Spirit Airlines, Inc.

Please stand by. We're about to begin. Good morning, ladies and gentlemen. Welcome to the Spirit Airlines third quarter 2022 earnings conference call. At this time, all participants are in a listen-only mode. And please be advised that this call is being recorded. After the speaker's prepared remarks, there will be a question and answer session. If you would like to ask a question during this time, simply press star 1 on your telephone keypad. And if you would like to withdraw your question, you can press star 1 again. And now this time, I'll turn things over to Deanne Gable, Senior Director, Investor Relations. Please go ahead, ma'am.

Thank you, Bo. And welcome, everyone, to Spirit Airlines' third quarter earnings conference call. This call is being recorded and simultaneously webcast. A replay of this call will be archived on our website for 60 days. Presenting on today's call are Ted Christie, Spirit's Chief Executive Officer, Matt Klein, our Chief Commercial Officer, and Scott Harrelson, our Chief Financial Officer. Also joining us are other members of our senior leadership team. Following our prepared remarks, there will be a question and answer session for analysts. Today's discussion contains forward-looking statements that are based on the company's current expectations and are not a guarantee of future performance. There could be significant risks and uncertainties that cause actual results to differ materially from those reflected by the forward-looking statements, including the risk factors discussed in our reports on file with the SEC. We undertake no duty to update any forward-looking statements. In comparing results today, we will be adjusting all periods to exclude special items. Please refer to our third quarter 2022 earnings release, which is available on our website for the reconciliation of our non-GAAP measures. And with that, I turn the call over to Ted Christie.

Thanks, Deanne. Thanks to everyone for joining us today. And thanks to everyone on the SPIRIT team. The daily demands of operating an airline are complex and often come with unexpected challenges. And I want to thank our team for being committed to bringing their best day in and day out and delivering excellent service to our guests. Before discussing our third quarter results, just a quick update about the merger agreement with JetBlue. On October 19th, our stockholders voted to approve the transaction. This is an important step forward on our path to closing a combination that will create a compelling low fare challenger to the dominant U.S. carriers. The transaction remains subject to regulatory approval. JetBlue is taking the lead on this. We are committed to assisting them in whatever way we can. Turning now to our third quarter results, the business performed well against a set of negative headwinds, including much higher fuel costs, hurricane Ian, and Florida capacity constraints. Strong demand and sound revenue management coupled with excellent operational reliability, which led to good cost execution, helped mitigate the impacts of these headwinds. We achieved a break-even adjusted pre-tax margin and $3.6 million of adjusted net income, or a profit of 3 cents per share. Leisure demand remained strong throughout the entire quarter, leading to total revenue increasing 35.4% compared to the third quarter of 2019 on 13.5% more capacity. Operationally, we are running great. Despite challenging operating conditions during the quarter with hurricanes in Florida and the Caribbean, Spirit achieved the best third quarter DOT on-time performance in our company's history. Our team did a fantastic job planning for and reacting to Hurricane Ian as it developed and changed course, minimizing the impact to our guests and on the operation. The crew scheduling and network changes we made earlier in the year also contributed to these record results. There are still many in our home state of Florida that are dealing with the devastating impacts from Hurricane Ian, and our heartfelt thoughts are with them. While our third quarter 2022 results were in line with our expectations, we continue to face infrastructure constraints that are impeding our return to normalized margins and full utilization. One of the primary limitations is the constraint on flight volume to and from Florida. There has been some improvement since the issue first arose, and we continue to work closely with the FAA on alternative options to increase throughput, but this will likely be a multi-year headwind limiting our network optimization. Our network team has plenty of other growth opportunities, but growing service in our hometown state of Florida is key to our return to normalized operating margins. We are also facing high rates of labor inflation. Increasing productivity will help mitigate this, which is in part tied to the pace at which we can hire and train pilots. Attrition rates remain elevated. which means we've had to build a bigger schoolhouse and increase resources to train the number of pilots needed to support our growth and to cover the higher attrition. Additionally, attracting new pilot talent has been more challenging as regional airlines and major airlines have announced new pay structures. However, in September, we began negotiations to amend the current collective bargaining agreement with ALPA, the union representing our pilots. Both parties are working towards an agreement which may in part address the higher attrition rates. We are very pleased with how smoothly the operation is running and we are encouraged with the strength we are seeing in demand trends as we head into the fourth quarter. And now I'll hand it over to Matt and Scott to share additional details about our third quarter performance as well as some color around our fourth quarter outlook.