Robust demand for travel pushed revenues up for Spirit Airlines and helped it reduce losses in Q2. This despite serious operational issues early in the quarter, but these problems seem to have been adequately addressed and services are running reliably right now, the airline said on August 9. Spirit reduces losses thanks to strong revenues.
Spirit Airlines, which announced a definitive merger agreement with JetBlue on July 28 after the Board ditched the previous agreement with Frontier Airlines, reported a $-52.4 million net loss. This compares to $-287.9 million in the same quarter of 2021. The operating loss was $-45.3 million versus a $93.2 million profit last year.
Although non-fuel costs were better than anticipated, operating expenses increased to $1.4 billion from $766 million, with both salaries and fuel costs significantly up. Fuel expenses increased to $558.6 million from $214.8 million. CFO Scott Haralson says in a media statement that Spirit kept good cost management and benefitted from better operational reliability.
Revenues benefitted from the strong demand for leisure travel and jumped to $1.367 billion from $859 million, of which $1.348 billion was from passengers (2021: $846.5 million) and the rest from other sources. “Top line revenue growth in the second quarter of 2022 exceeded our expectations, driving a better-than-expected adjusted pre-tax margin despite much higher than anticipated fuel prices”, CEO Ted Christie said in a media statement. Total revenues per available seat mile (TRASM) were up 22.8 percent to $11.54.
The quarter started badly for Spirit, which was forced to cancel one-third of all flights on April 4 due to weather-related problems. ATC delays also affected operations and forced the airline to adjust capacity for April and May by five to six percent. The adjustments worked out well, says Christie: “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.”
For the first six months, Spirit reduced its net loss to $-247.1 million from $-400.2 million. The operating loss was $-256.8 million compared to $-9.3 million. Total revenues for HY1 were $2.3 billion, up from $1.3 billion.
Compared to 2019, available seat miles (ASM) in Q2 were 9.9 percent up, but this compared to +19.5 percent for Q1. In Q3, Spirit expects capacity to be up by fourteen percent and by 25 percent in Q4. Spirit expects to grow its fleet to 197 aircraft by the end of the year, up from 173 in December 2021. It hopes to take delivery of five Airbus A320neo’s in Q3 and twelve in Q4. Another 33 aircraft are scheduled for delivery in 2023, of which twenty A322neo’s, and thirteen A321neo’s.
The airline ended June with $1.5 billion in unrestricted cash, cash equivalents, and a revolving credit facility plus $3.1 billion in total debt.
