catiii
Topic Author
Posts: 3120
Joined: Mon Mar 31, 2008 1:18 am

Spirit taking a beating today

Fri Jul 26, 2019 3:45 am

Hard to be a ULCC when you're buying block and schedule buffer to be a "ontime machine." CASM ex projected to be up 8% for Q3, and the street did not like it. The stock closed down at roughly 25%.

Good summary here from Skift: https://skift.com/2019/07/24/spirit-air ... t-corners/

They've got to figure out what they want to be.
 
timpdx
Posts: 667
Joined: Fri Jul 31, 2009 1:54 am

Re: Spirit taking a beating today

Fri Jul 26, 2019 4:01 am

Never again for me, 4 segments delayed out of 4 flights. First and last time. I ended up buying a walk up fare on AS when my flight home was delayed 4:50. And wx was fine as I traced the flight back. Shrug. I went in with an open mind, wanted to like, but, um, no.

Surprisingly AS BOS-LAX walk up on the 4th weekend was only $300 one way. 90 minutes later I was at the airport boarding. NK means Never Knowing (when you are going). Wanted to like, bought big front seat, nice value, but if you're hours late on every segment with no alternative, then, no.
Flown 2018: LAX, ARN, DXB, ALA, TAS, UCG, ASB, MYP, GYD, TBS, KUT, BER, TLS, SVO, CCF, DUB, LGW, MEX, BUR, PDX, ORD, SLC, SNA
Upcoming 2018: STL, MIA, BZE, IAH, BHM, LHR, DFW, PHX
 
raddek
Posts: 325
Joined: Wed Feb 06, 2013 7:09 pm

Re: Spirit taking a beating today

Fri Jul 26, 2019 8:01 am

The new CEO should have known better. They planned poorly for the summer schedule. They increased the hours aircraft were flying, without having spares for bad weather. It was going to fail from the beginning...
 
tphuang
Posts: 3108
Joined: Tue Mar 14, 2017 2:04 pm

Re: Spirit taking a beating today

Fri Jul 26, 2019 1:06 pm

This is typically what happens when an airline has a few good quarters. It gets too ambitious, tries to take on too many fights and the numbers start to look bad. And of course, they have even more ambitious expansion plans coming the next 2 years. I wonder how that's going to work out. Their pre-tax margin 2018 Q3 is 14.2% and 14.7% for this quarter. Both are really good. Now they are anticipating around flat RASM and 8% growth in CASM-ex. A lot will depend on the fuel prices, but hard to see how that won't lead to sub 10% margins. Which will put them firmly in the bottom tier amongst domestic airlines.
 
SFOtoORD
Posts: 1092
Joined: Tue Jul 03, 2007 2:26 am

Re: Spirit taking a beating today

Fri Jul 26, 2019 1:23 pm

timpdx wrote:
Surprisingly AS BOS-LAX walk up on the 4th weekend was only $300 one way.


Not a good sign for AS on that route. I remember them being by far in last place on the PRASM for that route.
 
msycajun
Posts: 1052
Joined: Thu Jun 16, 2016 4:13 am

Re: Spirit taking a beating today

Fri Jul 26, 2019 5:36 pm

I still think the margins are impressive given the number of new cities being added. What's more interesting to me though is that they seem to have found 4 more 320neos for 2020 and 9 more for 2021 than they had originally planned for. Surprising given how tight the market is right now. Will be fun to see where they grow in the next few years and how they plan to continue past 2021 without a major order on the books yet.
 
wingman
Posts: 3738
Joined: Thu May 27, 1999 4:25 am

Re: Spirit taking a beating today

Fri Jul 26, 2019 5:41 pm

msycajun wrote:
I still think the margins are impressive given the number of new cities being added. What's more interesting to me though is that they seem to have found 4 more 320neos for 2020 and 9 more for 2021 than they had originally planned for. Surprising given how tight the market is right now. Will be fun to see where they grow in the next few years and how they plan to continue past 2021 without a major order on the books yet.


Their owners placed the largest firm order for commercial aircraft in history just last year, 400 firm 320 NEOs. It was Leahy's final rabbit and his biggest and best ever right before sailing off into the sunset. So you have to figure Frontier has at least 100 NEOs coming on line in the next 5 years. That ought to solve these delays!
 
FLALEFTY
Posts: 405
Joined: Tue Jan 31, 2006 11:33 am

Re: Spirit taking a beating today

Fri Jul 26, 2019 6:41 pm

NK has done a fine job of establishing themselves as competitive airline in recent years. But NK is advancing to a new stage where their "white shoes market" strategies are maxing out and their passengers' expectations are rising.

NK's next challenge is to improve dispatch reliability, but this will take people, time and lots of money. Sadly, Wall Street has no patience with building and reinforcing a successful business - they just want to take their money and run. But as the fictional "Blue Horseshoe" might say, "Blue Horseshoe says NK is a "Buy".

NK will weather this storm and come out stronger in the long run.
 
WayexTDI
Posts: 1168
Joined: Fri Sep 21, 2018 4:38 pm

Re: Spirit taking a beating today

Fri Jul 26, 2019 6:51 pm

wingman wrote:
msycajun wrote:
I still think the margins are impressive given the number of new cities being added. What's more interesting to me though is that they seem to have found 4 more 320neos for 2020 and 9 more for 2021 than they had originally planned for. Surprising given how tight the market is right now. Will be fun to see where they grow in the next few years and how they plan to continue past 2021 without a major order on the books yet.


Their owners placed the largest firm order for commercial aircraft in history just last year, 400 firm 320 NEOs. It was Leahy's final rabbit and his biggest and best ever right before sailing off into the sunset. So you have to figure Frontier has at least 100 NEOs coming on line in the next 5 years. That ought to solve these delays!

Are you mixing Frontier Airlines and Spirit Airlines?
This thread is about Spirit, which has no parent Company; Frontier, on the other hand, has Indigo Partners as parent Company, and Indigo Partners ordered 400+ A320neo Family at the November 2017 Dubai Air Show. Spirit "only" has 55 A320neo's on order (12 delivered, 43 to go).
 
tphuang
Posts: 3108
Joined: Tue Mar 14, 2017 2:04 pm

Re: Spirit taking a beating today

Fri Jul 26, 2019 7:20 pm

msycajun wrote:
I still think the margins are impressive given the number of new cities being added. What's more interesting to me though is that they seem to have found 4 more 320neos for 2020 and 9 more for 2021 than they had originally planned for. Surprising given how tight the market is right now. Will be fun to see where they grow in the next few years and how they plan to continue past 2021 without a major order on the books yet.

well, the problem is not this quarter, but the next 2 quarters. It looks like their margin will be pretty subpar given the guidance.

heir 2018 Q2 results weren't fantastic, but you can see they were really turning things around. And then they went on this huge growth spurt and added a bunch of new cities like CLT/RDU with BNA to come. When you go into places where legacies have spent a lot of money on, you are going to bleed. They've basically avoided AA/UA fortress hubs for several quarters and they prospered. The larger they get, the more push back they will get. WN will not sit by as NK expands at LAS, MSY and MCO.
 
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lightsaber
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Joined: Wed Jan 19, 2005 10:55 pm

Re: Spirit taking a beating today

Fri Jul 26, 2019 9:18 pm

msycajun wrote:
I still think the margins are impressive given the number of new cities being added. What's more interesting to me though is that they seem to have found 4 more 320neos for 2020 and 9 more for 2021 than they had originally planned for. Surprising given how tight the market is right now. Will be fun to see where they grow in the next few years and how they plan to continue past 2021 without a major order on the books yet.

Accelerating growth!?! If some aircraft are used as spares, that will help the delays.

NK has horrible customer satisfaction, yet good profits. They need to work on ontime performance as most will put up with anything except schedule uncertainty. DL has learned that is where the money is.

I wish them luck, I do not seem to be in their market.

Lightsaber
IM messages to mods on warnings and bans will be ignored and nasty ones will result in a ban.
 
767driver
Posts: 61
Joined: Fri Feb 22, 2008 3:42 pm

Re: Spirit taking a beating today

Fri Jul 26, 2019 9:25 pm

lightsaber wrote:
msycajun wrote:
I still think the margins are impressive given the number of new cities being added. What's more interesting to me though is that they seem to have found 4 more 320neos for 2020 and 9 more for 2021 than they had originally planned for. Surprising given how tight the market is right now. Will be fun to see where they grow in the next few years and how they plan to continue past 2021 without a major order on the books yet.

Accelerating growth!?! If some aircraft are used as spares, that will help the delays.

NK has horrible customer satisfaction, yet good profits. They need to work on ontime performance as most will put up with anything except schedule uncertainty. DL has learned that is where the money is.

I wish them luck, I do not seem to be in their market.

Lightsaber



On time performance isn’t the issue. NK has either been leading the pack or at worst middle of the pack with on time this year. Management was very clear they haven’t been happy with their IRROPs recovery and/or completion factor, and that’s what’s driving the internal cost pressure
 
767driver
Posts: 61
Joined: Fri Feb 22, 2008 3:42 pm

Re: Spirit taking a beating today

Fri Jul 26, 2019 9:27 pm

tphuang wrote:
This is typically what happens when an airline has a few good quarters. It gets too ambitious, tries to take on too many fights and the numbers start to look bad. And of course, they have even more ambitious expansion plans coming the next 2 years. I wonder how that's going to work out. Their pre-tax margin 2018 Q3 is 14.2% and 14.7% for this quarter. Both are really good. Now they are anticipating around flat RASM and 8% growth in CASM-ex. A lot will depend on the fuel prices, but hard to see how that won't lead to sub 10% margins. Which will put them firmly in the bottom tier amongst domestic airlines.


Someone, I believe it was Matt Klein, said on the call they still plan on delivering mid teens margins for the full year so we’ll see
 
wingman
Posts: 3738
Joined: Thu May 27, 1999 4:25 am

Re: Spirit taking a beating today

Fri Jul 26, 2019 9:49 pm

WayexTDI wrote:
Are you mixing Frontier Airlines and Spirit Airlines?
This thread is about Spirit, which has no parent Company; Frontier, on the other hand, has Indigo Partners as parent Company, and Indigo Partners ordered 400+ A320neo Family at the November 2017 Dubai Air Show. Spirit "only" has 55 A320neo's on order (12 delivered, 43 to go).


My mistake, thanks for correcting that.
 
Mboyle1988
Posts: 56
Joined: Sun Feb 25, 2018 4:38 am

Re: Spirit taking a beating today

Fri Jul 26, 2019 9:55 pm

raddek wrote:
The new CEO should have known better. They planned poorly for the summer schedule. They increased the hours aircraft were flying, without having spares for bad weather. It was going to fail from the beginning...


Trying to copy B6 I see.
 
Etheereal
Posts: 333
Joined: Tue Nov 29, 2016 11:44 am

Re: Spirit taking a beating today

Fri Jul 26, 2019 10:07 pm

Easy, they should just buy more NEOs since they're so good, and voilá: Enough planes for the expansion :stirthepot:
JetBuddy wrote:
"737 slides off the runway" is the new "Florida man"..

:lol:
 
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tb727
Posts: 2145
Joined: Thu Jun 30, 2005 1:40 pm

Re: Spirit taking a beating today

Sat Jul 27, 2019 1:20 am

raddek wrote:
The new CEO should have known better. They planned poorly for the summer schedule. They increased the hours aircraft were flying, without having spares for bad weather. It was going to fail from the beginning...


Less than impressed with this guy. Playing a numbers game(and a guitar :roll: ) as things were turning around. I know it's bound to happen once in a while but they have been missing the boat IMHO on an airplane order, it's going to be years go get slots at this rate. Not a word on anyone taking responsibility over these IROPS until this, which still doesn't satisfy anything. These guys get paid with stock options and performance bonuses, they took a double beating on poor planning. MCO has been an absolute mess after being grown so fast with the weather just walloping the ops there the last 2 months. It'll turn around and these mistakes will help make better choices in the future I hope.
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