Spirit Airlines, Inc.

Second-quarter 2024 total revenue was approximately $1.3 billion, down 10.6% year over year. TRASM was $9.05, down 12.1% year over year. Spirit reported an adjusted net loss of $158 million, and operating margin was negative 13% (or negative 10.7% if all AOG credits had been recognized). Non-ticket revenue per segment declined 9.6% to $63.44. Non-fuel costs rose 4.6% year over year on 1.7% more capacity, and fuel expense increased 4.2%. For Q3 2024, Spirit expects TRASM down 6.4% to 8% year over year, total revenue of $1.155 billion to $1.175 billion, capacity down 0.3% year over year, and total operating expenses up 3% to 3.7% year over year with fuel cost per gallon at $2.65. For full-year 2024, capacity is expected to be flat to down low single-digits versus 2023. Liquidity ended Q2 at $1.1 billion, and the company expects to end 2024 with over $1 billion of liquidity assuming additional initiatives close.

Ted Christie framed the quarter as disappointing but used it to justify Spirit’s transformation into a "high value low cost" carrier. He argued the old low-fare model is not broken, but Spirit needs to compete better for higher-yield travelers by offering more bundled options, premium leisure products, and a clearer brand message. His tone was urgent but confident, emphasizing that the new product rollout is happening quickly and that the company is focused on refinancing debt, improving liquidity, and restoring profitability over time.

Fred Cromer said Q2 non-fuel costs were up 4.6% year over year on 1.7% more capacity, while fuel expense rose 4.2% because fuel cost per gallon increased 6.1%, partially offset by better efficiency. He noted Pratt & Whitney agreed to issue $37.2 million of AOG credits during the quarter, with $7.1 million recognized in the income statement, and said full-year 2024 liquidity benefit from the engine agreement is expected to be about $150 million to $200 million. He guided Q3 total operating expenses up 3% to 3.7% year over year, said annual run-rate savings of about $100 million remain on track with about $75 million expected before year-end, and highlighted $1.1 billion of liquidity plus the extension of the $300 million revolver to September 30, 2026 subject to conditions.

Analysts pressed on liquidity, the unencumbered asset base, the new pricing and merchandising strategy, capacity cuts, and the impact of Pratt & Whitney engine issues. Management said unencumbered assets are north of $500 million and that around 50 owned aircraft also have about $0.5 billion of equity value; on products, Spirit said the new offering will be demand-based, faster to shop digitally, and eventually distributed through third parties. On capacity, management explained that more aggressive trimming of off-peak days and network changes are offsetting demand weakness, while on engines they said the MRO system remains backed up, with turnaround time north of 400 days. Management also clarified the $186 million transaction was a structured sale-leaseback/direct-lease deal on 36 aircraft plus PDP refunds on the remaining near-term order book.