Spirit Airlines Reports Second Quarter 2022 Results

posted on 9th August 2022 by Eddie Saunders
Spirit Airlines Reports Second Quarter 2022 Results

Spirit Airlines, Inc. today reported second quarter 2022 financial results.

Ended the second quarter 2022 with $1.5 billion of unrestricted cash, cash equivalents, short-term investment securities and liquidity available under the Company’s revolving credit facility.

As Reported

(unaudited)

Second Quarter 2022

Second Quarter 2021

Second Quarter 2019

Total operating revenues

$1,366.6 million

$859.3 million

$1,013.0 million

Pre-tax income (loss)

$(67.5) million

$(273.3) million

$148.6 million

Pre-tax margin

(4.9) %

(31.8) %

14.7 %

Net income (loss)

$(52.4) million

$(287.9) million

$114.5 million

Diluted earnings (loss) per share

$(0.48)

$(2.73)

$1.67

Adjusted1

Second Quarter 2022

Second Quarter 2021

Second Quarter 2019

Total Operating Revenues

$1,366.6 million

$859.3 million

$1,013.0 million

Adj. Pre-tax income (loss)

$(38.9) million

$(56.9) million

$150.1 million

Adj. Pre-tax margin

(2.8) %

(6.6) %

14.8 %

Adj. Net income (loss)

$(32.2) million

$(45.7) million

$115.7 million

Adj. Net income (loss) per share, diluted

$(0.30)

$(0.43)

$1.69

“Top line revenue growth in the second quarter 2022 exceeded our expectations, driving a better-than-expected adjusted pre-tax margin despite much higher than anticipated fuel prices,” said Ted Christie, Spirit’s President and Chief Executive Officer.

“On the operations side, following a rough start to the quarter, we implemented key operational changes and quickly saw meaningful improvements in our operational reliability and recoverability.

“We finished the quarter on a strong note with a 98.8 percent completion factor for June.  And, our completion factor for July was 99.7 percent, including 15 days of 100 percent completion factor.

“The robust demand for leisure travel during the peak summer period resulted in busy airports and high load factors, and I want to thank our Team Members for staying focused on supporting each other and delivering a high value experience for our Guests.”

“On July 28, 2022, we announced plans to unite with JetBlue Airways Corporation (“JetBlue”) to create a compelling national low-fare challenger to the dominant U.S. carriers.  I am thrilled we were able to reach an agreement with JetBlue that delivers value for our stockholders, Team Members, and Guests.”

The Company believes that providing analysis of financial and operational performance compared to second quarter 2019 is a more relevant measure of performance than comparing to second quarter 2021 due to the severe impacts from the COVID-19 pandemic on the Company’s financial results and operational performance for 2021.

Second Quarter 2022 Results
For the second quarter 2022, Spirit reported a net loss of $52.4 million, or a net loss of $0.48 per diluted share. Excluding special items, adjusted net loss for the second quarter 2022 was $32.2 million1, or an adjusted net loss of $0.30 per diluted share1.

For the second quarter 2022, Spirit reported a pre-tax loss of $67.5 million and a pre-tax margin of negative 4.9 percent. Adjusted pre-tax loss for the second quarter was $38.9 million and adjusted pre-tax margin was negative 2.8 percent.

Capacity and Load Factor
Capacity, or available seat miles (“ASMs”), in the second quarter 2022 increased 9.9 percent compared to the same period in 2019. Load factor for the second quarter 2022 was 86.0 percent, up 1.0 percentage point compared to the second quarter 2019.

Aircraft utilization in the second quarter 2022 was 10.7 hours, down 16.4 percent compared to the 12.8 hours in the same period of 2019.

Revenue Performance  
Total operating revenues for the second quarter 2022 were $1.4 billion, an increase of 34.9 percent compared to the second quarter 2019 primarily due to increased flight volume and higher operating yields.

Total revenue per ASM (“TRASM”) was 11.54 cents, up 22.8 percent compared to second quarter 2019.

On a per passenger flight segment basis, compared to the same period in 2019, total revenue per passenger flight segment (“segment”) for the second quarter 2022 increased 24.3 percent to $140.61. Compared to the second quarter 2019, fare revenue per segment increased 25.7 percent to $72.41 and non-ticket revenue per segment increased 22.8 percent to $68.202.

Cost Performance
Total GAAP operating expenses for the second quarter 2022 increased 66.3 percent compared to the second quarter 2019 to $1,412.0 million. Adjusted operating expenses for the second quarter 2022 increased 63.2 percent compared to the second quarter 2019 to $1,383.3 million3. Compared to the second quarter 2019, these increases were primarily driven by increases in flight volume, additional aircraft, higher fuel prices and inflationary wage pressures.

“Good cost management and benefits from improved reliability resulted in better-than-expected non-fuel costs for the second quarter, mitigating the majority of the impact from higher-than-expected fuel prices,” said Scott Haralson, Spirit’s Chief Financial Officer.

“Looking ahead to the third quarter, we continue to face constraints that limit our ability to both optimize our network and operate our fleet at full utilization. One of the primary limiters is the continued constraint on U.S. continental flights to/from Florida.

“Therefore,  while demand trends continue to be strong as we head into the off-peak shoulder season, we are estimating pre-tax margins will be between negative one percent to positive one percent for the third quarter 2022.”

Fleet
Spirit took delivery of four new A320neo aircraft during the second quarter 2022. The Company ended the quarter with 180 aircraft in its fleet, an increase of 33.3 percent since the end of second quarter 2019.

Liquidity and Capital Deployment
Spirit ended second quarter 2022 with unrestricted cash, cash equivalents, short-term investment securities and liquidity available under the Company’s revolving credit facility of $1.5 billion.

Total capital expenditures, including net pre-delivery purchase deposits, for the six months ended June 30, 2022, were $113.6 million, primarily related to the purchase of spare parts, including two spare engines, and expenditures related to the building of Spirit’s new facilities in Dania Beach, Florida.

Tax Rate
On a GAAP basis, the Company’s effective tax rate for the second quarter 2022 was 22.4 percent. The Company’s non-GAAP tax rate for the second quarter 2022 was 17.2 percent.