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

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. [Operator Instructions] I would now like to turn the call over to Vivian Tavarez, Manager of Investor Relations. Please go ahead.

welcome, Call. Spirit and XXXX Second Adam, Conference Earnings you, everyone, Airlines' to Quarter Thank is recorded call This being and simultaneously webcast.

it call for As replay days. as is will we soon archive of this minimum on a website our of XX available, a

are Also today's Spirit's Christie, other senior of joining our us call Matt Haralson, our leadership Chief and our Commercial are Officer; Presenting Scott Officer; team. Chief Klein, Ted on Executive Chief Financial Officer. members

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

So the net incremental impact smaller. may be

will more we September. However, learn in

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

have XXXX, aircraft a result equivalent part, any NEO as the of service while in we XX should time spike latest doesn't life-limited which have have will out will we unfortunately, during aircraft This, And the that engine XXXX. as issue. we as of a at short enter least ground checks of large of include most course, to of additional unscheduled of engine result we year, a a of next ease means number the removals scheduled

make And updates. issue unknown as those This of assumption are take our further at new yet. has issue, and intend reimbursements airlines and their another as posted now, RTX word in you new we development. use disappointing is details frustrating timings to them We'll NEO yet by The keep affected engine this that we whole. get and planning. of for promised the to

Matt, over to you.

a Thanks, everyone the overview all numerous thanks the on brief a navigating volumes number the special We second guests for and with the Ted, quarter. involved high provide while managing members. record do of carried ATC continues team quarter job great weather our of to color third start some challenges. a performance and and a to I'll our environment demand revenue and

a a X.X% increase strong Total capacity factor to XX%, of RASM but total a year-over-year. billion, quarter QX XX.X% XX%. the revenue Total Compared was X.X% X.X result, up on expectations. $X.XX nearly second $XX.X, for capacity points of a increase was RASM of XXXX, Load of year-over-year. down decrease XX.X%, on short was up was our

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

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

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

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

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

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

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

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

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

now third quarter to guidance. Turning

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

broader XXXX, we Given and original all into discussing our a only these reevaluation deliveries. fact aircraft started things of orders our future that of the extended

XX the day, of the the make by At XXXX. XXXX agreed deliveries the provide of slower we smooth and consistent these and the One, back direct with between for in the and the near growth reduced Together AXXX, total term lease number level and changes deliveries of retiring our end following without deliveries commitments the of changes half to remaining the of commitments: us changing we XXXX a our decade.

XXXX we be upgauged AXXXneos Number all AXXXneo two, orders of our to delivered to and XXXX. between

smooth of the X our year decision timing moved those of the and timing option we by three, And aircraft options.

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

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

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

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

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

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

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

Thanks, Scott.

we our on of improving margin the quarter and potential face still XXXX, underperforming we a challenging our in clearly operating are made Although QX. progress second

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

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

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

pulled GTF fact, with could if being service believe utilization due by we In we full burdened fleet our entire to year-end. issues, aircraft on weren't we from achieve

July approach normal did We challenging. that accurately out not have believe been out has and in June materialize, Not for holding fall. passenger the missed some levels our and revised post-pandemic volume higher yields for on new the we we predicting surprisingly, demand

and expected our believe pace flying, answer. line beginning beyond we non-peak us which and in demand revenue the retirement revising including early We between XXXX XXXX to all growth in peak variant demand in cost benefits including our we holiday, variation making AXXXs, is of to in drive the more deliveries are made, maximizing through margin fuel with AXXX day the environment, of and decisions allow Day changes and and this tactical The the more XXXX upgauging deliveries fleet Labor network efficiency deliver to other the more have post and should the of aircraft growth. week

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

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

a doing a Most as strongly and advantage performance rate, necessary, provide us, utilization we expected job Frustrations is normalized and considerable against cost levels us I team tailwinds important anomaly. trend margin industry. aside, the believe rest is our structure XQ towards return expect a our to the industry-leading for of to and we as adjusting an our great

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

ready Ted. Adam [Operator Thank you, Instructions]. we begin. to are

comes the first Melius Your Instructions] [Operator question from Cunningham of line with Conor Research.

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

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

Yes. Yes.

about that. Sorry

No Okay. problem.

our you're of mean to only part having few understand done that the And smooth our for we that nice things that it a we've from X started as I that that of quite operational was enhancement So airline operation out and the of a is schedule bit to have alluded to it's particularly the think things a and because comments many a right. But implemented the implemented that airline. of run, we here my little we've things make result package. that to X easier I I been ops airport XXXX we learnings more effect. as our is in

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

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

I'm know to talking I mentioned that -- you think GTF Okay. expect about I talked And -- making-whole. issue, then you Is about I on credits. just Alliance play out. perhaps that the maintenance that mean

would there thoughts any helpful. Just be

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

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

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

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

Ted, out about kind holding of was your comment yield for interesting.

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

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

last to intentionally from made, year the about witnessed shift international, saw drive what distinct of and we've this very points and and was We very we rapid nicely long-haul year. strong ties talk is think I domestic and obviously which considerably isolated with as people heard some noticeable International, home, nearfield now away which and words outperforming acute. it's and was we like the feel you used

the of did seeing would geography clearly But what that XX-plus the well we yield handling around were Matt, off what patterned was and you of play strategy sort our end of about that last thing? not out add June. towards over and months, And

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

that, bit a example. little up other our have we couple Cancun. that's the And biggest probably And examples of is said but that, like in capacity having a

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

So But in it's always just about the demand supply off. and fell case, demand. this

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

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

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

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

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

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

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

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

Sure.

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

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

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

always an And and by RTX. with no folks very to honored they've and a change reason said with their But stood commitments. so got have at as them. And always we've we They've that I we earlier, important it here. us, strong partnership discussion Pratt the that have would expect will be

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

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

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

Scott.

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

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

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

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

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

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

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

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

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

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

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

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

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

you would to what add So that?

think No, that's right. I

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

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

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

the for on pilot Thanks attrition. color

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

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

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

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

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

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

And us limiter. be really it the now, now that no that And will gives so comes longer down for confidence some it fleet. to

that's that's solve Pratt. so how And solve with -- problem we this we how to work

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

both. Can't have

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

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

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

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

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

Matt. it's Stephen,

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

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

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

Sure, Stephen.

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

the in XXX weather. flights, quarter XXXX, poor pre-pandemic, of second about canceled Spirit So

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

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

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

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

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

for crew we've bases. us, I wins And added we've X be adding think or -- in has X out maybe added bigger fact. turned bases the XXXX, X of to crew since So

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

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

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

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

Helane. on is Tom for This Fitzgerald

something on the to just know particular. shift regional revenue will quarter. there. year quick mix would a Angeles. the XQ if you third looks wanted the that I as assumption in -- just be was versus slightly -- third be shift in had little you quarter to or expect and And Last any it level, little it like a quarter curious still to in lot a bit high those a would just you're regional like up. the bit. demand third. base question I'm First a just just just color in last sequentially Are feel up growing would Los follow-up, the you down appreciate case you'd more modeling any -- markets in pre-COVID, decline I question. fourth get Charlotte Is -- the to year versus color it usually a just the from seems Phoenix, then back normal

Tom, it's Matt.

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

is which Angeles in revenue destination we've do. has Angeles, work another Angeles, gate our out time more seen We did start just in up effective an makes on country It's more. relevant and extra Los leisure And what Coast up seeing extra West -- bit for Angeles helps a in then you're Charlotte, helped pretty pick Los That's growth out Los have to the us picked the we a we're success growth there. these which presence been little It it's awareness and us really. in cities brand gates in seen good for bit Phoenix us. them. little in utilizing more there, doing that also growth generation in our and own there. is general we've very build Los overall We out the the And why

be, in mentioned then generally, answer terms you expect versus there. see continue of And of the to we'd trends QX out yes, QX, would kind that

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

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

that just of into assets or much is how you've more of -- that XXXX, that route all fare of not, competition much and cases, capacity just at How much low-fare really and of to it's it maybe like not does where different sort markets. versus or they've because seem X of have big or of the to allocating on leisure seem the and Jamie's the does look low-fare when want are they lot fact carriers a question maybe about maybe take lot going you're made curious late, And corporate I of up here. just the been the questions not it about Scott factor. a a that. seen sort many adding a other I'm you back like that how you customer. is low go capacity capacity much like is markets after same the Two in though, I'm I down sense curious the same are have it's your factor carriers targeting in markets of a your or of markets changes whether in and and

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

calls or other any have we do Adam, questions?

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

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

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

So changed. hasn't that

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

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

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

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

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

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

think I right. No, that's

I the delivery think out we stream. smoothed

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

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

base think to us to to with about maneuver opportunity gives grow. us a we this So continue as good for

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

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

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

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

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

Yes.

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

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

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

have the difficult a loyalty that we best the control it's And alternative. of as rest very oligarchs see low fares, JetBlue. on you And from not are programs. the the we diversity lot day We best happened but the compete, strength accident. for with to their strength the with to that the across really do our answer competition with the low revenue dominant fight the of you and programs, sources, credit industry the that here, from their and every card outperforming to see an of When you haven't create of fifth cost is numbers. can results can commented just But think especially industry a pending capacity, that's transaction much the

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

Perfect. Yes.

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

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

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

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

I is this when is the think during traveling weather it happens is which everyone bad. and a lot period,

I I've that people theoretical it's because spend say, trip that I can afford it's you see understand what, I and not that add go impact X to -- hours may just think I can't person family third just you very how waiting. back know my to experience, tell you But first can a witnessed, forth and might

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

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

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

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

worth really probably And X made In teens, the really 'XX, high which As probably they're X And X both points another the average year-over-year, probably And X we X-plus we'll of the thought you utilization fleet about about up worth everyone. move. of it's for have that's to have grow But in of we to points. points. X points is things. X probably move seats impact.

And the gets so in that you teens. high

And of pilots. so your point impacted less are is right, really by X those

longer talked about constrained. we're good pipeline. I think pilot about before, that our no -- We've feel But we

again. the humming now airline So is this just getting

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

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

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

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

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

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

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

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