Spirit Airlines(US:SAVE)2021-07-29 20:45Financial Data and Key Metrics Changes - The company reported a net loss of $36.3 million for Q2 2021, but achieved profitability in June, marking the first month of profit since the pandemic began [7] - Total operating revenue decreased by 15% compared to Q2 2019, with a 5% reduction in capacity [11] - The EBITDA margin for Q2 was a positive 7.2%, significantly better than initial expectations due to improved revenue and lower costs [24] Business Line Data and Key Metrics Changes - Total revenue per passenger segment declined by 9.4% compared to the same period in 2019, with passenger revenue per segment down 23.5% [12] - Non-ticket revenue per segment increased by $2.85 compared to Q2 2019, a 5.1% increase, setting a record for the company [12][13] - Load factors have largely recovered, and yields during peak travel periods have improved significantly [14] Market Data and Key Metrics Changes - The company added 28 new routes and reinstated 11 previously suspended routes in Q2 [17] - Capacity is expected to increase by 10.6% in Q3 compared to Q3 2019, and by approximately 23% in Q4 compared to Q4 2019 [20] - The company is well-positioned to capture market demand, with nearly the entire route network reinstated to pre-pandemic levels [16] Company Strategy and Development Direction - The company is focused on growing its network and enhancing non-ticket revenue through improved product offerings and revenue management initiatives [12][15] - The strategy includes deliberate route deployment to build a sustainable long-term network [19] - The company anticipates a full recovery in travel demand and aims to leverage its low-cost structure to deliver pre-pandemic margins by 2023 [34][32] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in achieving profitability in both Q3 and Q4 2021 based on current booking trends [7] - The recovery is expected to be choppy, but the company remains optimistic about its long-term prospects [34] - Management highlighted the importance of operational efficiency and cost management as key drivers for future profitability [8][24] Other Important Information - The company ended Q2 with $2.2 billion in liquidity, including unrestricted cash and short-term investments [27] - The average daily aircraft utilization was 9.9 hours, which is 23% lower than Q2 2019, with expectations to ramp up to full utilization by mid-2022 [29] Q&A Session Summary Question: Aircraft acquisition costs and market dynamics - Management indicated that current lease rates are at or below pre-pandemic levels, making them attractive for future aircraft acquisitions [39] Question: Miami market entry and cost structure - The decision to enter Miami was based on a favorable change in the airport's cost structure, allowing for profitable low fares [42] Question: Revenue guidance and yield recovery - Management confirmed that the top end of revenue guidance implies a return to 2019 levels, driven by improved non-ticket revenue and anticipated demand recovery [45] Question: Cost focus and CASM outlook - Management reassured that unit cost remains a strategic focus, with expectations to achieve sub-6 CASM by mid-2022 despite inflationary pressures [49][59] Question: Fourth quarter profitability expectations - Management expects sequential revenue growth into Q4, driven by increased utilization and overall demand recovery [51] Question: Network diversification and new markets - The company has increased its network diversification, with a notable rise in capacity to Latin America and the Caribbean, now at nearly 20% [74] Question: Labor situation and pilot staffing - Management confirmed no furloughs among crew members, with active hiring ongoing to support growth [80] Question: Handling unruly passengers - Management acknowledged concerns regarding unruly passengers but emphasized that such incidents remain a minority and are being addressed through active communication and enforcement [84]