Spirit Airlines has reported total operating revenues for the third quarter 2021 of $922.6 million, a decrease of 7.0 percent versus third quarter 2019. Despite the operational challenges in the quarter and the continued negative impact on travel demand due to COVID-19, Spirit Airlines reports that it experienced quarter-over-quarter improvements in total operating revenues and operating yields, increasing 7.4 percent and 8.0 percent, respectively from second quarter 2021.
"Higher fuel prices, continued travel restrictions, and near-term staffing issues have all played their part in delaying our return to sustained profitability, but they have not changed the long-term outlook for Spirit. Looking ahead, we continue to position Spirit for the post-pandemic environment – an environment in which Spirit will remain the low-cost leader among U.S. operators, with ample opportunities for continued growth and among the best margins in the business," said President and Chief Executive Officer Ted Christie.
Spirit Airlines experienced significant operating challenges during the quarter driven in part by adverse weather conditions which, when combined with airport staffing shortages and crew dislocations, led to an unusually large number of flight delays and cancellations. Following these disruptions, and in light of continued airport staffing issues, Spirit elected to make tactical schedule reductions to help support its operational reliability, which resulted in lower-than-expected capacity growth for the quarter. Load factor for the third quarter 2021 was 77.6 percent on a 3.5 percent capacity increase versus third quarter 2019. Spirit's DOT on-time performance2 was 68.3 percent and its Completion Factor2 was 93.5 percent.
For the third quarter 2021, total GAAP operating expenses, including $78.9 million of special items primarily related to the grant component of the funding received through the payroll support program, increased 4.8 percent compared to the third quarter 2019 to $908.6 million. Adjusted operating expenses for the third quarter 2021 increased 15.1 percent compared to the third quarter 2019 to $987.5 million. Compared to the third quarter 2019, these changes were primarily driven by an increase in salaries, wages and benefits and other operating expenses driven by increased flight volume and additional costs incurred as a result of the irregular operations during the quarter. Increased aircraft rent expense as a result of a greater number of aircraft financed under operating lease arrangements; and higher depreciation and amortization expense due to the depreciation of additional aircraft and the amortization of heavy maintenance events were also to blame.
"The resiliency and strength of our business model has allowed us to deliver financial performance that is among the best throughout the pandemic and gives us confidence in our ability to navigate the challenges ahead in what has proven to be a prolonged recovery period. Considering labour resource uncertainties, we are slowing the pace at which we are going to push the airline back to full fleet utilization and expect to produce 53 to 55 billion available seat miles in 2022," said Chief Financial Officer Scott Haralson. "We are still targeting sub-6 cent adjusted cost per available seat mile ex-fuel ("Adjusted CASM ex-fuel") once we get to full utilization. The timeline to achieve that target has stretched out to late 2022/early 2023 due to our slower pace of growth, and increased inflationary pressures – particularly labour and airport costs – will push the target closer to six than we originally expected. We are confident that we will still be among the best margin producers in the business, while remaining the low-cost leader, when the recovery has fully taken hold."
Spirit took delivery of four new A320neo aircraft during the third quarter 2021, three of which were financed through direct operating leases and one under a sale leaseback transaction. The Company ended the quarter with 168 aircraft in its fleet.
Spirit ended third quarter 2021 with unrestricted cash, cash equivalents, short-term investment securities and liquidity available under the company's revolving credit facility of $1.9 billion.
Total capital expenditures for the nine months ended September 30, 2021 were approximately $249 million, primarily related to pre-delivery deposits associated with future aircraft deliveries and the purchase of four aircraft and two engines off lease.