Executive Summary

Spirit deferred its Q3 2024 10-Q filing and provided preliminary results indicating operating and adjusted operating margins approximately 12 percentage points lower year over year due to lower revenues and higher expenses; management disclosed ongoing noteholder negotiations and warned a statutory restructuring could cancel existing equity if consummated .
Q3 adjusted operating margin improved about 300 bps versus prior guidance, driven by stronger-than-expected revenue as early results from the transformation plan exceeded initial expectations .
Liquidity actions included a binding term sheet to sell 23 A320ceo/A321ceo aircraft (~$519M gross) with net proceeds plus debt discharge expected to add ~$225M liquidity through YE2025; year-end 2024 liquidity still guided to >$1.0B .
Capacity was down 1.2% YoY in Q3, with Q4 guided down ~20% YoY and 2025 down mid-teens; management also identified ~$80M annualized cost reductions starting early 2025 alongside workforce reductions .
Key catalyst: equity impairment risk and deleveraging path, offset by transformation revenue uplift and liquidity raises; narrative hinges on execution of product pivot and final debt resolution .

What Went Well and What Went Wrong

What Went Well

Adjusted operating margin tracked ~300 bps better than prior Q3 guidance on stronger revenue, with management citing early positive impact from the transformation plan .
Liquidity bolstered by aircraft sale plan: ~$519M gross proceeds with ~$225M net liquidity improvement through YE2025 after debt discharge, plus expectation to end 2024 with >$1.0B liquidity .
Clear cost actions: ~$80M annualized reductions beginning early 2025 and tactical capacity trims aligning supply/demand, including workforce reductions commensurate with flight volume .
Quote: “early results from its transformation plan [are] exceeding initial expectations” .

What Went Wrong

Preliminary Q3 margins down ~12 percentage points YoY on lower total revenues (–$61M YoY) and higher operating expenses (+$46M; adjusted +$52M), reflecting yield pressure and ancillary policy changes (no change/cancel fees) .
Ongoing debt negotiations diverted management bandwidth; company filed Form 12b-25 and disclosed potential statutory restructuring that could cancel existing equity if implemented .
Capacity constraints and AOG headwinds persist; Q4 capacity down ~20% YoY and 2025 capacity down mid-teens (after aircraft sale/removals, A319 retirement, P&W GTF removals) .

Financial Results

Metric	Q1 2024	Q2 2024	Q3 2024 (Prelim/Guidance)
Total Operating Revenues ($USD Millions)	$1,265.5	$1,280.9	$1,155–$1,175
Operating Margin (%)	(16.4)%	(11.9)%	~ (24.8)%
Adjusted Operating Margin (%)	(13.9)%	(13.0)%	~ (24.5)%
Net Income (Loss) ($USD Millions)	$(142.6)	$(192.9)	ND (10-Q delayed; prelim only)
Diluted EPS ($USD)	$(1.30)	$(1.76)	ND (10-Q delayed; prelim only)

YoY deltas cited by management (Q3 2024 vs Q3 2023):

Revenue YoY change ($USD Millions): –$61
Operating expenses YoY change ($USD Millions): +$46; Adjusted operating expenses YoY change: +$52

KPIs

KPI	Q1 2024	Q2 2024	Q3 2024 (Prelim/Guidance)
TRASM (cents)	9.38	9.05	YoY change: –6.4% to –8.0% (management estimate)
Load Factor (%)	80.7	83.2	ND (not disclosed in prelim)
Capacity (ASMs YoY)	+2.1%	+1.7%	–1.2%
Fare revenue per passenger segment ($)	$48.08	$45.02	ND (not disclosed in prelim)
Non-ticket revenue per segment ($)	$68.95	$63.44	ND (policy change headwind persists)

Segment breakdown: Spirit operates as a single carrier; financial reporting is consolidated without segment revenue splits in these releases .

Guidance Changes

Metric	Period	Previous Guidance	Current Guidance	Change
Adjusted Operating Margin (%)	Q3 2024	(29)% to (26)%	~ (24.5)%	Raised (better)
Operating Margin (%)	Q3 2024	N/A	~ (24.8)%	New disclosure
Total Revenues ($USD Millions)	Q3 2024	$1,155 to $1,175	$1,155 to $1,175	Maintained
Capacity YoY (%)	Q3 2024	(0.3)%	(1.2)%	Lowered
Capacity YoY (%)	Q4 2024	N/A	~ (20)%	New
Capacity YoY (%)	FY 2025	Down high-single digits (Q2 call outlook)	Down mid-teens (updated)	Lowered
Liquidity (Unrestricted cash, ST investments, RCF + initiatives)	YE 2024	>$1.0B	>$1.0B (reaffirmed)	Maintained
AOG credits (Liquidity benefit)	FY 2024	~$150–$200M	~$150–$200M	Maintained
Aircraft sale proceeds (Liquidity benefit net of debt discharge)	Through YE 2025	N/A	~$225M	New

Earnings Call Themes & Trends

Topic	Previous Mentions (Q-2 and Q-1)	Current Period (Q3 prelim)	Trend
Product transformation (Go Big/Go Comfy/Go Savvy)	Rollout begins mid-August; expected 15% unit revenue uplift over time; merchandising via third parties; blocking 6 seats per departure adds modest CASM ex-fuel pressure	Early results exceeded expectations; revenue stronger than prior guidance	Improving trajectory
Supply/demand and pricing environment	Elevated domestic capacity; off-peak shoulder weakness; Latin America/Caribbean oversupplied; capacity trims, day-of-week optimization	Q3 capacity –1.2% YoY; Q4 –20% YoY; 2025 down mid-teens	Aggressive capacity discipline
P&W GTF AOG impact and credits	AOG credits $150–$200M liquidity FY24; Q2 earned $37.2M, recognized $7.1M; margins penalized by credits accounting and AOG inefficiencies	Ongoing AOG unavailability reflected in lower capacity guidance; credits framing unchanged	Persistent headwind
Liquidity actions	Direct lease/PDP transaction raised ~$186M; revolver maturity extended to 2026; YE 2024 liquidity >$1.0B target	Aircraft sale plan (~$519M gross) with ~$225M net liquidity through YE2025; YE 2024 liquidity >$1.0B reaffirmed	Strengthening
Debt resolution	Active discussions with noteholders (2025/2026 maturities); details withheld	Progressing; management time diverted; potential statutory restructuring could cancel equity	High-stakes; binary outcomes

Management Commentary

“The Company estimates its third quarter 2024 adjusted operating margin will come in approximately three hundred basis points better than the mid-point of its previous guidance range, primarily due to stronger-than-expected revenue with early results from its transformation plan exceeding initial expectations.”
“If a definitive agreement…is reached…it…is expected to lead to the cancellation of the Company's existing equity.”
On transformation economics: “We…anticipate our CASM ex will settle in the $0.08 range…we do expect that revenue benefit to be 15-plus percent.”
On P&W AOG credits: “We estimate the full year 2024 benefit to our liquidity will be approximately $150 million to $200 million.”
On capacity discipline: “The Company’s third quarter 2024 capacity was down 1.2 percent year over year, and…fourth quarter 2024 capacity will be down approximately 20 percent year over year.”

Q&A Highlights

Transformation monetization and distribution: management plans broader merchandising, including third-party channels, to widen the funnel and capture premium leisure yields; near-term ancillary headwinds (e.g., fee elimination) offset over time .
Cost and capacity implications of product changes: blocked middle seat adds modest CASM ex-fuel pressure; medium-term ex-fuel CASM target around $0.08 as efficiencies normalize .
Liquidity and financing: direct lease/PDP transaction (~$186M) and aircraft sale/lease initiatives bolster liquidity; revolver maturity extended contingent on notes extension/refinancing .
AOG outlook: turn times >400 days constrain spares/MRO throughput; AOGs escalating through 2025, pressuring capacity and margins .
Margin bridge: near-term headwinds (~10–11 margin points) from Pratt inefficiencies, fleet retirements, IT outage, rollout costs, ancillary changes; longer-term ~10+ margin points recapture anticipated from transformation and market normalization .

Estimates Context

S&P Global consensus for Q3 2024 EPS and revenue was unavailable in our data pull due to a missing CIQ mapping for SAVE; we attempted retrieval via both relative and absolute period methods and failed (SpgiEstimatesError) [GetEstimates attempt logs].
As a proxy anchor, Spirit’s investor updates guided Q3 revenue to $1,155–$1,175M and improved adjusted operating margin relative to prior guidance, enabling qualitative comparison against company guidance rather than Wall Street consensus .

Key Takeaways for Investors

Equity risk is now explicit: management disclosed a potential statutory restructuring that could cancel existing equity; position sizing should reflect binary outcomes tied to noteholder negotiations .
Near-term fundamentals are weak but improving vs guidance: Q3 adjusted operating margin improved ~300 bps vs prior guide; revenue uplift tied to product transformation is the primary upside narrative .
Liquidity runway is enhanced: aircraft sale/lease actions and financing transactions support YE 2024 >$1.0B liquidity; watch execution milestones and covenant triggers .
Capacity discipline is aggressive: Q4 down ~20% YoY and 2025 down mid-teens; coupled with ~$80M cost reductions and A319 retirement, this should stabilize cash burn but suppress near-term revenue scale .
P&W AOG and ancillary policy changes remain headwinds: margins penalized by credits accounting and operational inefficiencies; elimination of change/cancel fees reduces non-ticket revenue near-term .
Medium-term thesis hinges on transformation efficacy: management targets ~15% unit revenue uplift and ~$0.08 CASM ex-fuel; monitor uptake of Go Big/Go Comfy bundles and third-party distribution traction .
Trading implications: expect headline/event risk around debt deals and restructuring disclosures; near-term rallies likely tied to liquidity events or better-than-feared margin prints vs guidance.

Supporting Documents Reviewed

Form 8-K (Nov 13, 2024): Press release and Item 2.02 with preliminary Q3 disclosures and restructuring risk .
Form 8-K (Oct 24, 2024): Aircraft sale term sheet and Q3 estimates with margin reconciliation .
Q2 2024 8-K and investor update: detailed financials, KPIs, and Q3 guidance ranges .
Q1 2024 8-K and investor update: detailed financials/KPIs and Q2 guidance .
Q2 2024 earnings call transcript: strategic and financial commentary –.
Q1 2024 earnings call transcript: strategic and financial commentary –.

Note: Wall Street consensus via S&P Global was unavailable due to a CIQ mapping error for SAVE during retrieval attempts.

Spirit Airlines, Inc. (SAVE)·Q3 2024 Earnings Summary