

Frustrations and rate. great team adjusting aside, necessary, our I as us, a job utilization XQ trend is believe anomaly. doing Most normalized we our towards expected strongly a important is an for performance as

provide industry. industry levels cost rest of margin to our return and tailwinds expect a We and leading the structure considerable to against advantage us the

the to And begin now Vivien back Q&A session. to

Vivian Taveras

Thank you, Ted.

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

Operator

[Operator Instructions].

line with first question Your of Melius Conor comes Research. from the Cunningham

Your line is open.

Conor Cunningham

comment it's just just operational big when when But theme the Ted been ignoring the you [Technical -- stress on this a potential about more -- impact. Difficulty]. week, of shifting of add fair day system, think just you

Ted Christie

you cutting and but Hey, and is the -- that, right? asked sorry, about Conor, that of variation Conor, in and out, I effect you're day think week you're operational

Conor Cunningham

Yes.

that about part. Sorry

Ted Christie

No problem. Okay.

So for understand things to operational that But to and mean of things of only one enhancement out of that that we you're the more, I airline. as a little airport is part ops many particularly the our schedule XXXX the airline one is here it bit implemented right. we've because from a learnings of package. that as easier our implemented started smooth we was result the

comments that operation run, effect. to things think have I been a And we having a quite our few I and it's nice alluded in done to make that my we've that

things most much are of And weren't effective the we part of we're impact. at some so that an and looking that, that as the of did things as that from having learnings

to off we some to day, stress the peak to too not the we which much There unit some airline help from drive believe period. particularly of going so peak. us that, going the margin that and at the off-peak will it opportunity for helps And while in think we're the revenue, is of end

Conor Cunningham

a I'm be to I about issue, you. the Alliance mentioned then any just you And perhaps would Just thoughts -- talked making that whole. Okay. out. I mean credits? think I that you there on Thank that talking about Is play helpful. GTF maintenance -- know expect

Ted Christie

early. Yes, problem. quite it's us. still No all quickly This developed on

at we're September, favorable the United States, is one which of their quick about we said, institution history the to This we've will long-standing honored long-standing customer. a all. had Pratt, biggest a the the changes we their had a storied As of say not with them, I thing States, they've in always to and customers, But is one make industrials United always stood partnership and commitments. and they've in by

that And expect will this look to to it's still to too form, and of details true. early to intended that whole take and it will expectations. issue, They've how that so on But like make what us our coming be we is tell. the

Operator

ISI. comes of question next with from the Duane Evercore Your line Pfennigwerth

Your open. line is

Duane Pfennigwerth

comment was morning. Thanks. out of your holding about yield Ted, good kind interesting. Hey, for

So of the maybe felt I was kind was issue? for in in was I of coin of of kind late acute Is press on the demand? line first in kind Caribbean, reduction it of other maybe reduction demand. of about you sort talk an any most the acute et the cetera? about And think acutely, release that yields? where color that holding a markets there saw quarter assume when the out side you Can in it

Ted Christie

Sure, I'll Duane. Matt around but the edges. let intro, a going give Thanks. coloring to brief just I'm

thing? intentionally from people and very what and isolated used you of and feel and well about talk with around heard international, seeing and XX-plus to and the what and which is out June. we outperforming we over off But was which you home it's nicely and very was considerably add some And last that obviously distinct last We sort of year of points ties words towards away noticeable long-haul geography saw months, would think we international, clearly that were the rapid shift near-field our of I domestic strategy acute. we've about yield was drive strong this not the witnessed year. patterned now what did the play as end handling made, like Matt,

Matthew Klein

flights have occurred one we April, touched then less and the same some -- about think, would the of two how months be day. the all in but time example, some in which Duane. and quarter, basically high unit strength, than cases, saw biggest second, moved. pricing I example. for is there And I saw Cancun revenues, that's that's you strong is an same happening with Sure, couple very June, during the other Cancun Caribbean a things us of examples that's reverse as year-over-year. later, numbers and a kind probably that, like power abruptness a the can for down quarter April, incredible for of example every double-digit very out within is demand perfect within talked quarter, still change And percent we that And sold of abruptly we

And said in bit Cancun. a capacity little is our that, up having

be could actually saw. that added but not we capacity industry of to level has extra the there, some And too. the that some So explainable,

we -- So it's think And then into off. the quarter. XX, that stopped also about and in that last be third position yields as and And supply just demand into for will always months the will June, just end and XX about But demand We the been there come this yield talk the of really fell then demand. be had impressive. but a June, XX, the we relatively of the quickly. will third took about case, and seeing and in

volume, held to we Once that, in. to yield need a away. that stopped the went just it sacrificing the bit completely we out it had to that then pace too an in. come at we volumes just yields then you come expecting those and adjustment same make It's are And not see see you that seen. really, little long It's for you --

quarter. lower the just yields normally what for at like third volumes see than to anticipating are and see starting we'd we in. come They're So to

see trends look then as We described to back. near-field acute as we well bounce the the periods more an especially demand also fall, in out get fourth domestic the expecting U.S., as as situation, the are of And normal summer international in into this at here but and quarter. peak territories and the we have U.S.

Duane Pfennigwerth

the that aspect Or see originating to sort did variation country upon you you're of city demand originating on change? of what depending from? region themes Any the

Matthew Klein

really, not East like that is spread. demand It No, as Duane. heavily the far not would on too feels being where from Coast an oriented, expect, speaking. it's the mean demand effect of you Europe I some has East away decides Coast, to go, because relatively Transatlantic,

an So we probably really But there was impact East in Coast took most. but with impacts, it that. the general, saw

Duane Pfennigwerth

headwind that then X%, point color. That's appreciate of engine and issue, for But that third great. negative impossible margin X% sometime there's the I do today? in And this road, of this quarter. the kind engine outlook the size How time. down this many at specific really you are the margin how may just extent negative be you? reimbursement of to would on that costing points issues as these think And you

Ted Christie

Sure.

that, think aircraft that about utilization, way fleet productivity. into which where margin of all broadly really driven result X-plus missing we think right easiest now our probably margin ground are to on So issue and we're this we And speaking. have the impact given of today, utilization is we by the the as account a points takes with

we're attributed of the how have we of vast which about airline. be running before because AOGs. we restrictions, some can alluded our to own to majority of that But is some it Now the

discussions we're And is for so stand us, here. be it we're And it's going obviously United out the about really in unfortunately what having the in to on States, impact us. to

discussion an have RTX. we And the and folks with that so be Pratt will it at important

said They've we've they've by stood change here. would reason honored as But their earlier, always with to very I we us, got partnership commitments. no strong that expect and a have And always them.

Duane Pfennigwerth

Thank you.

Operator

Your the Scott Group next of question Research. from comes with line Wolfe

Your line open. is

Scott Group

thanks. guys. Hey, morning Good

international surpassed focused was about in week. legacies I of capacity. it of where just pre-pandemic somewhat step be a if know demand So is and leisure. just days from now shift we've talk corporate same bit a to the But possible a domestic I it lot little back, there's finally At time, more is take forced are diminished on that the

what's too reached to that's just now? the relative just smaller happening much there's So that supply point carriers, just and of we for demand of inflection right some sort possible

Ted Christie

Scott. Yes, good morning,

mean, arrive So as nuances at the in you impacts of the a way. to QX, would we what what demand seeing in of would it expect. we what We describe difficult latter wouldn't establishing and look, geographically. I we're describe part are that it as here given experienced But demand shift clearly QX in

the in. And that so move us XXX expect that on probably more this repeat we that And don't quarter. costs think that next closely basis in will we points margin summer or quarter the fourth

that a that we say demand noticeable imbalance. so nothing we're seeing says And supply now have right I wouldn't

happening larger, there's plenty you what's is In out there's, revenues And larger, and considerably from the demand we're course if at it unit recovery but over there. would industry of fact, across look admittedly, that you the the been are Board the tell the up. only of modestly pandemic,

data possible? know it yet. I would So we mean I don't that see say, your is supposition

operations anything that suppose returned is But we've hasn't I that there's right? right the it's artificial and of it delay and with been programs. initiatives because hours delayed control over traffic dealing because and ground possible, travel with And fatigued becomes people airport an the demand, all sit a possible and corporate half. because you six when entirely last at you're now, are lid an air exhausting on year

always changes happening in that I the possibilities as much mean, there's just as demand So there's there's profile.

that we're that as artificially are say possible it's living I that many there's demand. think just some seeing things

more performance. the expecting third, driving we what's we what we're on what quarter we're disconnect and the that's here our the again, focused in in second in saw that think and So

Scott Group

need And then down And sense. much makes initial have to I and merger capacity plan growth your CASM What you guess year? I thoughts? capacity you just guess, That the the are year? how next given of Okay. getting the growth shot of next uncertainty how for a do merger,

Ted Christie

I'm is, where the that of jump news can to here in primary to we and done, the want the after where assets the be it Well, good is Scott wanted productivity the getting to we getting CASM be. is of driver existing

our mean, in us and for necessarily Scott of because But should So that with be excluding That CASM the fact I quarter, us. expected trajectory, feel utilization will the get that growth. about would help AOGs we that's said, that that Pratt. tailwind to in not kind as obviously, will at drives be growth a drive more fourth we -- expected

So looking thought smart. pretty now, we of We information think were a which a And just beat made I we weeks the changes happening fleet. that. kind we XXXX, right adjustments, of it's that because two ago with then, course, on cloudy at little good the received had what was necessary originally

So that? what would you add to

Scott Haralson

right. that's think I

that the and I that navigate comfortable to margins to of earn that us are to again. running that I grow delivery I got we've about tell think, changes the delivering. in be first good think in that let to put few of to generate Scott, all been that mean try feel we're a stream for should the with moving pill airline. it's able the amount and right for to foremost utilization up aircraft trying been us pretty catch variables the we us. will different And a So last Airbus we spot growing we we've to I mean the years negotiated, us

where can start want return reduction. margin we'll few return We've And get got to years, then to get I we kind to we us, and and capacity. utilization lean forward. So it a then taken cash of underneath forward. sure over skis digest the can is, we we and the our make think But last utilization, move

Scott Group

Okay. Thank you guys.

Operator

Your of Baker the question comes with next from line Jamie JPMorgan Chase.

Your is line open.

Jamie Baker

Hey, for everybody. the good attrition. morning color on Thanks pilot

it Just is new obviously it's have share. year-on-year way, slowing numbers any you desired the the having or Either is effect that applications could merely contract increasing wondering of positive? you if attrition? Also,

Ted Christie

pulled April, on we anomaly. attrition is that up the alerted earnings the QX attrition the were where capacity that a ended ranges in And summer. are some alarming it in And were at we as Those positive. Yes, result, And seeing you'll versus recall stabilizing we peaks. some from call levels. our numbers we being

the akin forward, So of us year we're as were we the as some result experiencing of part much that stability. to levels a and at deal that what more this confidence we now reached move give early are in we've

pilots. Now, I existing a think create for obviously, does stickiness contract new

of is offer there benefits, to to experienced a Our really majors. engagement going numbers gone anecdote. And We've has a balance, I pilots left great is mix lower-cost success another and they've fantastic the and spreading. The of having navigating classes obviously, noticed new airline those pay we've team mouth have it of, full we -- life think the combination are I life us, we're there contract and time. now of we're of with well, leaving and other the doing been at a number that airlines coming where attracting And us word a what said, one the as the boomerang the And environment We like job pilots, work at strong. every is calling of that as to back. recruiting quality and pilots do itself.

We of touch all that and our that. We've can't it's by laurels. pilots rest type and much encouraged feel, established I'm on programs working. new give time our more So concierge

this now now, solve confidence that's no it some how And be us so Pratt. gives that And it problem will that fleet. for And to to we with limiter. really comes the longer down work

Jamie Baker

but Thank most you. tomorrow, gone, and the you the is completely years. the that demand you corporate big disappearing I've three recover immediately And issues Got choose? that it. to one the asked second GTF not have one just you have both other? XXXX, and should this between to theoretical having been for if But into over and it in could those or would the back of choose question, my XXXX, which of probably or questions where Can't leads have

Ted Christie

have can't I both.

like productivity answer to my Pratt to stand the And this We have business, which do the think what makes drives It I would they way. Well, and by it's out. cost. is us. localized low it, issue It's be Okay. don't crimping neither resolved. us

whole feel the we I the specifically industry. funnel would up having And our right want good couldn't it. order industry another I us, for you're be demand wouldn't our little open and that where would help bit. better So argue broader about thinking house that, about when first that having fleet a in But

Jamie Baker

helpful. Very Okay. Thank you everybody.

Operator

Your next of question Trent comes the Stephen line from with Citi.

Your line is open.

Stephen Trent

my Good morning everybody. for questions. And taking thanks

your up last flow, cross-border tailwinds or seen you rating not and the Category considering not X intrigued what have you has over Mexico's any so, Mexico I quickly, the restored cetera. Cancun. Just linked in actually that demand wondering, said year et terms safety of I by [indiscernible] was was FAA aviation yet, On about

wondering you. opportunities you? if that's Thank Just for created any

Matthew Klein

Hey, it's Stephen, Matt.

Mexico a have added bit we little in more overall. So

a point we for the United that is Mexico. I discussing U.S. I'd guess, that And lot of It's majority me, of about. We cross-border vast or, of saw origin believe us more you're in vast, benefit asked demand origin a States. coming the you of point tell I all sales is seen wish well, of our haven't Almost really vast, Mexico out

Stephen Trent

storms. Matt. versus I doing you high traffic out Thank everybody view the air you. challenges, regions that, there crew mean, quickly, of and look were other more appreciate longer-term Great. when the issues very with respect level you Any with just certain bases not just at with maybe control guys, strategy to today? And I in

Ted Christie

Sure, Stephen.

a very delay the to certainly the disruption, and vocal I face, But from account in mean has it's about we don't a the weather driver noticeable we been shift cancellation. that. has industry changes and for fully right. know appears the a patterns that of I what whole weather there believe And you're in really is patterns. the level we're been experiencing of So weather be that challenges

let And me interesting give you an data like point.

control in very that very a second that of the quarter had And you'll through flights we It having. in and difficult pre-pandemic, Easter turns some of first quarter of -- pattern period of moved the because noticeable Center but center Florida. you was it second of JAK for it recall, of the XXXX, Spirit not, a canceled about the weather. which very early was indication was part out XXX this the challenges storm So the if may XXXX, of

in XXXX. about So today we're XX% bigger we than were

should we year. cancellations to in quarter have Instead, this XXX of see we X,XXX expected canceled So around the to second X,XXX flights.

that around been So happening navigate their ability publicized real us shortages challenges, are the of throughout has variety weather alone U.S., different bind. describe the to what's is it's into putting What's doesn't which and the limiting the widely the airlines at control staffing centers happening. a

you done things what over the So course do were trying of easier significantly that the what put just years to is and to we've we're of into investment suggested. done what we've We've exactly last previously more couple run.

crew in bigger adding out of bases fact. has be one So to for turned the wins us,

I we've XXXX, or since we've -- crew five And added bases. four added think maybe

around easier So to been that's line to and days, one the go average days they create to a go insert helped days different that a and create they the recoverability. of there. on out makes of two we've for a And We've crews, average things done that's it's bit ease to it buffer variety more now scheduling team reduced recover recovery. average four and noticeable our on little that around used shift, just example of

doesn't free. is easier the and All recover intended to more reliable, make for this of operation to come but it

to of is for place system fares, in airlines are efficiently, the so lower necessary infrastructure and will and traffic best with the control which FAA really start the run to doing best like the we we, so lobby Transportation can put other air cost in country. And to the Department the the our which lower drive more answer

Stephen Trent

time. the appreciate color. the helpful. Really very That's And thanks for

Operator

of from Becker with line Your TD Helane next comes the question Cowen.

open. is line Your

Thomas Fitzgerald

Tom time. Helane. Fitzgerald Hi, much for the on so Thanks this is for

like mix a seems looks more be the Charlotte in I the know the just Angeles. follow-up, a will back as base fourth the you Los normal question in demand Phoenix, if -- First shift regional that question. wanted shift third any color -- the And to growing I those in then particular. to had to lot just and just something regional in in quick get markets on a quarter. case modeling assumption you're curious quarter just

down pre-COVID, so XQ be expect to quarter decline it the you'd a would third. the there. color usually Is little feel like a would Last up still was little appreciate bit. versus last you would you a just any -- Are slightly it level, I sequentially Thanks high bit year up. it from revenue year third just much. versus or

Matthew Klein

Hey it's Tom, Matt.

first your Phoenix, question Angeles. Los and So regarding Charlotte

is we've growth good in up success there. And cities we've seeing own what our in seen has up pretty which We the also pick seen did do. Los we and gate effective these growth you're have gates We and very in Angeles them. utilizing Los extra in we're picked extra Charlotte, Angeles, growth That's why us. an for -- been

overall bit destination Los And out little It's us leisure helps Angeles West relevant is bit helped which Los the out presence Phoenix in be, there, of would it's more little more. continue QX, the general yes, the there. that us really. in awareness just answer then you for makes that a revenue expect Coast our a out of we'd another and to the It Angeles, on in brand country build doing terms in out generation time start work mentioned then QX kind more versus to trends And there. see generally,

that would QX. in we see expect of So to growth kind

Operator

Your line Linenberg next question Deutsche Bank. the Mike from comes of with

open. is line Your

Michael Linenberg

into good markets. everyone. big down fact is just I corporate that they've the Hey, Jamie's three been leisure to I and just maybe more questions the and morning question -- here. and Two to Scott allocating go want assets back about

How factor. much and the Thanks. the customer. going much are about or it's route a sort because lot low-fare of changes how is when of of like of like up of they seen other in same does carriers markets after curious that made capacity like not that fare of is your maybe the it have a you many how of are I'm your I'm different that lot much carriers markets of markets does whether late, not And where maybe same factor sort a or though, that? sense it adding you've take low really the have and or XXXX, a you in seem look competition a at all curious seem you're the capacity much in it's cases, versus not, just on of or capacity low-fare targeting

Matthew Klein

It's Mike. tackle one. Sure, that to I'll Matt. try

seen pre-COVID from So we have now. really until

with Our we've noted, overlap just a have Southwest, increased with our industry couple the been a is, with the bit. gone you nonstop same has But One of generally overlaps as across exceptions. Frontier down.

say, So there carriers. kind of a fare amongst, low you'd guess, trade-off I

we we overall general, pick generally what's and routes where of how -- operating put already we cities, new and dynamics, who the evaluating evaluating help because account routes is decide do lot fly we on into we're outcomes history and while generally speaking, can going we and think in landscape, city in us when different will roots and we we pick as overall, certain predict competitive to a understanding city forecast, we're will course, what to have we the how And of the be. in our together we take perform think

a going can in if we to a The we're domestically what that markets, little we routes it, a do. seeing is arrogant bit times, right issue it doesn't normal think that target but environment, to not towards lot international into play move we generally already a doesn't about who's traffic. our having we're It sound So matter with big is of said and now that, that this forecast turn out all grow long-haul which issue. there

for all were inside anticipating profile summer. we of we demand were profile at Some what be anticipating, than a demand competing competition what the this the right different least U.S. is might now probably lower

in see to us to hasn't this we issue general, get expect of time, to that of top that on the all do Fall stay seeing we competition used impacts. customers some turn back question and that to then seeing. are expect into feel when just of answer just trips flip peak and patterns on will we we other just growing they're top generally we like from the And summer, are into I demand time to these periods unique us. been though even incredibly we're your So think side. as This as and people for we state the generally, we're And we and is an normal looking they back noted, holiday more take is shorter

Michael Linenberg

more Okay. modeling answer. just And that. just Great. a And Good then question. of thanks second, then for

revised You moving cut capacity since especially the about lot XQ capacity, numbers obviously, of I of year, rough a back you've XXXX just parts it's should with think here what number XXXX, you. mean How we early? your issue. does since your for Thank sort GTF and know for deliveries that then next for

Scott Haralson

take Yes hey I'll stab and Mike, a this is Matt too. Scott. then can opine

GTF fourth the reductions slight probably to at QX. probably you So that had looking would QX new looking utilization, bit in we've between have a GTF, at reduction sort increase and of second, higher expect be than from good -- we the third in with the a with the QX. the move But issues,

move somewhat in We would capacity haven't for material QX, I the exact schedule finalized expect north capacity. but

thinking issues. And is on news mean, fresh 'XX, obviously, the about I additional GTF the

like. But look the will moves XXXX I made that where mention to did be expect it the the prepared teens. with we predict high to hard in it's remarks we So Airbus, in with

in my going to point, we're of be for the low lot a to would growth that is 'XX. in hard expectation tell somewhere to or issues. at guess engine be the So if this the the or flat single-digits Hard but single-digits teens, will muted know by be

Ted Christie

Mike for allotment. the indicated that aircraft said out see that effective prepared to tight pulled I the remarks, time for this was given And up had my Pratt and it I'll would in going inspections in service be the engines seven September, were And frame we XX the it and point that quarter, effective, fourth we make, one in other initial month. to of

given that, go could However, which some refine may give of And have we that initial our available pilots, the October, December with if with in airplanes. with what that XXX fly. And opportunity they're those it's in of and definitely means talked to that's see just about that true to more the and we allotment engines, that November productive associated we've exposure us universe possible ready benefit entirely continuing down. would

to learn So update of of all just soup, the know next going as we course to and have the you yet. the we over kind in more don't we're It's month.

Michael Linenberg

Okay, gentlemen. very Thanks good.

Vivian Taveras

any do other or Adam, questions? we calls have

Operator

Your line next the with McKenzie of Global. Dan question comes Seaport from

open. Your line is

Daniel McKenzie

need growth point, back think on thoughts the How has to the the they've pretty that also about last morning, moderated. to around guys. script But the de-risk slow growth beyond XXXX Good thanks. also uncertainty growth and XXXX, going down understandable. Hey, business, Picking longer-term? about and should is your up we

Ted Christie

sizable can opportunity. these changes Scott some I of And to We Well, script. the alluded still start. see a in

that hasn't changed. So

what think that been far fleet continue the on been be. to just basis where I notably a and to as is pandemic alluding we're as to wanted to grow able throughout the we utilization the get them. near-term of able the pretty course we We haven't use haven't it to

chance help a them the airplanes and will story. taking the digest and air to margin So get helps story, unit up those cost which in efficient the

that smooth team to treasury out more the if with part to lessor difficult effort and feel to ourselves did of work necessary. us hands that your very allow So are into get and we this us airplanes where and like community and manufacturer was decade the going to the give deliveries, use Airbus a very, Scott certainty the supplement between be the latter to one on cooperative it's

in oldest there's XXXs years to whether or or those parts starting to pretty and XXXs, is retiring we not of the to We're going in for close and six have as a or those fleet We're airline. to get every five lot not what right around. over about So our keep our true think happens fleet with moving now. next it believe the

and that the but itself with, opportunity still ups we'll hasn't changed deal there's us. downs So for

pacing that sort a just question of it's and of So thing.

Scott Haralson

No, I think that's right.

smoothed we the out stream. delivery think I

prior pretty were troughs So to we material. having that adjustment, some this were and peaks

to, it some growth sort to to I we'll as the ability and give use of us again. profile smooth additional base this lessor a some said, the out, predictable earn earlier, community have early extend So and or allow we like Ted way give And our mentioned us retire to allowed aircraft. flexibility, into us us

going we with base forward. good maneuver So to this a think us gives as about

think same. us We for the grow. I the to is story long-term opportunity think to is there continue still

mix what that. fleet us set I platform so the we do and And that. was for best up well And think for to ourselves

Daniel McKenzie

mid-double-digits? an just that in thinking actual double-digits? low I rate, call sort that guess that? target terms of Any Okay. growth does Or target are we it longer-term of growth around is perspective it, -- still,

Ted Christie

Well, it airplanes, pace things. great the than point. think mathematically you it's get we're the bigger, And think now. think that say, a just, earlier, into evaluating why that's out if I Certainly, said roll you future. as less the of was I Scott I it I

we that can first getting is the believe efficiency and to starting have We deliver full our capacity to earn right to step. the our and we deliver margins back to

we what job this good and prove that's a chance need And out of for of the was and allows team right I lot to it, kind recent of things smooth modification to gives but to So idea reasons, to to have execute ourselves done. kind think a we kind for get a the that, us of us of to do. this to here all

Scott Haralson

Yes.

there need it. point the objective, justify is is not the able growth too an isolated returns the that be think right? I to We to

will we we think need deploy that that case, the before sure doing to we're we while so And make do that be the capital.

management first. sort prudent of that's us to think game I the so plan just And for see

Ted Christie

lot can are outperforming happened we rest And as here, the have pending an oligarchs industry a really industry with accident. commented the dominant the from But across results and the of haven't JetBlue. you see the not on the that transaction that's

the of much compete, their you card their diversity do competition the from that capacity, programs, strength that a our of credit fight the cost and see the When we fares, revenue alternative. difficult create We strength it's answer to control loyalty the with every with to of low very think you but just sources, fifth especially And to day numbers. is low for best programs. can best

think management, still about that stand-alone, with And going the make not -- be it And I our intend opportunities. it's we growth some going experience bit we the what to prospects. to we're best we case there's you there But good recent in And say us we're which make that's hasn't right engine, prudent, and the the shown expect is doing to that that are to unique answer. doesn't the a work would growth to there. as way. little do to feel -- think I we're clearly, sure be If that's just be challenges out and would pursuing

Daniel McKenzie

Perfect. Yes.

Second that some to artificial question when severely understaffed? to until demand I here, ATC to tied fully of lid ATC issues. is Is is will persist today due be this guess, the idea you so just that of it's temporary more an it Or the thought because just that, issues on sort shared expected staffed? XXXX

Ted Christie

I've and Well, admittedly, anecdote, but it. experienced I'm speaking purely on speculation

And the at can stuck hours fly different be delays four, people because buying I I when a think making ground may things six -- decisions. for happening. flown be and lot, that having three, So of you're an it frustrating and five, airport all make

that a so We the bit persists. easier And to going where the fall its type frustration. winter at Clearly, don't actually little see know how it's summer, peak. long anticipate or that the that don't we're during during operate, to I of it's

traveling just that I impact this happens witnessed, first a it is can is a tell the But think experience, which and when period, I how you say, third lot waiting". I is weather bad. hours afford think can people theoretical that what, I've not that back during person my understand you and everyone to might go spend may nine just to -- add family forth very can't it's "You trip see I because know it's and I

Daniel McKenzie

so much for guys. Yes, sense. time the makes Thanks

Operator

Syth final question the from line with Raymond James. Savi Your comes of

Your open. line is

Savanthi Syth

morning everyone. good Hey,

in thinking you this training to more high you as to think next improves. year from and that and kind when of Just terms not much bit hiring year, much of costs about your going exiting going growth like utilization might just XXXX, of into of how from of your many and of but were come a that pre-GDS, was of utilization? as trying thinking I'm follow-up so teens, need how you're

tailwind, that be should but just a quantify little bit pretty good to that a So trying I'm more.

Scott Haralson

Yes, hey of think Savi, that. this with on spot Scott. is I some Yes, you're

they're impact. seven utilization to is of of five things. three year-over-year, to really of 'XX, And probably high have thought points move. up fleet you teens, seven probably really grow worth made about we both As in above five But points move probably which the worth points the in the it's we'll five

have everyone. we average five-plus And points. another probably seats for that's And

gets And you in that high so the teens.

our those pipeline. longer less so But of think by pilots. I impacted really point And -- We've we're is talked about are good your we right, two pilot that feel before, about no constrained.

getting this now the So is just airline humming again.

issues, the of Unfortunately, deal spot. have we about core do I good batch next but of the So feel a the think part airline. comfortable we're we with in GTF to

Savanthi Syth

you how P&L? special how helps Maple, does item a like and settled of that if through Regarding through? flow cash? does the GTF the that flow and kind the your with do Is Or that it get

Scott Haralson

around the we're might in Yes, like. what early look Savi, discussions that

So difficult to say. of time. different could It few a over take forms different lengths

accounting So the let on vehicle. that be we would have to what based when you would know figure out materializes. the we'll But

Savanthi Syth

you. Thank

Operator

for back now to over turn will closing Taveras Vivian the I call remarks.

Vivian Taveras

look Have us soon. for further contact Thank We questions. any participation to a or great if Media to your Investor today. you Relations for joining talking you Please all forward you day. and have

Operator

for that Ladies call. you Thank joining. today's concludes and all gentlemen,

now You may disconnect.

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