Spirit Airlines (SAVEQ) 1 Aug 242024 Q2 Earnings call transcript

Thank you for standing by. At this time, I'd like to welcome everyone to the Spirit Airlines Second Quarter Earnings Conference Call. [Operator Instructions] Thank you.

I'd now like to turn the call over to DeAnne Gabel, Senior Director of Investor Relations. Please go ahead.

good Earnings welcome, Conference and Second to Adam, XXXX Quarter Call. you, morning, everyone, and Spirit's Thank

Presenting on Fred today's are including CEO; Also Matt our call us other will be our joining Officer, senior Commercial Ted members Chief Chief of Officer; leadership the Transformation and for Cromer, our CFO. Klein, our call Christie, team, our Ghosh. Rana

our direction. about the of demand Fred Spirit's outlook. and profile few of the strategic before a overview the current call details quarterly closing and provide provide an Matt we performance begin with open session. then environment, will will question-and-answer Ted cost will and discuss forward revenue drivers performance, comments will performance and Ted our liquidity

uncertainties on Today's various statements, of discussion and forward-looking from our uncertainties statements, undertake these forward-looking statements. differ to the a are those any including, not performance. and SEC. expectations update the file future that no but our to in contains significant guarantee not to, forward-looking duty and We cause investors forward-looking not risks current on statements risks based with reports undue discussed materially could contained not company's on reliance be There place results and limited should actual that in are

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

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

Ted to call I'll that, with And the over turn Christie.

joining to us Thanks, on the everyone thanks call for DeAnne, today. and

be know team the to great Fred Chief asset Spirit. him that announced of Officer. delighted has airline and wealth our I'm to we as of industry a you will welcome experience Financial who industry Spirit quarter, Cromer to joined the a Many team. the the follow Fred During

members. joining. Fred our all serve to you to CFO acknowledge and say to Thanks, thank interim agreeing prior I for Brian Spirit also to McMenamy to team as want too, our

revenue operationally a the has job difficulties. and addition challenging it has done the managing our through environment, In been great to well, challenging as team

Herculean airlines the XX. effort by midday team Like operations the It the by Spirit network by normal Sunday, in I on to despite so extend their had to team all my for quickly, But other worldwide, and members to was the thanks was and operations a July disruption, most of sincerest outage of return our IT most of them dedication. impacted stabilized. all technology

call that outlook help guest our going we expect our are new to enhancements announced travel our results, we this on liquidity, QX forward drive improved will and focus We and recently the experience options performance.

results, the our the conversations to debt we not I the into on going are to as is and of experience. driving quickly this while topic are new focused to we potential business for on securing elevated travel a and get Because upcoming maturities. in that address implementing focused the it are advisers want priority, outcome we into as outcomes. engaged on with take productive say, or speculate Needless any to guest conversations on our detail we options or Before questions note performance those bondholders ongoing, go are the best and possible, staying

difficult This an by largely Moving is to net adjusted capacity of revenue of was results. to continues quarter level yield most the for elevated driven financial drive a We segment. on it our second that reported industry price-sensitive very disappointing make improvement to weak results. leisure result XXXX The loss million. travel $XXX

plan an new low-fare an affordable to our us transformation to allow experience this the travel elevated on on guests will strategy to validate choose frustrating, travel with conditions these believe that right profitability. the While place that high-value at with redefine are options price. we path We path

As and full-service, has carriers untruths large low-cost in the imbalance become about network carriers COVID, is. between the the of dispel the why industry would smaller, like that recovery recovered the to the some has from narrative. I

model opposite. the not low-fare is or "broken" "obsolete." the First, Quite

services higher-cost over what brethren introduced last larger, we figured have to doing years compete And few Our have for effectively in products offer. out that low-fare and mirror so, ways currently the more traffic.

about boasting that are they product. fact, of In selling more

effectively services until the happened their traffic some of products not traveler. travel can are the introduction going ability a and has corporate to to mean What This our us cost low that maintaining new for higher-yielding choice we is be while more of compete the provide structure. doesn't now for

with of combination option us our the for However, our make will our diversified guests. travel coupled structure, product cost options, high-value

last offering new set introducing we've more including on and a shared a those the extensive travel will experience As us products premium an who price. have surveyed Based quarter, research, doing of soon we competitive that be guests affordable array low-cost reviewed products and not. of high-value, carrier, we a those as broader done are at flown In so, redefining services. products, and we inputs, leisure have Spirit

As X our travel no the part of fees. of or change transformation, all include flexibility options we that cancellation offer will

will an more still will opportunity at to in we and can leisure the the to premium And space, a the do price. continue all expect low-fare industry. because lowest and have of affordable with our flexibility also amenities experience have products cost guests provide quality, we amongst guests still We to prefer, many that choose we offer but the

abandoning but position, are We our not we are it. rather leveraging low-cost

boarding U.S. and guests, as and Silver our Spirit Go Gold designated service Mastercard holders also Big and options, check-in a will World members, prioritize Elite Free Spirit We debut active-duty Free other enhancing to travel new process designed members. such priority

new sale options on The very actual happen August rollout on will these of offerings quickly. The XX. go will travel

the environment. comment liquidity on and of However, the that and will by navigate puts patience that these will of constituents acceptance time, later. marketplace to and the need means the changes our more take adoption and takes we from adequate Fred

Tombras travelers we record how our engaged reframe brand Spirit have as the strong track us XXXX record. of marketing has as a Independent help this the of Year. perceive was Age Agency the chapter, enter agency new we Ad To named new and Tombras

they right the confident bring strategic market. transformed are to to partner are our offerings We

here's share Fred to about second more details that, quarter Matt outlook. you. and our to With performance over and Matt,

thank Thanks, many thank want our our and significant for the implementing extra team even to unusual strategy members, Thank Ted. of circumstances, evolve on patience lifting our on well guests each you and taking Spirit plan I, as the care our too, thank faced as entails line team. Successfully we business. I of entire everyone scenes execute other. their for network behind transformation everyone our when for all with you. flowing And as the front those that to to our keep

RASM to of on billion, second Total XX.X% ability $X.X has year-over-year. ticket Elevated revenue second quarter the a a industry approximately increased the to moving flight segment quarter. Now revenue year-over-year. was during performance. passenger quarter Total fair drive yields, domestic our was XX.X% our $X.XXXX, decrease decrease restrained for second quarter revenue second for capacity per the of pressuring

$XX.XX downward declined X.X%, for per pressure We segment segment. nearly to revenue per also year-over-year down the $X revenue on full quarter. Non-ticket non-ticket experienced

were to the changes that could of lower we revenue per in result quarter, implement non-ticket Last we planning some mentioned segment.

these of more eliminated We per estimate second we the for during in decline contributed quarter, non-ticket cancellation revenue quarter half change than changes fees. charges segment. and that a planned, As to little year-over-year the second

change expect We and continue eliminating to from XXXX. the remainder of at fees for headwinds cancellation least the

over consumers funnel will these set in believe changes of will larger time higher we result willing travel, to a in which overall consideration their air lead However, include us to revenue. for

first a have policy mid-May, first ticked relatively new since time, up. still flowing volumes have factor of quarter since XXXX. consecutive but improvement of we to are that year-over-year It's And for see our change, we our seen implementing new load months in pleased the the

pricing pressure our to to incremental also in as part move Ancillary revenue we strategy of competitive changes We the experienced marketplace. will continue is due an important ancillary and forward. be on

report going passenger total will product merchandising we segment. only the given per implementing, revenue and However, are you see offerings forward, us changes

As guests a are Go we our options: offer Comfy, X and desire Go Big, Savvy will premium of for leisure experience. part Comfy travel Go. Go and Big go-forward designed who strategy, Go Go

current it and check-in will Big, product already the as a value better, for sky Go known configuration. drinks, even Front and the Our WiFi in beverages. with including a premium is Big bag; domestic get boarding; checked best priority included and alcoholic snacks And Seat carry-on with XxX seating and priority

The well caters guests guaranteed who boarding, a seat snack offers and per carry-on checked want to their a Comfy fully seat blocked and drink bag, travel only Go offer as we including guests and with who add Go unbundled choice a priority a other for a those want as Savvy option for only amenities, experience. bag a middle a either prefer nonalcoholic Go will they of a options or option carry-on those our service. to checked still a and travel preassigned

the our our while as has be travel we guest offer will low-cost combination most of popular bundled formula. included structure, for the premium other a part of with No believe winning So offerings, la selects. purchase, now ancillary the along majority still carte will items we carrier be the the leisure will options items which à of that

opening XX. The airport with for Ted experience on along will options in August his on available that enhanced XX. remarks, will August begin travel All mentioned be sale beginning onboard the experience,

to In seeing better demand what our addition products network to changing environment. we changes make to align in are the services, with we continuing are and

align trends balance in As more continuous supply-demand adjustments I've our where are said markets to making is better capacity before, the a towards exercise.

offering which to profile. nearly markets. options increased XXXX, year-over-year, a allows less-than-daily July We risk at more route lower have expand are us day-of-week our routes In XXX%

the new be We for on The are peak pronounced quarter ones. and XX remainder XX and compared off-peak schedules will Other week last days. year, the include than between periods year. new flights and off-peak changes for on introducing this off-peak as to suspended suspending days flight third we year the the fewer the this and week many third daily shoulder will days of the variance of In scheduling routes of in peak others. more of quarter network routes introduced have

the is into sit by period mid-August around fall industry for when into capacity level the as here schools of the off-peak phenomenon travel as for back the an session. demand. we This muted benefit many is these season, existing oversupply leisure of Unfortunately, move begins which go changes we today, exacerbated of

is other shared, QX setup carriers not for already production the favorable. As revenue have

between quarter We quarter are and will third to and total X.X% compared estimate X% XXXX the revenue billion year, quarter range will to last that XXXX third $X.XXX TRASM $X.XXX estimating third down be billion.

digits will be low reflect will provided. the middle our for Please quarter, for through we estimate the single that versus yet estimates we And schedules for to Published blocks, XXXX, third year capacity flat Including the are and year-over-year. of seat beyond year impact X.X% capacity published down only do estimate full October finalized September. note fully full XXXX. schedules not the decrease

projections slightly better in improved, Aircraft AOG Ground full Our for than our on year are and XXXX or have forecasts estimates. average XXXX the previous

we the will an of For estimate estimate our versus average AOGs previous have we XXXX, full year of XX XX. now about

projection for throughout XX on the XX that with will the Based AOGs, AOGs. escalate number with XXXX, Pratt continuously about XXXX will and about forecast we AOGs, start & Whitney's that latest ending year is

be digits capacity Our that for down is XXXX will year-over-year. single working high assumption

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

of look time forward be Spirit It's I new and an era this Matt. for exciting Thanks, part joining to to Spirit. being the team,

lot as begin work with performance a of sheet to the financial are, exciting Spirit us quarter financial discussing state return and have brief and items. second liquidity some a of third acknowledge of we recap As that health. we quarter before to outlook ahead prospects our I'll of a balance

an ASMs expenses due in increased quarter, flight costs high-cost share fuel per increased by mix X.X% second more fuel inflationary to better wage related at XX.X. volume, and a X.X% to partially of efficiency. primarily increase operating related due X.X% Fuel and labor expense pressures per costs, year-over-year up a to the airports cost were For on market year-over-year capacity, increased to nonfuel gallon leases. gallon, X.X% basis, to under improved X.X% On efficiency fuel financed aircraft offset higher

quarter, Pratt for Regarding to AOG $XX.X issue during period. the million during the second agreed credits Whitney & AOGs accumulated

in agreed XXXX X, to million Pratt March within statement. of issues in approximately have we credits, benefit AOGs liquidity to $XX of related $XXX cash our of has the the the recognized be $XXX through to October end agreement to estimate issue the XXXX, our full million flows. Per million. We credits XXXX. approximately recognized will covers GTF signed quarter, which million million the $XX Whitney second us For June & compensation Year-to-date within income XXXX, through that engine year statement XX, from $X.X of we

negative able going margin unfortunately, Operating the quarter, have This it's during gets been is clearly margin worse Had of was a projection earned our XX.X%. quarter, to better. we credits all before XX%. And for second AOG the would quarter to our get third it the been the recognize revenue operating disappointing on based for result. negative

come of performance the understand balance We expeditiously into estimate and take a -- year benefits we quick our transformation course, will will will to plan to but more for as realize demand. underlying it drivers the is it industry before than fix. and with not working change we this are there possible as capacity financial We estimate a full more

outlook. quarter third our to on Moving

to cost labor pressures. and NEO inflationary will continue face to costs from availability engine carrying and issues We related the pressures other

the we addition, our cost pressure will be our a departure. plan. U.S. on related lowest-cost There basis, introduction seats every to producers to which continuing the we in implemented, the Comfy ex-fuel Go the go-forward once CASM modest see position implementing expenses some on X our among also $X.XX all expect of will ex will On of CASM anticipate our run related CASM product, are ex-fuel In industry. changes maintaining in the in to transformation from range, block rate the pressure settle

$X.XX. to which discretionary rightsize These captains XXXX, our We be quarter leaves XXXX. attendants, to of recruiting year-end of fuel to approximately target pilots X.X% effective onboarding savings flight suspension voluntary we savings pilot furlough XXX operating discussed spend annual include of but unpaid about absences For averaging group necessary of our per achieve non-crew in resulting X. $XX total flight difficult up and cost attendants previously of reducing XXX on downgrade and expect cost for the of approximately operational gallon XXXX, expenses overhead and to third the September capital pilots offering remain the and $XXX run initiatives rate rightsizing with the million, million the year-over-year, estimate X% before in will positions, achieve we and about decision

certain available credit quarter, second XXXX quarter during cash which under capacity investments second million Of billion our $X.X credit we note, unrestricted notes extended the the refinancing maturity of ended We XXXX, XX, details. XX-Q including our facility with and short-term senior our of cash additional filing and our to $XXX revolving liquidity, equivalents, conditions, to extending includes facility. the or due $XXX September million to the of subject for revolving secured XXXX. Please refer

or and notes secured on our our updates will extending senior priorities, top remains refinancing appropriate. one provide when our we Successfully of progress

liquidity. low-cost to continue the manage effort our will aggressively leader and make in industry, as our to a maintain cost every to adequate We maintain position

raised Earlier transaction aggregate this week, that we in payment and $XXX disclosed a predelivery approximately million. direct lease

cash facility unrestricted close we of initiatives, over liquidity that in currently available including revolving our liquidity, investments, credit under cash We and with expect that assuming billion additional year to XXXX end and are initiatives short-term able the liquidity to are $X those process. equivalents,

that, Ted I'll And for closing back it remarks. turn to with

Fred. much Thanks, here of thankful Spirit. There be and at to is for

best to will instead the best challenges, team As every service real and that of is time. goes, hottest Spirit in guests but back day the offering the expect with dedication our strongest we forges moving with benefit I'm drive with The the away will group. possible provide and the speed our over history saying and products our and not not fire from that has seeing steel, the

must cost and the savings market The the us distracted. opportunities. to in possible Nonetheless, find consider available is period, chatter are revenue, every avenue we market about we through incremental but to as notable, Spirit we move not

reimagined We are improving product and our market liquidity new, growing focused the debt, position, loyalty overall our on our refinancing programs. into deploying our

so its airlines does for of the the business, we by markets and competitive In road issues. know the our and we impact When the by size improve our We in the challenging and in years, serve have advantages, particularly which and were especially the the bumpy smaller of this many GTF is the why to efforts is engine from for the Spirit, dynamics a magnitude given those government decisive over and quickly new decisively and strategy we blocked we steps diversifying improve positioning. courts, investing products competitive pivoted, competitive took last federal X to offer. uncertain positioning

direction. first strategic excited of are stages be to the new, implementing We our

consumer behavior are industry Given dynamics and the make. move to we convinced the right us this for trends, current is

DeAnne to back Q&A. now And for

the are [Operator Adam, Ted. ready from to analysts. take you, we Thank Instructions] now questions

question first of Didora comes Andrew of Bank the Instructions] Our from America. [Operator line with

question. on available base you just give Fred, the you have unencumbered today? rundown first Can updated us my an asset

it's unencumbered we week And you his third going well. past value. We $X.X billion Andrew, Ted. a I'm Obviously, equity XX assets that that in of have around to estimated here. billion, is of the own the that's $X.X on so we've Fred I'll jump view. in give addition in as airplanes in to have somewhere still north neighborhood

like the going to Matt, of changes And And you then any your like of can way of old? -- potential given you guess, this product how Just any or I versus it. of make have compares kind kind just how Got plus. year new how help the to changes, us think that Ted strategy that evolve pricing any curious the to next systems? have understand kind you you about over or that's

this Andrew, is sure. Yes, Matt.

sell So Spirit demand everything here that is based. at we and merchandise

our also positioning knowing years, gives that. of which a part, had recent how been to service us products of selling a advantage quite some past bundled like for in already the about number with think experience but the options, in la doing the we've most for we've carte of the So à lot offerings,

ability What's we're third and the to our time, us the a to as Spirit. be we move exciting the now real make over they for able through these game most parties through going app. including changer significantly going is in customers for market products quicker distribution for purchase through to experience be be Spirit well, we're strategy, then going is them merchandising also our also to for which and as to spirit.com And think

offerings product new That's includes distributed the our as Front and Big product to haven't be as up for Comfy future, third the new Seat Big today, whole other customers segment product that today today time. parties a well of shopping. in or Because the will Go know through the open the exposed normal going that over Go product us in product don't to been

So and are get quite with we're externally us. product third-party internally, systems going our think to we difference to that be as for partners prepared disseminated that's a our And working well.

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

the capacity yet driving on departure, Is X Just just And XX now a the is it blocking utilization? that being the seats to in Ground capacity? low What to It the Matt. Aircraft of flat XX. singles be can't question here versus per else prior. on the it from changes down improved network? Is

say, of of And to a of flying it's example, year, the like relative I day much Yes, at this you XX% is closer utilization, XX%. it -- Wednesday a for month largely week. off-peak sure, if was week a In year, last week September, that of the think on it It's had as days look driven mentioned. peak about day Mike. Wednesday but to

demand we're and coming them the is of some some of trimming in. result these So just off-peak as of how supply down situations a days,

big with mentioned that trims. week I is extra piece day of what a of just there, So some

and of that off-peak through year. through be periods expect We rest the the shoulder to the

some exactly that this that people fill of week. to experienced have But certainly And the hold. help is will because help And the introducing reach it to peak off-peak in days it time have Spirit the a fill we and take new week, past. days we new to we're we in why not products in get go just is to broader have have us give for but will like this customers, haven't the

then to you. the And back second my airline Great. Fred, hear question, welcome Great to just industry.

we Just million, on into here this What the tied on talking this? $XXX are to go PDP about financing? you just can airplanes details this

near-term to And Yes. the come It's at XX here order order of back, especially direct answer Spirit. And -- and aircraft be forward. book. question going Thanks for but of your book, lease those welcome. out specifically, with great to those look our now the we'll

back come burden also So to we PDP those avoid aircraft. the PDPs are associated with forward and now the going direct-lease those because us,

a aircraft half remaining deliveries. near-term given now, bit. those well the rescheduling order the those PDPs that of as And out second those a little of of the we've book in transaction is rescheduled The return

So about aircraft be in and XX groups leased you can of think ways, as remaining we forward. the think to X then are X those combination about XX aircraft the going it right? that going

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

A couple of here. questions

so, on engines deliveries. Pratt And any have if going is Airbus can kind continuing after planes Whitney deliver provided have reliable First aircraft to line that & when then time shortly with they the that of for to start engines? they bad deliver Is delivery? are

best favorite I'll it's Ted. Dan, topic, my to address it. do My so

that with regard the Pratt longer delivery powdered metal. flaw with progress the have no reconfiguring So made the new to in revised has engines parts

bleed to beginning your that's into So deliveries. new

issues eliminates they a early whether direction. backing seen, perspective larger MRO. supply to the that any abates up from those but The that production step And not remains chain right are the risk removal it, be still that is a parts experiencing is and in or or that on issue are

days. us, And And the back so and off north it system of worldwide why get to time wing way that's the an wing visit engine all heavy the through a is on XXX and take enough and simply MRO spares not and There's in the on not north next there's example, of seeing expecting is you're yet up AOGs system the why enough XX side. for throughput backed year.

Yes. Understood.

Okay.

date looks September compensating card a million into XX $XXX credit per like it a -- deposit processing XX-Q this there's agreement compensating balance is question a for in morning. on Second arrangement. It the just and here a the

-- it And looks credit you of I've soft don't that credit term the bit that at elaborate if of that's I at risk wondering point? a a being think I've holdback a seen hard before, that. little just card just sort like I'm And but can some card Is holdback.

a our bank No, processor. account credit at of deposit parent card the purely it is just

it's a cash such and advisers those that in So to the solution find is bondholders to for balance And unrestricted them regular our status with reported that our and those with for with we sheet. the be that. bondholders as XXXX on the contact loyalty in we're with plans agreement their negotiations mature, notes. date a Obviously, on will negotiations existing as aligns Elavon update And with guys. there continuing yes, of the

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

on Jake Duane. for This is Gunning

puts the of fourth idea various seat total have quarter? ex-fuel middle the and blocking you into and given to expense takes, cost Just think the an do the about how about

quarter, guide. we a fourth given full for the think haven't I Well,

-- got out numbers we've are third, the For the there.

that and You to of talking can arrive the blocked out inventory, seats some about coming it. at natural But so the math of you're kind costs. seat, pressure unit X provides do middle

an targeting experiencing outline we're some on $X.XX an that perspective. kind CASM dealing near-term think that some of way kind of of the carrier of out, I utilization once meaning can Whitney indicated with -- from comments in its today, sits the issues sort Fred comments headwinds we're Pratt with ex-fuel with everything out that engines of the associated as well, & in his I that we're and

The that. blocked a middle marginal of seat is very component

things, it's X%. But here, of to about much So unit material And in unit in from perspective, cost needle we changes those fact, The a very inflator revenue. all at that costs. don't expecting we're a uplift all. not announced probably the combination move product of significant it's the

take That more will expect really develop for take to Fred time coming revenue to and over -- a think, than probably But percent. hold. as things be that indicated, do for kind XX-plus to year we benefit I us the of

brand margin why it's reimagination is this clearly believe impact reinvention, right the accretive, answer. So of is this which the of the we

do the And of margin you just Okay. breakeven? above then the percent projections the insight any for what given is quarter, network third have

to Jake, -- question right Yes, going overall, now. the of network that's that's ecosystem. as one lives not we're address just We that it think large a

going So we're to on it's just that not route-by-route something address a basis.

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

guess questions pretty improved Just the consumers? on to When basic first about do time was question pivot message and learning the you experience. my of I a out couple economy, get that across industry a is, I how curve. an travel to steep pretty the rolling think consuming

not sure establishes precedent. that, I'm But that

customer products with how is long wondering you taking new the these new to envision to these traction new Just gain categories, that options? a base unaccustomed of many

we notes. of economy thought on was Ted. as that on interesting jump either see or one an implementation I I'll it's of Matt maybe in comparison. Jamie, basic start, and Rana I well. then the have your But did can between your discussion the analogy

in a price drive telling the been case. let is, think all, time not believe money discussion. We've or simply And first story I of the haven't we different That I has any reason the spent the past. little here. true that are things the that Spirit

on completely traditional that of up attention. up on will impact impact. to have social broader it, going doing going outsized start And a groups pick going picking get And what and an so will I we media are lot think start different that, we're what be exactly on think marketing. that that, is, media outsized I will will And it. is The talking, to have is be the to I once mean which by we

helping a comments, in way. ad how said to and we best addition Tombras that, the possible who's we we and how effective appointed In I do is world the in as recognized, it but brand-new in agency we're developing that cost-efficient and my think message, that through most as executor. do way us

shot a have we real there. So

that that product eventually In To muted be addition way alluded sold. merchandised distribution leverage of a to the today about a it, on compared to and the out when to and that, is way way the that OTAs. direct currently are it, have sold configured product, GDSs but our third-party the simulates they products get not Matt we sold, it's the be will and business class that we that

sort If we not do arrive. class, business by you

over consider size work think we natural we with us. significant that a and change. time, So change that of as population And will those will partners, the in the that's

So jump me. as it turn to and thoughts Matt over going a to few him from let well. I'm in

our Yes, And Jamie, wanted really recognize I that competitors large sell and out basic large to really wasn't market. economy difference introduced, something tried not it they is product. there. very One -- your difference was when that put one between analogy to actively to

This opposite. the is

very market. put to our it's can't and to tell we're to be out very excited We are very to story. as We from wait go out perspective this And mentioned the know about, advertising doing word an about, there. well. we Ted out there received what get We're excited going and

And so hope that can't and makes sense to I started. wait get we

interesting let's were the an as on consumer. When made taking Jamie, Matt away they from economy point well, things wanted was basic think I introduced, to. forget, I that not to add

making So harder things and We're to actually things to adding advertise that. the product.

was was facility. it. online, out we energy when yesterday, energized the town XXX for about. yesterday, the -- probably by people training the had or company hosted to release And something our palpable. with This that We we an the business I people building And get in in entire associated hall just day put we before is entire and attended

I was we're challenges that value part and be that's to be to add. the we mean to implementing the face, understands going knows organization that ready change, real embrace services but that honored products and I are this of a a humbled

And watching this. dialed we XX,XXX people had over in,

Spirit a know team can go. the that's And you fact -- important. is for ready So you to

these your to got get You've to group deploy alignment products. around

it we're transpires. how So see to excited

you David on Ted, [ So go that. soon. circuit. for late-night circumstance I'll be need Remember looking you to TV a talk show on ] but a Different screen when Newman did

the embedded outside follow-up. exactly think your to premium it. quick delicately. want to. And far have accustomed you if Do get bench managerial Blocking this a middle you I to is you your I current from to It Low-cost, bring in is code? will. Just talent rocket afield crack ask science, isn't in any seems just what no-frills seats DNA, really but

the question, delicate late-night the I and drums you that appreciate play circuit, if can way, want the I'll you guitar. fair? do nature Jamie. play By the of to Is

fare being cost shift yes, assistance that we value from low to to with are ad we I us agency. and bringing talking mentioned just about a new cost. we're And low low delivering Look, about the in outside that. have think help

we strategic a have helping that. brand also deliver thinking about us that's We how adviser

in is and actually a for. fact, that And earlier, as pushing they're is around nobody here reinvention I a fighting, said this reimagination

need that's team So yes, the they tools our be cost, be I'm different we're going give where around have the What's that we think team, game that, DNA is and the that, for to we part a frontline, all what And glad changer. we value. to because can low deliver going do. of we management a to that's

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

-- kind was improvement, you're periods? or industry of over near-term because is is capacity a you more can the adjusting of seeing question? those a ask kind quarter, being exit of capacity as if adjusting I showing is aggressive little exit more a Matt, your that in any either rate, off-peak kind I little this on of if curious bit you're your bit

not Savi, get benefit factor starting to booking periods, around as advanced say so periods I see the and outsized curve, closer now, the we're shoulder closer off-peak load of clawback. necessarily to were of the yet. moving through would the and seeing some we're But as right we shoulder some more

advanced So to to that's of moves some nature why that of make but industry and rapid some overall in we're in. traffic we're not the up does seeing clawback move now, we're close continuing adjustments is happening, the seem to be right the loads year-over-year The around. on some helping

So more the new the And -- and right the for onto to days demand last amount as with trends and we're our seen we've push year, should of will week. be it then of the peak/off-peak, close-in be way handling the if there. able hold, structure

little to a see what So from exit of talk It's quarter. get seeing that's curve and closer to for. as bit perspective. hoping we we see. too That's soon those want about closer we're what starting booking periods, what we're a to to rate But we're third

just then It more? I lease? appreciate monetized that like the these And And that. on the said. revenue just to you book leasing build as and has should move put then we leasing nothing been just on seems expect order get

airplanes I Ted. form basically a to a sale-leaseback I'll the wouldn't transaction that. being book "monetized." take order of delivery. forward it's Savi, on describe as it in the was XX structured This do a

PDPs, on refunded forward as prefinanced And us. just obligations AerCap. and them airplanes result that, the all a were we to are now of those So

next up a we're over well. capital that's of years of million. pick north as the I mean So talking $XXX working notable couple

an So going to benefit that's the forward. extreme company

to a XX book under conclusion reached But near get remain aircraft we be that It's delivery did PDPs control. as term. our liquidity on stream, the then way repaid advanced the in remaining conditions those certain basically that And time. structured our just with over they well, we a enhancing in our will order those in and airplanes work is

way misunderstood makes so Okay. it. was Appreciate that And the structured, I that sense.

question with line next Conor of from comes Cunningham Research. Our Melius the

non-ticket, accreted that some you puts product correct? $X math up I frame over puts it up. on lose revenue billion. do think going help revenue takes assume Is the XX% -- just quick in if gets from the opportunity that to the from you expected And at new increase initiatives, and but If you're then could some the unit I

just So around at opportunity as the rate. any full it's run when thoughts

it to over But But earlier, ballpark, year time the I start. described can feel get we by in. as will think your I Matt, math jump or free is the is about especially landing which accrue zone, time. I that Sure. more correct, still you a out. probably to

experiencing the And yes, we are headwind of non-ticket immediately. some

pounds. and Matt flexibility in flexibility a of to credit as unit the we like those to perspective natural change the bag guests, XX a from fact, headwind elimination and the cancel me, XX X%. near and from outlined, in think, benefits credit as revenue, our vouchers much that as the term are the other I shell the All In change to checked fees, excuse -- of extended some revenue and ancillary to

a us comes now over that to back that's problem So time.

benefit load the think we're of to the reimagined more headwinds you crossing new the the want as start associated sort the to ancillary streams Matt, term to funnel can factor, so with near anything? access the and offset or in experiencing an guests, from all of that the of do of add of perspective. those things year And the over about sort the product, next widening getting you benefits

they I'll A Sure. historically one we and of that guests hope is keep It's is had the quarter, Conor, was again. it for And offer low We fares, your wanted. below I a -- going what I what talked looking think bit a it that is was very mention are about lot loyalty people loyalty Yes. that. as and model billion think last our number But our had be little we is that because and to unbundled thing calculation is for. exactly our mind optionality we've rich the revolutionary bit your something $X part of right. there. to is program in little we

a loyalty relationship build over it up in But to more to has program, driven. time, be order really

we're fares. come coming also the the come have of more want in they to future have to just They back back experience, that low that loyalty We to also. and is for reflective going for to to want to program Spirit for not Spirit, Spirit be is who to back a

we moving haven't but loyalty of we on think that takes in for to and the works yet, build. program that things really And as things time that well. we how announced about with is forward, So a any are changes piece

will of a as get little take get be And improvement, there. to place. bit it's of it to ongoing will Ted there. of in So an time revenue -- some a it's unit sort just process mentioned the And everything it

assuming checking it, you're you but you're That's that product over working close on. then caveated billion. in your trying clarify helpful. of in I'm liquidity you I appreciate to could release, currently process not that message But press great of And Okay. kind the there? at that's target I your math, changes, so so you just But that. $X you mentioned what assume of initiatives the

a done. in aircraft-related confident transactions transactions initial are have those few included that we're Sure, about them. few value underway by a And that number. in No, that other equity we is Andrew that and asked And are assets at the we're that we're discussions on get think basket Conor. that will unencumbered I in was that what of question in talking looking the feel about already we

Trent comes of from question Stephen Our next Citigroup. line the with

CrowdStrike. are sort them appreciate guys you conversations of result tell us that the outage? I curious with having with you disclosed was on of their as whether you on to I a what losses you any Can respect incurred incident.

to Stephen. we Spirit Thanks, customer interesting What was of a CrowdStrike. impact about not the are is

So this our was of third-party an issue with one software regard to providers.

back end agreements be about we on discussions with And discussions in it. we the have be with so the may that to provider, will their extent in service-level with they that them with CrowdStrike. And relationship

changes big I Are you also if with space, any domestic Or just spillover, airlines curve? fence may, you booking customers product. the seeing side making at your with to it Okay. competitor you Helpful. sense. other say point? I know early too across have moves And example, at Makes when migrating some way of over to their your this from for the look is

happening I the second the seeing, of at think attributable did say. granted the load Like the not it 'XX But least Well, a is are changes what to we've at early in heard in quarter. look this or talking in deployment other about 'XX I acknowledge something least right since we're vis-à-vis their is because partially to improvement, one benefits that be us, the it with that this may might too which year-on-year for flexibility people factor of now. product, some vague the of rest We we competition of like. with I about time doing have think XXXX, we some promise first for associated descriptions think is

were do, way the is We're careful going to design, the acknowledging, which now. so it, actually the And next why and we we weeks, time in happening right careful it, we we were were our we were pressure is to to the why were what do was to about when do did. we getting we disclose felt were this right research thing going deploying about we X do from the it it constituents was to going which

actually exploit. us see and than faster we're that's we with have structure, our or new going a and the share to So makes having advantage we're we're not else. anyone play. a going the of market That, excited that whether as result to to capturing in think at high-value I interested product low-cost that, a are successful And coupled

Our of comes Fitzgerald Tom Cowen. question from the TD line with next

to want get plan the the of get a just kind long-term kind of settling of and see -- mix with of to fare out. your I where sense we non-fare of you end as XXXX, revenue

Matt. It's Tom. Hey,

As I moving reporting my only we're forward. segment on be revenue to in said a going remarks, passenger per prepared total

Okay.

just so how on XX Okay. versus Fair new enough. And could are those you just comment expectations? then performing markets far

Tom. sure, Yes,

one to thing XX the heard doing wherever that's see that we around I the move you've about think talk opposed how network one new we the about Latin me in America thing we're is Caribbean. and past note, talking as important specifically those and about routes to opportunities,

that up So had to moved we to used of around that was be XX%. in XX% We our network region.

Some even was over a times it of the XX%. bit little year,

a number that that XX% Now territories. now. the of we're near capacity in region, international plus to right lot down U.S. back There's

will, very there, that. we're everything an with been around, how an need that that's network. we've So careful move just and to sure things when the of we making that's and of we doing example we're we're But evaluating example

Research. question comes final of line the Ryan with And Wolfe Capozzi the from

targets you out to sources year? kind for on And other Scott. your next sort as then do look of well cash? uses liquidity any as of next year discuss CapEx plans Capozzi and just have as we early for of Ryan minimum you Could

for year. beginning usually of We're we that We going closer on you expectations. XXXX you, have to to to Ryan, refine the the view give the a get CapEx guys once

party, -- just the kind that our run PDP to that that be changes we're part is forward expect as given than going of third wouldn't dramatically different I rate. a moved in delivery our CapEx well. we've So CapEx our And non-aircraft-related of the aircraft discussion to considerable

to we on we closer as and get some back we do to kind to got do on that get of that, will year-end. which you math So

Got it. then squeeze follow-up. Very helpful. a in if maybe could just And I

or have very you just, guys at of when get You get of Could there? talk implemented, new as products least the about of you back profitability kind to some well. steps outlined to these initiatives scenario sort they of and best-case of getting sort the

Sure.

today. a we're heads So we issue. in that And I recognize up tough we're about that don't position look, think anywhere but

I way profitability. back our so would I And to Spirit about margin build to is way divide start can the a think it at you think we got baskets to repair that into few so

items quarter, onetime number both hitting that first a unique there us current of Spirit from are to and margin perspective. that The in the is a are

from issue. to the aircraft statement being the But of able addition and X.X then and previously we is the associated The of inefficiency adjust The disclosed report business with the service we the is is on to the mere that receive in of able about not fully income that, are credits couple points. accounting margin. to removing Pratt first another

got we've term Pratt of in around X.X%. So near really the headwinds

that, to we exiting remainder company's the fleet. XXX addition are In of the

at the part back go to last In next service of beginning X fact, will the aircraft in their year. lessors

type, on aircraft, the and a in the current have that a of margin. hits us returning onetime X accrual -- quarter As at that terminating for points we about actually those result fleet

actually We points margin about the IT on So for point of couple That talked the CrowdStrike that's about this X there. another quarter. was outage. us

has with we revenue product point points out adds to And personnel. that, talking quarter. airport-related that. roll expenses, to first changes. about the onetime our somewhat excuse reimagined that the all, X IT-related the but are reconfiguration the them in and talking be as of well, training of are about incurring to I'm things delivered near-term then platform the about about as start don't me, in we of some talking headwind like introduce material I'm -- Spirit, And associated couple a near e-commerce of also have in expenses nature. term new benefit both I'm actually, it yet,

before And X of model ancillary of as the points term, sort in to then stuff changing change just the benefit. in bag the a few like of fees the XX-pound and about near things in that other is cancel X removal starts to we the a it detail, headwind of from talked the and

in XX add XX you're headwind You quarter. points to up, near margin and the all of that

that bravo but longer -- unit somewhere the deliver will pressure around a points with unit we around some I -- to Additionally the benefit expect come but of around reimagined And revenue. of our term, XX what said neighborhood additional in or incremental earlier Spirit, call points. X we I as to of discussed X of is cost neighborhood earlier, like internally,

benefit So with we're margin associated talking of XX-plus points that.

really deferred swing the then potential is in of that changes acknowledge to has today, we talking that most we're supply-demand last out the fact about one that's a we make to the quantify in And near moving that. the imbalance. We're a hardest potentially number think difficult biggest to aircraft we lever, we but which of is to the term. the already kind the predict, are And

smaller. year, we're In next getting actually fact,

Pratt a the obviously that of Some is issues. of result

the a unit And is balanced see similar margin. to other revenue starts nonetheless, return we're market that, making as natural hearing to and tailwinds Spirit adjustments. supply-and-demand we contributing to more and But market, should airlines to

So notably most time. combo will build your which things to back profitable time, together way of take of over some answer, you you that those and a all X can window

You're to to getting really is want we more which flow, be. EBITDA cash and you're starting where

an it put the zone will are I but it. that factors now. drive plus, It's year end on those definitely So wouldn't right a

I to closing remarks. will Gabel DeAnne for floor now over the turn

I today. Relations out you, please any Investor joining just you, free feel to or want And you Thank for have Adam. if everyone, to Relations. thank questions, say reach us to Media

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

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