Spirit Airlines (SAVE) Quarterly Earnings Q4 2023

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Spirit Airlines‘ The CEO said on Thursday that the domestic market is improving and protecting the ability of a budget airline to generate money even without acquisition by JetBlue Airwayswhich a federal judge blocked earlier this year.

Spirit expects to lose money in the first quarter, however, and said it is projecting revenue between $1.25 billion and $1.28 billion, above analysts’ forecasts. He believed it would be cash flow positive in the second quarter of the year “and beyond.”

The budget airline is trying to recover after domestic fares fell last year, which Pratt & Whitney The engine issue grounded dozens of their Airbus planes and the JetBlue deal failed in court. Both airlines are appealing that decision, although analysts have been pessimistic about the chances of the decision being reversed.

The failed merger has helped drive Spirit stock down more than 55% so far this year as investors worry about its financial future. Spirit’s debt payments are ahead of some calls to encourage that the airline could be restructured, or even liquidated.

“This misleading statement was advanced by a variety of experts,” Spirit CEO Ted Christie said on Thursday’s earnings call. “Liquidity is always king, and we have increased our rates to give us the necessary flexibility to successfully close with JetBlue or pursue our individual plans.”

Spirit ended 2023 with liquidity of $1.3 billion.

On Thursday, Spirit reiterated that it is evaluating options for the 2025 and 2026 debt maturities.

The budget airline has spent months looking for ways to cut costs, including changing its network and changing its flight schedule.

“The Spirit team is 100% clear and focused on the changes we are implementing now and will continue to make through 2024 to return us to cash flow generation and profitability,” Christie said in employment notice.

Christie and other Spirit executives said they were encouraged by strong bookings late last year and the upcoming spring break season.

Here’s what Spirit said for the fourth quarter compared to Wall Street expectations, based on average estimates compiled by LSEG, formerly Refinitiv:

  • Adjusted loss per share: $1.36 vs $1.46 expected
  • Gross income: $1.32 billion vs $1.32 billion expected

Spirit’s net loss of $183.65 million, or $1.68 per share, is an improvement from a net loss of $270.66 million, or $2.49 per share, in the year-ago quarter. Adjusting for one-time items the carrier reported a net loss of $1.36 per share.

Revenue was down 5% to $1.32 billion.

The carrier expects 2024 capacity to be flat to mid-single digits compared to last year, and up 1.5% in the first quarter, Spirit said.

Weaker domestic flights have had a major impact on budget airlines, which are mainly focused on US routes. Extra capacity has encouraged them to reduce flights, especially during off-peak periods. spirit, Frontier Airlines, Southwest Airlines and Alaska Airlines have limited their capacity growth plans after fares fell.

Spirit said fare revenue per passenger fell 25% in the fourth quarter to $48.24, while non-ticket revenue per passenger, which includes various fees, fell Spirit such as seat assignments and carry-on bags, 6.6% to $66.60. Passenger aircraft segments were up 12% in the fourth quarter from the same period of 2022.

Spirit said it expects to ground an average of 25 Airbus planes this year due to Pratt & Whitney engine issues.

These disruptions are expected to peak at 40 aircraft that landed in December. Spirit said it expects to have 215 aircraft in its fleet by the end of the year.

The Miramar, Florida-based airline reiterated that it is in talks about compensation with Pratt & Whitney, a unit of RTXhas proceeded and “although no agreement has been reached to date, the Company believes that the amount of compensation received will be a significant source of liquidity over the next two years”.

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