Maybe
the analysts were wrong.
Or
at least premature.
Some
Wall Street analysts who cover the airline industry predicted that, in the wake
of a judge blocking a proposed merger between JetBlue
Airways and Spirit Airlines, Spirit would go bankrupt from being unable to
cover its debt.
But
Spirit Airlines said its losses last quarter were lower than expected and
should have a positive cash flow in the second quarter.
"As
we enter 2024, we are beginning to see benefits from the tactical and strategic
changes we implemented in 2023," Spirit President and Chief Executive
Officer Ted Christie said."In addition, current booking trends further our
confidence that the domestic environment is beginning to rebound."
"Together
with the changes we have made, we estimate this will result in an unprecedented
sequential improvement in total revenue per available seat mile (TRASM) from
the fourth quarter of 2023 to the first quarter of 2024, which supports our
view of a domestic recovery in 2024," Christie continued. "The Spirit
team is 100% clear and focused on the adjustments we are currently deploying
and will continue to make throughout 2024 to drive us back to cash flow
generation and profitability."
Although
the ruling by the judge to block
the merger with JetBlue was a disappointment, a strong holiday season at
the end of 2023 will bolster the airline.
“We
estimate this strong operational performance contributed $10 million of
incremental revenue, allowing us to exceed our mid-December revenue guidance
for the fourth quarter and deliver cost performance in excess of our
expectations," Christie added. "We have continued this operational
excellence and finished January 2024 as the No. 2 airline in reliability."
"In
the fourth quarter, we saw cost benefits from our high level of on-time
performance and completion factor for the quarter, particularly in the peak
Thanksgiving and Christmas holiday periods," Spirit Chief Financial
Officer Scott Haralso said. "We also saw fuel efficiency benefits with the
increase in the number of Neo aircraft in our fleet, particularly the eight
A321neos added in 2023."
"We
expect these benefits, along with improved utilization of the aircraft
available for operation and the right-sizing of our labor costs, to be the
platform for our ongoing unit cost repair," Haralson continued.
This
could be welcome news for those looking to find competitive fares from
ultra-low-cost carriers like Spirit Airlines, especially the Department
of Justice, which filed the lawsuit to block the proposed merger.
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