Spirit Airlines reports a first quarter net loss of $142.6 million

Spirit Airlines Airbus A320-271N WL N986NK (msn 11643) LAX (Michael B. Ing). Image: 961904.

Spirit Airlines, Inc. today reported first quarter 2024 financial results.

First Quarter 2024 Financial Results

Quarterly results were in line with expectations despite a 230 basis point1 headwind from deferred recognition in earnings of a significant portion of the credits from Pratt & Whitney related to aircraft unavailable for service.

First Quarter 2024 (unaudited)

As Reported

Adjusted1 $(175.6) million

$(160.2) million

Total operating revenues $1,265.5 million $1,265.5 million

Operating income (loss) $(207.3) million

Operating margin (16.4)% (13.9)%

Adj. Operating income (loss), for AOG credits — $(146.6) million

Adj. Operating margin adj. for AOG credits — (11.6)%

Net income (loss) $(142.6) million

Diluted earnings (loss) per share $(1.30) $(1.46)

“While we reported a loss in the first quarter 2024, we are making progress towards our financial goals. I thank the entire Spirit team for their continued focus on running a reliable operation and delivering value to our Guests as we implement our go-forward standalone plan. There are numerous steps to rollout the plan in a successful, orderly fashion, but we are on track and we are excited to unveil the milestones to you over the coming months,” said Ted Christie, Spirit’s President and Chief Executive Officer.

“The competitive environment remains challenging due to elevated capacity in many of the markets we serve. Nevertheless, we are confident that the strategic changes we are implementing, together with our cost saving initiatives, will allow Spirit to compete effectively in today’s marketplace and drive continuous improvement in the years ahead.”

First Quarter 2024 Operations

Adverse weather and air traffic control related delays, particularly along the Eastern seaboard and in Florida, as well as continued civil unrest in Cap-Haitien and Port-au-Prince, Haiti negatively impacted the Company’s operational performance for the quarter.

• System completion factor of 98.7 percent
1

  • System controllable completion factor2 of 99.9 percent
  • Capacity increase of 2.1 percent year over year
  • Load factor of 80.7 percent, a decrease 0.1 pts year over year
  • Aircraft utilization of 10.4 hours, down 7.1 percent compared to the first quarter last year of 11.2hours, primarily due to aircraft unavailable for operational service due to PW1100G-JM geared turbo fan engine availability issues (“AOG”)
  • First Quarter 2024 Revenues
  • Spirit’s total revenue per available seat mile (“TRASM”) improved significantly from the fourth quarter 2023 to the first quarter 2024, increasing 4.9 percent sequentially. Sequential improvement in domestic TRASM was partially offset by continued pressures in the Company’s international markets, driven by elevated capacity increases by U.S. and non-U.S. based carriers to/from the U.S. and Latin America.
  • Total operating revenues of $1,265.5 million, a decrease of 6.2 percent year over year
  • Total revenue per ASM (“TRASM”) of 9.38 cents, a decrease of 8.2 percent year over year on 2.1percent more capacity
  • Total revenue per passenger flight segment (“segment”) was $117.03, a decrease of 8.1 percent yearover year
  • Fare revenue per segment was $48.08, a decrease of 16.3 percent year over year
  • Non-ticket revenue per segment was $68.95,1 a decrease of 1.4 percent year over year
  • First Quarter 2024 Cost Performance
  • Total operating expense of $1,472.9 million and adjusted operating expenses of $1,441.1 million1
  • Adjusted non-fuel cost of $1,034.7 million1
  • Average economic fuel price per gallon of $2.90
  • Total non-operating income of $50.3 million and adjusted total other expense of $31.4 million1
  • First Quarter 2024 Liquidity and Capital Deployment
  • Ended the quarter with unrestricted cash and cash equivalents, short-term investment securities and liquidity available under the Company’s revolving credit facility of $1.2 billion
  • Completed sale-leaseback transactions of five previously owned and operated aircraft resulting in net cash proceeds of approximately $99.0 million
  • Received a $69.0 million payment from JetBlue related to the termination of the merger agreement
  • Total capital expenditures of $33.9 million“Over the last several months, our team has been engaged working on the first phase of our new standalone business plan. While we were hopeful for a successful merger with JetBlue, over the last year we have been working in the background to prepare for the possibility that the merger would not be allowed to proceed. The first phase of our standalone plan involved finalizing our AOG compensation agreement with Pratt & Whitney, reducing near term capacity to improve working capital, rightsizing the resources in the business to our expected lower level of capacity and additional liquidity improvements. We believe the combination of AOG compensation, aircraft deferrals and cost savings will improve our cash levels by $450-$550 million in 2024. All of this was done to prepare us for phase two of our go-forward evolution, which we plan to start rolling out over the coming months. The pending merger and engine AOGs have made the last year disruptive for our team, but we are on the cusp of making changes which we believe will position us on the road back to sustained profitability,” said Scott Haralson, Spirit’s Chief Financial Officer.”Also, Spirit’s advisors have started discussions with our loyalty bondholders and convert holders that come due in September 2025 and May 2026, respectively, and expect a resolution at some point this summer.”
  • First Quarter 2024 Fleet and NEO Engine Update

  • Took delivery of seven new aircraft (three A320neos and four A321neos)
  • Retired five A319ceo aircraft
  • Ended the quarter with a fleet of 207 aircraft
  • Reached an agreement with Pratt & Whitney regarding compensation for AOG aircraft through theend of 2024
  • AOG credits to be issued by Pratt & Whitney based on AOG days during the quarter were $30.6million, of which $1.6 million was recorded as a credit within maintenance, materials and repairs on the Company’s condensed consolidated statement of operations, $16.2 million recorded as a reduction in the cost of assets on the Company’s consolidated balance sheet with the remainder to be recognized as future reductions in the cost basis of goods and services purchased from Pratt & Whitney
  • Estimates that it will average about 25 AOG aircraft throughout the full year 2024
  • Estimates AOG credits to be issued by Pratt & Whitney for AOG aircraft in 2024 will be between $150million and $200 million
  • Spirit intends to discuss appropriate arrangements with Pratt & Whitney in due course for any SpiritAOG aircraft after December 31, 2024On April 8, 2024, Spirit announced that it reached an agreement with Airbus to defer all aircraft on order that are scheduled to be delivered in the second quarter of 2025 through the end of 2026 to 2030-2031. These deferrals do not include the direct-lease aircraft scheduled for delivery in that period, one in each of the second and third quarters of 2025. There were no changes to the aircraft on order with Airbus that are scheduled to be delivered in 2027-2029. Spirit estimates the deferral of these aircraft will enhance its 2024 liquidity position by approximately $230 million.

Top Copyright Photo: Spirit Airlines Airbus A320-271N WL N986NK (msn 11643) LAX (Michael B. Ing). Image: 961904.

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