Spirit Airlines(SAVE) - 2025 Q1 - Quarterly Report

Financial Performance - For the first quarter of 2025, the company reported operating revenues of $1,012.4 million, a decrease of $253.1 million or 20.0% compared to the prior year period [258]. - The company experienced a negative operating margin of 28.6% in Q1 2025, worsening from a negative margin of 16.4% in the same period of the previous year [255]. - Revenue passenger miles (RPMs) decreased by 20.9% to 8,604,963 thousand in Q1 2025, while available seat miles (ASMs) decreased by 19.8% to 10,824,829 thousand [254]. - The average daily aircraft utilization dropped by 22.1% to 8.1 hours in Q1 2025 compared to 10.4 hours in Q1 2024 [254]. - Total operating expenses for the first quarter of 2025 were $1.3 billion, a decrease of $171.3 million, or 11.6%, compared to the prior year [265]. - Adjusted CASM (cost per available seat mile) increased to 11.89 cents from 10.68 cents, reflecting a 11.3% rise [266]. - Total revenue per passenger flight segment decreased by 1.3% year over year, primarily due to a decrease in other revenue [259]. Cost Management - The company identified approximately $100 million of annualized cost reductions as part of its strategy to return to profitability through 2025 [292]. - Salaries, wages, and benefits decreased by $46.7 million, or 10.8%, driven by lower headcount and a decrease in operations [268]. - Aircraft rent expense increased by $35.9 million, or 31.1%, due to the acquisition of 22 new aircraft financed under operating leases [270]. - Maintenance, materials, and repairs expense increased by $3.8 million, or 6.9%, attributed to a higher volume of maintenance events [274]. - Distribution costs rose by $4.7 million, or 10.4%, primarily due to higher advertising expenses related to new travel options [275]. - Other operating expenses decreased by $8.1 million, or 4.1%, mainly due to reduced travel and lodging expenses [276]. Reorganization and Debt Management - Spirit emerged from Chapter 11 bankruptcy on March 12, 2025, following the confirmation of its reorganization plan [225]. - The company canceled $1.6 billion of liabilities subject to compromise during the Chapter 11 Cases and fully repaid the $300 million DIP Facility [287]. - The company reported interest income of $10.9 million for the combined Successor and Predecessor Periods for the three months ended March 31, 2025, compared to $13.6 million for the Predecessor three months ended March 31, 2024 [280]. - Long-term debt outstanding is $2,768 million, with $1,737 million due beyond 2029 [306]. - The company made $51.2 million in debt payments on outstanding aircraft debt obligations [293]. Liquidity and Financial Position - As of March 31, 2025, the company had $882.1 million in liquidity, which included unrestricted cash, cash equivalents, short-term investment securities, and funds available under the Exit Revolving Credit Facility [290]. - The fair market value of short-term investment securities is $119.6 million as of March 31, 2025 [338]. - The company has $6.0 million in a line of credit related to corporate credit cards, collateralized by $6.0 million in restricted cash [307]. - As of March 31, 2025, the company had $11.9 million in surety bonds and $49.1 million in standby letters of credit, representing off-balance sheet commitments [309]. Fleet and Operational Efficiency - Spirit's all-Airbus fleet is one of the youngest and most fuel-efficient in the United States, supporting its low-fare carrier model [222]. - The company had 213 Airbus A320-family aircraft in its fleet as of March 31, 2025, with 92 additional aircraft scheduled for delivery through 2031 [257]. - Aircraft fuel expense represents approximately 21.6% of operating expenses for the three months ended March 31, 2025 [337]. - A hypothetical 10.0% increase in the average price per gallon of aircraft fuel would increase into-plane aircraft fuel expense by approximately $135 million [337]. - The company has not engaged in fuel derivative activity since 2015, with no outstanding jet fuel derivatives as of March 31, 2025 [337]. Customer Experience and Loyalty - Updates to the Free Spirit® Loyalty Program aim to enhance guest experience and build loyalty [223]. - The company introduced over 40 extra-legroom seats with a 32-inch pitch across 7 rows, enhancing customer comfort [227]. - The company aims to drive higher unit revenues through strategic changes focused on premium leisure travel options and ancillary revenue [238]. Challenges and Risks - The impact of Pratt & Whitney GTF engine issues may lead to reduced operational reliability and financial performance through at least 2026 [241]. - The company recognized a loss on disposal of assets primarily consisting of $18.5 million in impairment charges related to early retirement of aircraft [276].