DALLAS — Miramar-based low-cost carrier Spirit (NK) reported a net loss of US$271m (US$2.49 per diluted share) in the fourth quarter of 2022. This represents a 211.5% increase in net loss when compared to the same quarter in 2021 (US$87m).
The airline’s recovery from the fallout of the pandemic has been slow but the carrier is taking steps to achieve sustained profitability again.
Revenue, Expenses
For the quarter, revenue stood at US$1.4bn, a 43.5% and 41% increase when compared to Q42019 and Q42021, respectively. The surge in operating revenues mainly stems from increased flight volume and more stable operating yields. Total revenue per Available Seat Mile (TRASM) also experienced an increase of 17% and stood at 10.81 cents—with 22.7% more capacity.
Other revenue branches, such as per passenger flight segment and fare revenue, increased by 22.5% and 22.1%, respectively, when compared to 2019 levels from the same quarter.
Along with the benefits from revenue management tactics, strong take rates for ancillaries propelled non-ticket revenue per segment to US$4.24—an increase from the third quarter of 2022.
Operating expenses for the quarter were recorded at US$1.7m, representing a 100.8% increase when compared to total expenses in 2019 for the same quarter. Following the current industry trend, aircraft fuel was the airline’s highest expense, standing at $494,255, with special credits and wages following behind at US$348,246 and US$324,744, respectively.
The carrier’s total operating expense was better than expected after comparing it to the mid-December forecast. Landing fees and airport rents were lower than in previous periods, resulting in better cost performance for the quarter.
Operations
NK’s Chief Executive, Ted Christie, said, “Leisure demand has remained strong, and our team is doing a great job maximizing revenue production.” Christie further added that ” In the fourth quarter of 2022, despite the significant number of weather-related flight cancellations during the peak holiday period, our team delivered better-than-expected unit revenue performance.”
The LLC’s DOT on-time performance was 73% for the quarter as the airline struggled to arrive at terminal gates within 15 minutes of schedule. The company’s completion factor, on the other hand, stood at 97% with a load factor of 81%.
Aircraft utilization during the quarter was 10.8 hours a day, similar to 2021’s level but less than the 11.7 hours recorded in 2019 in the same quarter. The airline explained that constraints on flights in and out of Florida and “staffing challenges” remain an issue and therefore have impacted the aircraft utilization issue. The carrier expects, however, that the full-year capacity for 2023 will be up 19% to 22% in comparison to the previous year.
The current provisional acquisition of the airline by competitor JetBlue is awaiting federal regulatory approval and in a statement, on February 6, 2023, the airline cited that ” Spirit and JetBlue expect to conclude the regulatory process and close the transaction no later than the first half of 2024,”
Fleet
NK’s chief financial officer Scott Haralson said, ” Despite some unexpected setbacks with geared turbofan engine availability issues, a continued stressed industry infrastructure, and other issues, we have been steadily building back to full fleet utilization and are on track to be close to full fleet utilization by the end of 2023,”
Haraldson added, “These issues, together with Airbus aircraft delivery delays, have led us to be more conservative with our capacity planning assumptions for 2023.”
Spirit acquired 10 new A320neo aircraft during the fourth quarter of 2022. For the quarter ending December 31, 2022, Spirit had 194 aircraft in its fleet, representing a 33.8 percent increase since the end of the fourth quarter in 2019.
The airline recently signed an agreement to sell 29 Airbus A319ceos to Gryphon Trading Company, valued at US$152m to US$201m depending on price adjustments in the contract. The delivery process will begin in the first quarter of 2023 and continue through the end of the third quarter of 2024.
“I want to thank the entire Spirit Team for their contributions in overcoming the many challenges we faced during 2022. Thanks to their dedication and relentless pursuit to implement more efficient and effective strategies, we made excellent progress on the steps necessary to return Spirit to sustained profitability,” said Ted Christie.
Feature image: N903NK, Spirit Airlines Airbus A320neo @KSLC. Photo: Michael Rodeback/Airways
