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Spirit Airlines Reports Third Quarter 2020 Net Loss of $99.1 Million on 59.5 Percent Revenue Decline

The airline’s third quarter GAAP net loss was reported at ($99.1) million or ($1.07) per fully diluted share, compared to a net income of $83.5 million or $1.22 per share during the third quarter of 2019. Year-over year revenue for the quarter declined 59.5% to $401.9 million.

Spirit Airlines Airbus A319 - Courtesy Spirit Airlines

On Wednesday (October 28, 2020), Spirit Airlines announced a third quarter GAAP net loss of ($99.1) million or ($1.07) per fully diluted share. The carrier’s adjusted (non-GAAP) loss for the quarter was ($276.8) million or ($1.22) per share, while year-over-year revenue declined 59.5 percent to $401.9 million. The company’s Q3 load factor was 68.1 percent on a year-over-year capacity contraction of 33 percent. Third quarter revenue per flight segment declined 21.1 percent compared to the same period last year to $86.94. Spirit expects their fourth quarter capacity to be down approximately 25 percent versus the fourth quarter of 2019 and revenue to decline year-over-year by approximately 43 to 45 percent. In Wednesday’s announcement, Spirit Airlines’ President and Chief Executive Officer, Ted Christie, said,

“Our future is very bright. While the pandemic continues to affect demand for air travel, we do not believe it changes our competitive position. Our excellent operational performance, strong Guest satisfaction metrics, and industry-leading cost structure, position us well to be among the first to reach sustained profitability. I thank the entire Spirit team for how well they have navigated the challenges in this incredibly dynamic time, shoring up our resources, and putting us in a position of strength to fully participate when demand recovers.”

Spirit Airlines Reports Third Quarter 2020 Financial Results - Courtesy Spirit Airlines

Spirit’s third quarter GAAP operating expenses (including $148.3 million of special items) declined year-over-year by 42.2 percent to $501.4 million, while adjusted operating expenses declined 24.3 percent to $649.7 million. For the fourth quarter, Spirit expects total operating expenses (excluding special items) to total between $675-$685 million and a capacity increase of about 10 percent versus Q3. The airline ended the third quarter 2020 with $2.1 billion in cash, cash equivalents, and short-term investments. The company also took delivery of one new debt financed Airbus A320neo during the quarter and ended the period with a fleet of 155 aircraft. Also commenting on Wednesday’s announcement, Spirit Airlines’ Chief Financial Officer, Scott Haralson, added,

"Our team continues to adapt to the fluid environment caused by the challenges of COVID-19. In addition to flexing our network as we see shifts in demand, we are taking proactive measures to manage costs, conserve cash, and enhance our liquidity profile. Our average daily cash burn for the third quarter 2020 was $2.3 million, better than our most recent guidance of approximately $3 million per day, primarily due to better top-line sales and timing of payments. We estimate our average daily cash burn for the fourth quarter 2020 will average about $2 million per day, slightly better than what we experienced for the third quarter 2020. Given that we have fortified our liquidity position making cash burn as a metric less relevant, we now intend to migrate our guidance towards more traditional metrics such as EBITDA and EBITDA margin that better reflect a company’s cash generation capabilities. For the fourth quarter 2020, we estimate our EBITDA margin will range between negative 9 percent to negative 14 percent. We have a solid foundation and, as we move towards recovery, I am confident that the strength of our business model will be a key differentiator of our success.”

Spirit Airlines has focused on reducing costs and bolstering liquidity since the onset of the global COVID-19 pandemic including a private offering of $850 million in 8.00% senior secured notes due in 2025 collateralized by certain Spirit subsidiaries. The company also completed the sale of 9,000,000 common stock shares, raising net proceeds of $156.7 million. Spirit expects to take delivery of 16 aircraft in 2021, ten of which are secured under direct lease arrangements and six that have not yet been financed. The airline expects to utilize sale-leaseback transactions to finance those aircraft. Spirit Airlines expects 2021 CAPEX will consist of $40 million of pre-delivery aircraft deposits and $60-85 million in other aircraft relates expenditures, including one spare engine and other parts.

Miramar, Florida-based low-cost carrier Spirit Airlines typically operates over 650 daily flights to 77 destinations in the US, Latin America and the Caribbean. The airline allows customers to select and pay for only the products and services they want, something they call “À La Smarte.” Spirit also operates one of the youngest and most fuel-efficient fleets in the US which the carrier proudly calls their youthful fleet of aircraft their “Fit Fleet®.” In after-hours trading Wednesday evening, shares in Spirit Airlines, Inc. (NYSE: SAVE) were 1.99% higher at $15.87/share (5:42 PM EDT).

Source: Spirit Airlines


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