Executive Summary

Q2 2024 revenue of $1.281B and adjusted operating margin of -13.0% both missed the company’s May guidance ($1.320–$1.340B revenue, -11% to -9% adjusted margin) as elevated industry capacity and ancillary pricing compression kept yields weak; GAAP diluted EPS was -$1.76 and adjusted diluted EPS was -$1.44 .
Management launched a transformation strategy (Go Big/Go Comfy/Go Savvy/Go) with no change/cancel fees, heavier bag allowance, and premium seating/amenities to widen the funnel and drive unit revenue over time; adoption will take “more than a year” and requires adequate liquidity .
Liquidity ended Q2 at ~$1.1B (cash, ST investments, revolver), supported by ~$186M direct lease/PDP transaction and expected 2024 AOG credits of ~$150–$200M; FY24 liquidity expected to end “over $1.0B” while debt refinancing discussions remain ongoing .
Q3 2024 guidance: revenue $1.155–$1.175B and adjusted operating margin -29% to -26% (or -27.5% to -24.5% including AOG earned vs recognized adjustment), reflecting continued industry oversupply and incremental cost related to product rollout and Go Comfy seat blocking .
Near-term stock narrative catalysts: execution on transformation and merchandising (including third-party distribution), liquidity actions and noteholder negotiations, and clarity on Pratt & Whitney engine remediation/AOG credits .

What Went Well and What Went Wrong

What Went Well

Transformation plan rolled out with premium leisure offerings (Go Big/Go Comfy) and improved airport/boarding experience; four bundled options include no change/cancel fees, aiming to expand consideration and drive higher overall revenue over time .
Operational reliability held up: Q2 system controllable completion factor 99.8% and system completion factor 98.5%; load factor rose 0.3 pts YoY to 83.2% .
Liquidity actions: extended $300M revolver to 9/30/2026 (conditions apply), executed ~$186M direct lease/PDP transaction, recorded $57.1M cash inflow from AOG credits in Q2; year-end liquidity guided “over $1.0B” .

Quote: “We believe the transformation plan we recently announced places us on the path to improved financial performance… we expect to end the year 2024 with over $1.0 billion of liquidity…” — CFO Fred Cromer .

What Went Wrong

Revenue shortfall: total revenue -10.6% YoY; TRASM -12.1% YoY as elevated domestic capacity restrained yields; non-ticket revenue per segment fell 9.6% due to competitive ancillary pricing and elimination of change/cancel fees (headwind expected for remainder of 2024) .
Profitability pressure: operating margin -11.9%; adjusted operating margin -13.0%; GAAP net loss -$192.9M and adjusted net loss -$157.9M; interest expense nearly doubled YoY .
AOG accounting continues to mask the full economic impact in P&L: earned $37.2M in Q2 AOG credits, but recognized only $7.1M in the income statement; margin would have been -10.7% after adjusting for earned vs recognized credits .

Financial Results

Metric	Q4 2023	Q1 2024	Q2 2024
Revenue ($USD Millions)	$1,321.8	$1,265.5	$1,280.9
Operating Margin (%)	(16.3)%	(16.4)%	(11.9)%
Net Income ($USD Millions)	$(183.7)	$(142.6)	$(192.9)
Diluted EPS ($USD)	$(1.68)	$(1.30)	$(1.76)
Adjusted Operating Margin (%)	(12.4)%	(13.9)%	(13.0)%
Adjusted Diluted EPS ($USD)	$(1.36)	$(1.46)	$(1.44)

Segment revenue breakdown

Metric	Q4 2023	Q1 2024	Q2 2024
Passenger Revenue ($USD Millions)	$1,296.7	$1,239.3	$1,253.8
Other Revenue ($USD Millions)	$25.0	$26.2	$27.1

KPIs and unit metrics

Metric	Q4 2023	Q1 2024	Q2 2024
TRASM (cents)	8.94	9.38	9.05
Average Yield (cents)	11.17	11.63	10.89
Fare Revenue/Segment ($)	48.24	48.08	45.02
Non-ticket Revenue/Segment ($)	66.60	68.95	63.44
Total Revenue/Segment ($)	114.84	117.03	108.46
CASM (cents)	10.40	10.92	10.13
Adjusted CASM ex-fuel (cents)	6.75	7.67	7.36
Load Factor (%)	80.1	80.7	83.2
Aircraft Utilization (hours)	11.2	10.4	10.6
Fuel Price/Gallon ($)	3.18	2.90	2.78

Q2 2024 actual vs company guidance vs estimates

Metric	Company Guidance (May 6)	Actual (Q2 2024)	S&P Global Consensus
Revenue ($USD Millions)	$1,320–$1,340	$1,280.9	N/A (consensus unavailable)
Adjusted Operating Margin (%)	(11)% to (9)%	(13.0)%	N/A (consensus unavailable)

Guidance Changes

Metric	Period	Previous Guidance	Current Guidance	Change
Total Revenue ($USD Millions)	Q2 2024	$1,320–$1,340	$1,280.9 (actual)	Lower vs guide
Adjusted Operating Margin (%)	Q2 2024	(11)% to (9)%	(13.0)% (actual)	Lower vs guide
Total Revenue ($USD Millions)	Q3 2024	N/A	$1,155–$1,175	New
Adjusted Operating Margin (%)	Q3 2024	N/A	(29.0)% to (26.0)%	New
Adj. Operating Margin (AOG-adjusted) (%)	Q3 2024	N/A	(27.5)% to (24.5)%	New
Fuel Cost/Gallon ($)	Q2 → Q3 2024	$2.80 (Q2E)	$2.65 (Q3E)	Lower
Total Other (Income) Expense ($MM)	Q2 → Q3 2024	$35.0 (Q2E)	$40.6 (Q3E)	Higher
ASMs vs 2023 (%)	FY 2024	Flat to up low-single digits	Flat to down low-single digits	Lowered
Capital Expenditures ($MM)	FY 2024	$(30) (net)	$(20) (net)	Higher (less negative)
Pre-delivery Deposits (Refunds), net ($MM)	FY 2024	$(175)	$(175)	Maintained

Earnings Call Themes & Trends

Topic	Previous Mentions (Q4 2023 and Q1 2024)	Current Period (Q2 2024)	Trend
Product transformation / merchandising	Planning stand-alone strategy, testing merchandising shifts; non-ticket trends improved; Analyst Day hinted	Launch of four travel options (Go Big/Comfy/Savvy/Go), no change/cancel fees, distribution expansion into third parties; premium/value focus	Accelerating execution
Supply chain / Pratt & Whitney GTF	AOG expected to average ~25 in 2024 and rise later in year; long wing-to-wing times; negotiation on compensation	Earned $37.2M Q2 AOG credits, recognized $7.1M; liquidity benefit $150–$200M in 2024; AOGs ~20 avg in 2024; 2025 AOGs expected to escalate to ~67 by year-end	Ongoing constraint; mitigation improving liquidity
Macro/leisure capacity oversupply	Domestic TRASM pressure; off-peak weakness; network trimming and day-of-week adjustments	TRASM -12.1% YoY; guidance for Q3 TRASM down 6.4%–8%; continued oversupply, particularly into off-peak; capacity managed via more less-than-daily routes	Persisting headwind
Regional trends (LatAm/Caribbean)	Weakness in Cancun/Caribbean; careful exposure management; exits/suspensions	Mix reduced back to ~15%; capacity heavy region; cautious stance	Rationalizing exposure
Regulatory/legal / DOT rules	Commentary against DOT rule changes; merger blocked; focus on stand-alone plan	Debt maturity discussions ongoing; credit card deposit arrangement clarified; not a CrowdStrike customer; IT outage impact ~ $7.2M	Liquidity/creditor focus
Technology/marketing	Limited distribution of premium seat historically; increasing 3rd-party distribution; hiring Tombras agency	Execution underway; rapid rollout Aug 16/27	Execution phase

Management Commentary

“Elevated domestic industry capacity… made it difficult to increase yields, resulting in disappointing revenue results for the second quarter of 2024.” — CEO Ted Christie .
“Operating margin for the second quarter was negative 13%. Had we been able to recognize all of the AOG credits earned during the quarter, our operating margin would have been negative 10.7%.” — CFO Fred Cromer .
“We will offer 4 travel options that all include the flexibility of no change or cancellation fees… provide guests the opportunity to choose a premium leisure experience… leveraging our low-cost position.” — CEO Ted Christie .
“We are offering more day-of-week markets… suspended 42 routes and introduced 77 new ones [in Q3 vs prior year].” — CCO Matt Klein .
“We expect it will take more than a year before we realize the full financial benefits of our transformation plan…” — CFO Fred Cromer .

Q&A Highlights

Pricing and distribution strategy: Bundled products to be merchandised via third parties, opening new customer segments; systems prepared for rapid rollout .
Capacity/utilization: Off-peak trims driving lower utilization; more pronounced peak vs off-peak scheduling; Go Comfy blocks 6 seats per departure (marginal unit cost impact) .
Liquidity/PDP transaction: ~$186M direct lease/PDP raised; 36 future aircraft to be direct-leased, PDPs refunded; additional structured PDP advances for 52 aircraft .
Pratt & Whitney AOG outlook: Revised parts entering new deliveries; MRO wing-to-wing times >400 days; 2025 AOGs projected to ramp throughout year .
Credit card deposit arrangement: Deposit at parent bank (unrestricted cash); date aligns with bondholder discussions; not a CrowdStrike customer but suffered ~$7.2M Q3 impact via third-party outage .

Estimates Context

S&P Global (Capital IQ) consensus estimates for Q2 2024 revenue, EPS, and EBITDA were unavailable through our tool at the time of retrieval; as such, estimate comparisons are not provided. We anchored performance versus company-issued guidance and actuals from SEC 8-K filings and the earnings call .
Given the magnitude of misses versus company guidance (revenue and adjusted margin), we would expect sell-side models to revise down near-term unit revenue and margin trajectories, with heightened focus on Q3 guide and transformation adoption timing .

Key Takeaways for Investors

Q2 missed company guidance across revenue and adjusted margin, underscoring the impact of leisure capacity oversupply and ancillary pricing pressure; expect continued unit revenue headwinds into Q3 per guide .
Transformation strategy is substantive and could structurally expand revenue via premium leisure products and distribution, but management guides that benefits will phase in over “more than a year”; near-term P&L includes rollout costs and Go Comfy capacity effects .
Liquidity remains a strategic focus: ~$1.1B at Q2, “over $1.0B” expected at FY-end, supported by AOG credits ($150–$200M) and financing actions; watch progress on noteholder negotiations and additional aircraft-related transactions .
Pratt & Whitney AOG dynamics remain the largest operational constraint; margins and CASM ex-fuel are pressured until engine availability normalizes; 2025 AOG projections (up to ~67 by year-end) imply continued capacity management and potential revenue dilution .
Network/route hygiene continues: more less-than-daily routes, off-peak trimming, and reduced LatAm/Caribbean exposure back to ~15%; monitor domestic demand normalization and shoulder-season performance .
Near-term trading lens: risk skewed to downside until evidence of unit revenue traction (third-party merchandising, premium adoption) or industry capacity rationalization emerges; liquidity milestones and debt refinancing updates are potential catalysts .
Medium-term thesis hinges on successful execution of product/brand strategy while preserving low-cost leadership (target CASM ex-fuel ~$0.08 run-rate), enabling margin repair once supply/demand balances improve .

Notes: All figures and statements are sourced from Spirit Airlines’ Q2 2024 Form 8-K (including Exhibits 99.1/99.2/99.3) and the Q2 2024 earnings call transcript, as cited inline. S&P Global consensus estimates were unavailable via our tool at time of analysis.

Spirit Airlines, Inc. (SAVE)·Q2 2024 Earnings Summary