US carrier Spirit Airlines has announced its first quarter 2023 financial results, showing a net loss of almost USD 104 million.
Reducing losses
Spirit Airlines, the ultra-low-cost carrier based in Florida, announced its first quarter financial results, showing a net loss of USD 103.0 million. Adjusted net losses, excluding special items, was almost USD 90 million.
In 2022, the airline reported a net loss of USD 195 million, showing a marked improved in 2023. The airline revealed a pre-tax loss of USD 141.6 million in 1Q23.
However, the company had USD 1.3 billion in operating revenues for the period. This result was an almost 40% increase on the same quarter in 2022.
Total revenue per available seat miles (“TRASM”) had increased by almost 24% compared to 1Q22. Capacity had also increased by 12.7% compared to the same period of the previous year.
The performance on TRASM was in-line with the company expectations published in March 2023. For the quarter, the load factor was over 80%.
Total revenue per passenger flight segment increased 12% compared to Q1 in 2022. Fare revenue per segment also increased 16.8% and non-ticket revenue per segment increased by 8.3% compared to the same quarter in 2022.
“For the first quarter 2023, our adjusted operating margin came in better than expected, helped by lower fuel and a strong revenue per available seat mile (“TRASM”) performance,” said Ted Christie, President and Chief Executive Officer of Spirit.
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The airline experienced some adverse weather in some of its destinations in the quarter. Its reported on-time performance was almost 70% and a completion factor of 98.3%. The results show that when weather events and other uncontrollable delays are removed, the company completion factor was 99.6%.
“As a result of this weather event, Spirit canceled nearly 600 flights and diverted many others, disrupting travel plans for a substantial number of our Guests. Despite the significant and out-sized disruption to our network, our team was primed and ready to go on Friday morning.”
“This quick recovery is a testament to the diligent efforts of our entire team as well as the innovative changes we have put in place to help accelerate recovery operations,” Christie added.
The company’s operating expenses for the period increased by 24% to USD 1,462.2 million compared to the previous year’s Q1. The announcement cited the increase being due to the increase in flying programme, additional aircraft entering the company, higher fuel prices and inflationary wage pressures.
Outlook for 2023
Its announced outlook for Q2 is positive. It suggested demand continues to be strong with the industry capacity remaining constrained which could result in positive unit revenue.
The company’s aircraft utilization in the period was 11.2 hours, compared to 10.8 hours in Q1 2022 – an increase of 3.7%. It was also reported as a continued improvement, in sequence, from Q4 2022 – an increase also of 3.7%.
“For the second quarter 2023, we estimate our operating margin will range between 4.5 to 6.5 percent. In this demand environment, and with a declining fuel price in the second quarter of this year, the business at full utilization should be producing double digit operating margins.”
“However, we continue to be hampered by NEO engine availability and pilot attrition issues that are preventing us from ramping up aircraft utilization,” said Scott Haralson, Spirit’s Chief Financial Officer.
Spirit Airlines are expecting the issues with the NEO engine to improve through the year but could affect utilisation. Five new Airbus A320neo aircraft entered the company in the period. It also retired four A319ceo aircraft. At the end of Q1, the airline had 195 aircraft in the fleet, increasing by almost 11% since 31 March 2022.
Other potential issues to the company’s performance in 2023 are the continued volatility of pilot attrition levels and air traffic control capacity.
The airline holds concerns on the staffing in Air Traffic Control which is resulting in capacity constraints. It suggests its full-year result could be towards the “lower end” of its previous forecast of 18% to 20%.
The airline was recognised as the ‘Value Airline of the Year’ by Aviation Week Network’s Air Transport World (ATW). The airline was named ‘Most Affordable Airline’ by WalletHub and came second overall in its 2023 Best Airline Awards.
Christie said he was pleased to see the efforts of the Spirit team being recognised.
