Ted Christie was named President and Chief Executive Officer of Spirit Airlines on January 1, 2019. Christie joined Spirit, the largest Ultra Low Cost Carrier in the United States, Latin America and the Caribbean, in April 2012 as Spirit’s Senior Vice President and Chief Financial Officer. In January 2017, Mr. Christie was promoted to Executive Vice President and Chief Financial Officer. In January 2018, Christie was promoted to President with overall responsibility for the finance and commercial functions as well as operations, IT and human resources.
Prior to joining Spirit, Christie served as CFO of Pinnacle Airlines Corp, an airline holding company with subsidiaries flying as Delta Connection, United Express and US Airways Express. Christie began his airline career at Frontier Airlines in 2002. He was appointed Vice President of Finance in 2007 and promoted to Senior Vice President and CFO in 2008. During his tenure at Frontier he helped the carrier to restructure and to achieve a competitive cost structure.
Christie has also held the position of Vice President of Finance at a Denver asset-based finance institution and also served as an Economist for the Arizona taxing authority.
Christie earned a Bachelor of Business Administration in Finance from the University of Arizona in 1992.
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.
Spirit Airlines today celebrated the official opening of Spirit Central, its new corporate campus at Dania Pointe in Dania Beach, Florida. The campus spans more than 11 acres and features four buildings, including a support center with offices, an amenity building, a new crew training facility built for hands-on experience in flight simulators, and a corporate housing facility. Additionally, the campus also includes dedicated parking garages for Spirit Team Members. The new Spirit Central provides an expansive, centralized location for the airline’s main support teams and is only a few minutes away from Spirit’s largest operating base at Fort Lauderdale-Hollywood International Airport (FLL).
Spirit Central
The new campus interior includes design features that pay tribute to Spirit, including an 18-foot-long Airbus A321neo model plane, a 3D engine cowling, a gallery showcasing the famous “Howdy” sharklet, a history wall, and more. The main buildings on the campus include:
Support Center: The largest of all four buildings is approximately 180,000 square feet and features six floors of office space for more than 1,000 corporate Team Members from the Operations Control Center, IT, Flight Operations, Inflight and more.
Fueling Station: The amenity building is easily accessible from the first floor of the Support Center and features a café, fitness center, and lounge spaces exclusive to our Team Members.
Training Hub: The state-of-the-art training facility for Inflight and Flight Ops Teams will boast several high-tech flight simulator bays and fixed flight simulators, an advanced Cabin Emergency Evacuation Trainer (CEET), a door trainer, classrooms, and debriefing rooms.
The Landing: The corporate housing facility will be the home away from home for out-of-town Team Members visiting for company business and features accommodations for up to 400 Team Members, several meeting rooms, a grab-and-go market, a pool, a fitness center, and its own parking garage.
In celebration of Spirit Central’s official opening, the Spirit Charitable Foundation donated $25,000 to Dania Beach PATCH (Peoples Access to Community Horticulture), an urban farm and market created to provide local access to healthy foods and horticulture. The donation advances the Foundation’s Environment pillar by investing in a platform for education, cultural growth, access to healthy foods & community gardening, and economic development.
Spirit partnered with Florida-based architectural firm HuntonBrady, general contractor Brasfield & Gorrie, and project advisor Jones Lang LaSalle to design and build Spirit Central. The airline worked with Kimco Realty, the owner and principal developer of Dania Pointe, to secure the land.
The relocation from Spirit’s Miramar, Florida, facilities to Spirit Central in Dania Beach is expected to be completed in the coming weeks.
Spirit Airlines, Inc. has 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 each in the second and third quarter 2025, respectively. The agreement with Airbus will improve Spirit’s liquidity position by approximately $340 million over the next two years.
There are no changes to the aircraft on order with Airbus that are scheduled to be delivered in 2027-2029.
As a result of grounded aircraft due to Pratt & Whitney GTF engine availability issues, along with the 2025 and 2026 aircraft deferrals, Spirit announced it intends to furlough approximately 260 Pilots effective September 1, 2024.
As recently announced, Spirit entered into a compensation agreement with Pratt & Whitney regarding its GTF engines, which is estimated to improve Spirit’s liquidity between $150 million and $200 million over the term of that agreement. In addition, Spirit will continue to evaluate the use of its current financeable asset base to add additional liquidity over the coming months.
The Airbus amendment also defers by two years the exercise dates for optional aircraft included in Spirit’s purchase agreement. There is no change to the total number of aircraft on order or Spirit options for additional aircraft.
Meanwhile, the company welcomed the 400th A320neo delivery from Airbus.
Spirit Airlines has secured a compensation deal with International Aero Engines (IAE) to receive a monthly credit through the end of 2024.
The settlement will compensate the carrier for the costly grounding of its Airbus aircraft due to on-going engine issues.
The agreement will throw Spirit a necessary financial lifeline estimated to be between $150 million and $200 million in the short term.
Spirit Airlines’ filing:
As previously disclosed, in July 2023, Pratt & Whitney announced that it had determined that a rare condition in the powdered metal used to manufacture certain engine parts would require accelerated inspection of the PW1100G-JM geared turbo fan (“GTF”) fleet, which powers the A320neo aircraft. Pratt & Whitney notified Spirit Airlines, Inc. (“Spirit”) that nearly all GTF engines in its fleet, including potentially the engines slotted for near term future aircraft deliveries would be subject to the removal and inspection, or replacement, of the powdered metal impacted parts. As a result, Spirit has removed engines from service and grounded some of its A320neo aircraft for inspection requirements.
On March 26, 2024, Spirit entered into an agreement with International Aero Engines, LLC (“IAE”), an affiliate of Pratt & Whitney (the “Agreement”) pursuant to which IAE will provide Spirit with a monthly credit through the end of 2024, subject to certain conditions, as compensation for each Spirit aircraft unavailable for operational service due to GTF engine issues. The estimated impact of the Agreement on Spirit’s liquidity is currently expected to be between $150 million and $200 million, primarily determined by the number of days accumulated in 2024 in which Spirit aircraft are unavailable for operational service due to GTF engine issues. Pursuant to the Agreement, Spirit agreed to release IAE and its affiliates from claims related to the impacted engines that have accrued or may accrue prior to December 31, 2024.
Spirit intends to discuss appropriate arrangements with Pratt & Whitney in due course for any Spirit aircraft that remain unavailable for operational service after December 31, 2024.
Spirit Airlines has a heavy debt load and its continuing losses going forward dampen its prospects. The company lost $214 million in the fourth quarter of 2024 and $495 million for 2023,
Spirit previously reported a $598 million loss for 2022.
It had hoped to be merged with JetBlue but that hope has been dashed by a Federal antitrust judge.
JetBlue Airways today announced that it has reached an agreement with Spirit Airlines to terminate their July 2022 merger agreement.
Although both companies continue to believe in the procompetitive benefits of the combination, JetBlue and Spirit mutually agreed that terminating is the best path forward for both companies as required closing conditions, including receiving necessary legal and regulatory approvals, were unlikely to be met by the merger agreement’s outside date of July 24, 2024.
“We believed this merger was worth pursuing because it would have unleashed a national low-fare, high-value competitor to the Big Four airlines,” said Joanna Geraghty, chief executive officer, JetBlue. “We are proud of the work we did with Spirit to lay out a vision to challenge the status quo, but given the hurdles to closing that remain, we decided together that both airlines’ interests are better served by moving forward independently. We wish the very best going forward to the entire Spirit team.”
Under the agreement, JetBlue will pay Spirit $69 million and the termination resolves all outstanding matters related to the transaction and under which any claims between them will be mutually released.
“JetBlue has a strong organic plan and unique competitive advantages, including a beloved brand, a unique value proposition, and high-value geographies,” Geraghty continued. “We have already begun to advance our plan to restore profitability. We look forward to sharing more on our progress in the coming months.”
As outlined on the company’s fourth quarter earnings call, JetBlue is taking decisive action to return to sustained profitability and drive shareholder value. As part of this work, the company is refocusing on its core strengths – deepening its network relevance in proven geographies and better segmenting its product offerings to enhance its competitive position – while delivering meaningful cost savings.
To date, JetBlue has identified multiple near-term revenue initiatives for 2024, including increased distribution and partnerships, expanded loyalty program functionality, network initiatives, and ancillary initiatives, which will deliver over $300 million in revenue benefits. JetBlue also remains on track to deliver $175-200 million in cost savings from its structural cost program and $75 million in maintenance savings from its fleet modernization, as well as incremental savings from targeted fixed cost base reductions, positioning the company to approach breakeven operating margins in 2024. These initiatives are just the starting point as JetBlue rebuilds its long-term organic strategy with a renewed focus on driving sustained profitability for its crewmembers and investors.
JetBlue will hold an Investor Day on Thursday, May 30, 2024, to provide additional detail on its long-term strategy and ongoing revenue and cost initiatives. Further information regarding Investor Day will be shared with analysts and investors in the coming weeks.
Spirit Airlines issued this statement:
Spirit Airlines, Inc. today announced that its merger agreement with JetBlue Airways Corporation has been terminated by mutual agreement.
“After discussing our options with our advisors and JetBlue, we concluded that current regulatory obstacles will not permit us to close this transaction in a timely fashion under the merger agreement,” said Ted Christie, Spirit’s President and Chief Executive Officer. “We are disappointed we cannot move forward with a deal that would save hundreds of millions for consumers and create a real challenger to the dominant “Big 4″ U.S. airlines. However, we remain confident in our future as a successful independent airline. We wish the JetBlue team well.”
Christie continued, “Throughout the transaction process, given the regulatory uncertainty, we have always considered the possibility of continuing to operate as a standalone business and have been evaluating and implementing several initiatives that will enable us to bolster profitability and elevate the Guest experience. As we go forward, I am certain our fantastic Spirit team will continue delivering affordable fares and great experiences to our Guests.”
Spirit is confident in its strengths and is focused on returning to profitability. The Company has been taking, and will continue to take, prudent steps to ensure the strength of its balance sheet and ongoing operations, including assessing options to refinance upcoming debt maturities. In that regard, Spirit has retained Perella Weinberg & Partners L.P. and Davis Polk & Wardwell LLP as advisors. As part of the termination, JetBlue will pay Spirit $69 million. While the merger agreement was in effect, Spirit stockholders received approximately $425 million in total prepayments.
Spirit Airlines, Inc. reported its fourth quarter and full year 2023 financial results.
Fourth Quarter 2023 (unaudited)
“As we enter 2024, we are beginning to see benefits from the tactical and strategic changes we implemented in 2023. In addition, current booking trends further our confidence that the domestic environment is beginning to rebound. Together with the changes we have made, we estimate this will result in an unprecedented sequential improvement in total revenue per available seat mile (TRASM) from fourth quarter 2023 to first quarter 2024, which supports our view of a domestic recovery in 2024,” said Ted Christie, Spirit’s President and Chief Executive Officer.
“The Spirit team is 100% clear and focused on the adjustments we are currently deploying and will continue to make throughout 2024 to drive us back to cash flow generation and profitability.”
Operations
For the fourth quarter 2023, the Company’s load factor was 80.1 percent. For the fourth quarter 2023, Spirit reported a DOT on-time performance2 of 76.8 percent and a DOT Completion Factor2 of 99.2 percent.
“In addition to operational reliability being a core element of caring for our Guests, it also benefits the top and bottom line. During the fourth quarter 2023 peak holiday period, the Spirit team ran a great operation. We estimate this strong operational performance contributed $10 million of incremental revenue, allowing us to exceed our mid-December revenue guidance for the fourth quarter and deliver cost performance in excess of our expectations. We have continued this operational excellence and finished January 2024 as the No. 2 airline in reliability2,” commented Christie.
Fourth Quarter 2023 Financial Results
For the fourth quarter 2023, Spirit reported a net loss of $183.7 million, or a net loss of $1.68 per diluted share. Excluding special items, adjusted net loss for the fourth quarter 2023 was $148.7 million1, or an adjusted net loss of $1.36 per diluted share1.
For the fourth quarter 2023, Spirit reported a pre-tax loss of $228.3 million and a pre-tax margin of negative 17.3 percent. Adjusted pre-tax loss for the fourth quarter was $192.2 million1 and adjusted pre-tax margin was negative 14.5 percent1.
Revenue
Total operating revenues for the fourth quarter 2023 were $1.3 billion, a decrease of 5.0 percent compared to the fourth quarter 2022. Total revenue per ASM (“TRASM”) was 8.94 cents, a decrease of 17.3 percent compared to fourth quarter 2022 on 14.8 percent more capacity.
On a per passenger flight segment basis, compared to the same period in 2022, total revenue per passenger flight segment (“segment”) for the fourth quarter 2023 decreased 15.3 percent to $114.84. Compared to the fourth quarter 2022, fare revenue per segment decreased 25.0 percent to $48.24 and non-ticket revenue per segment decreased 6.6 percent to $66.603.
Cost Performance
Total GAAP operating expenses for the fourth quarter 2023 decreased 9.5 percent compared to the fourth quarter 2022 to $1,536.6 million. Adjusted operating expenses for the fourth quarter 2023 increased 11.3 percent compared to fourth quarter 2022 to $1,485.1 million4. The decrease in operating expenses was primarily driven by a decrease in special charges year over year, partially offset by increases primarily related to increased flight volume, additional leased aircraft and inflationary pressures. The increase in adjusted operating expenses year over year was primarily driven by expenses related to increased flight volume, additional leased aircraft and inflationary pressures.
Aircraft utilization in the fourth quarter 2023 was 11.2 hours, up 3.7 percent compared to the 10.8 hours in the same period of 2022. The Company’s aircraft utilization in the fourth quarter 2023 was constrained due to engine availability issues primarily driven by unscheduled engine maintenance events resulting in aircraft not being available for service.
Total other (income) expense on a GAAP basis was lower year over year primarily due to gains recognized from favorable interest rate swap provisions contained in certain debt agreements extinguished during the fourth quarter related to 20 of the sale leaseback transactions completed during the quarter, partially offset by the write-off of unamortized debt issuance costs. Adjusted total other (income) expense was lower year over year largely due to a decrease in interest expense, primarily driven by a decrease in the unfavorable mark to market adjustment related to the change in fair value of the derivative liability associated with the Company’s Convertible Notes Due 2026 and an increase in capitalized interest.
“In the fourth quarter, we saw cost benefits from our high level of on-time performance and completion factor for the quarter, particularly in the peak Thanksgiving and Christmas holiday periods. We also saw fuel efficiency benefits with the increase in the number of neo aircraft in our fleet, particularly the eight A321neos added in 2023. We expect these benefits, along with improved utilization of the aircraft available for operation and the right sizing of our labor costs to be the platform for our ongoing unit cost repair,” said Scott Haralson, Spirit’s Chief Financial Officer.
“Regarding liquidity, we believe our $1.3 billion in total liquidity at year end 2023 should be more than adequate to get us to our primary goal of getting the business to generate cash. This is a milestone we think we will cross as we enter March. We believe we will be operating cash flow positive in the second quarter 2024 and beyond. And, while we have confidence in our ability to return to positive cash generation, we will continue to look at other opportunities to further shore up our liquidity resources as we progress through the year. Also, while Spirit remains focused on consummating the merger with JetBlue and is looking forward to prosecuting the expedited appeal of the U.S. District Court’s order, the Company is aware of its 2025 and 2026 debt maturities and is assessing options to address those maturities when the time is appropriate.”
Fleet
During the fourth quarter 2023, Spirit took delivery of four new aircraft (two A320neos and two A321neos) and retired one A319ceo aircraft, ending the year with 205 aircraft in its fleet.
Neo Engine Update During the third quarter 2023, Pratt & Whitney notified the Company that all the geared turbofan (GTF) neo engines in its fleet, are in the potential pool of engines subject to the inspection and possible replacement, of the powdered metal high-pressure turbine and compressor discs. In January 2024, the Company had an average of 13 grounded neo aircraft and estimates that number will climb steadily to an average of about 40 in December 2024, averaging about 25 grounded neo aircraft for the full year 2024. Spirit currently estimates its capacity for the full year 2024 will be flat to up mid-single digits compared to the full year 2023.
The Company and Pratt & Whitney have been in negotiations regarding fair compensation for the financial damages related to the geared turbo fan (GTF) neo engine availability issues. Discussions with Pratt & Whitney have progressed considerably since October, and, while no agreement has been reached to date, the Company believes the amount of compensation it will receive will be a significant source of liquidity over the next couple of years.
Liquidity and Capital Deployment
Spirit ended fourth quarter 2023 with unrestricted cash and cash equivalents, short-term investment securities and liquidity available under the Company’s revolving credit facility of $1.3 billion.
In November 2023, Spirit modified its Revolving Credit Facility to, among other things, extend the final maturity to September 30, 2025.
In December 2023, the Company completed sale-leaseback transactions for 20 aircraft, resulting in repayment of approximately $325 million of indebtedness on those aircraft and net cash proceeds of approximately $320 million. In January 2024, the Company completed sale-leaseback transactions for an additional five aircraft, resulting in repayment of approximately $140 million of indebtedness on those aircraft and net cash proceeds of approximately $99 million. In total, these transactions resulted in net cash proceeds to the Company of approximately $419 million.
Total capital expenditures for the year ended December 31, 2023, were $232.4 million, primarily related to expenditures related to the building of Spirit’s new headquarters campus in Dania Beach, Florida, and purchases of spare parts, including four spare engines, partially offset by net inflows of aircraft pre-delivery deposits.
(2) Results are based on preliminary data compared to major and regional U.S. airlines. (3) See “Calculation of Total Non-Ticket Revenue per Passenger Flight Segment” table below for more details. (4) See “Reconciliation of Adjusted Operating Expenses to GAAP Operating Expenses” table below for more details.
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