Hurricane Ian and operational constraints in Florida have hurt Spirit Airlines in Q3. The airline was forced to cancel hundreds of flights due to bad weather, while staffing issues prevented it from optimally using its fleet, it said in its earnings release on October 26. Operational issues and a hurricane hurt Spirit’s Q3.
Hurricane Ian forced Spirit to cancel approximately 550 flights in September and another 400 in October. This impacted operating revenues by $5 million in Q3, with another $5 million expected in Q4. October bookings to Florida have been soft since the hurricane, which will have another $3 to $5 million impact on Q4 revenues.
As for the operational constraints, Spirit said that staffing issues affected aircraft utilization, with utilization hours down by 15.2 percent from 12.5 hours per day in 2019 to 10.6 hours per day in Q3. This had an impact on unit costs.
Spirit Airlines ended Q3 with a $-36.4 million net loss compared to a $14.8 million profit in the same time last year. Total revenues were $1.343 billion versus $922 million, but operating expenses were 59.1 percent higher at $1.379 million versus $909 million. Fuel costs soared 95.9 percent to $508.5 million. The operating loss was also $-36.4 million.
For January-September, the ultra-low-cost carrier reported a $-283.5 million net loss (2021: $-385.4 million), total revenues of $3.677 billion ($2.243 billion), and an operating loss of $-293.2 million ($4.7 million). Liquidity stood at $1.3 billion by the end of September and $2.6 billion of long-term debt.
Yet, Spirit reported strong demand and is happy with the operational reliability and on-time performance of 79.5 of the flights that it operated. Total revenues per passenger flight segment were up 22.2 percent and fare revenue per segment by 23.2 percent. “There is still much work to do to return to full utilization and normalized margins, but we remain confident we can reach both of those targets by mid-year 2023,” said CEO Ted Christie in the earnings release.
In Q4, Spirit plans to operate at 24.5 percent more capacity compared to Q4 2019, up from +13.5 percent in Q3. “Looking ahead to the fourth quarter of 2022, leisure demand remains strong and we expect unit revenue in the fourth quarter to be up 15.0 percent to 16.5 percent on 24.5 percent more capacity, compared to the fourth quarter 2019.”
Spirit ended the quarter with a fleet of 184 aircraft, having taken delivery of four Airbus A320neo. The airline is up for a rapid fleet expansion, as it will take delivery of another thirteen A320neo’s in Q4, five in Q1 next year, four in Q2, five in Q3, and six in Q4 of 2023. From Q2, two A321neo’s are scheduled for delivery, with seven in Q3, and four in Q4. This will grow Spirit’s fleet to 230 aircraft by the end of 2023. The fleet and future order positions are some of the reasons that JetBlue has been so keen to acquire Spirit. Last week, Spirit stockholders voted in favor of the merger agreement.
“Despite the large number of aircraft deliveries over the next few months, we remain confident we will continue to see gradual improvement in fleet utilization in the fourth quarter and throughout the first half of next year, reaching full utilization around mid-summer 2023,” said Chief Financial Officer, Scott Haralson.
Spirit announced later today that it will introduce new HAECO seats on aircraft thst are delivered from January or 33 during the year. Seat width in Economy is 1.5 inches wider at 17,5 inches for window and aisle seats, while middle seats even 18,5 inches. ‘Big Front Seats’ offer more cushion for more comfort.
