External reports (aggregated public sources), Value Investors Club

Value Investors Club (VIC)

External reports (aggregated public sources)

Value Investors Club

Equity Bottom-Up

<ul>
<li>Invest in Spirit 8% bonds due 9/20/2025</li>
<li>Spirit Airlines has strong cash position and available credit</li>
<li>Bonds are guaranteed by Spirit Airlines and backed by assets such as Airbus A320 airplanes</li>
</ul>
<p><em>This content is sourced through publicly available sources and has been machine generated. Information displayed is for general informational purposes only. This article was originally published 3 months ago on Value Investors Club.</em></p>


Invest in Spirit 8% bonds due 9/20/2025
Spirit Airlines has strong cash position and available credit
Bonds are guaranteed by Spirit Airlines and backed by assets such as Airbus A320 airplanes

This content is sourced through publicly available sources and has been machine generated. Information displayed is for general informational purposes only. This article was originally published 3 months ago on Value Investors Club.

Spirit Airlines (SAV Bonds) - Tuesday, Jan 16, 2024

Founder & Managing Director, AIR Control Tower, AIR Control Tower

Neil Glynn

Founder & Managing Director, AIR Control Tower

AIR Control Tower

AIR Control Tower is an independent research and analysis platform. Its mission is to provide impactful insight and analysis across the global airline industry at a company and market level via detailed financial models to aid decision making for key stake holders at a time when risks have seldom, if ever, been higher and the global sector grapples with the imperative of funding de-carbonisation. Unique analysis forecasting global carrier-level earnings/cash flows, and restructuring/de-leveraging prospects, is designed to dynamically assess the health of the industry, predict surprises and identify potential requirements for third party support.

Insights on the global airline industry

<ul>
<li>1Q24 upgrade from JetBlue increases our confidence that consensus is too low for 2024.</li>
<li>Investor Day on 30 May will provide the next leg of revenue self-help initiatives.</li>
<li>We model a minor net profit of $22m in 2025, versus consensus expectations for further losses, and the next 3 months are crucial for the carrier's long-term prospects.</li>
</ul>


1Q24 upgrade from JetBlue increases our confidence that consensus is too low for 2024.
Investor Day on 30 May will provide the next leg of revenue self-help initiatives.
We model a minor net profit of $22m in 2025, versus consensus expectations for further losses, and the next 3 months are crucial for the carrier's long-term prospects.


JetBlue – Positive 1Q Momentum Inspires Confidence 2024 Can Beat Expectations

<ul>
<li>Spirit Airlines finished 2023 as expected and highlights improving pricing momentum in early 2024 which should drive some margin recovery.</li>
<li>However, we still expect EBITDAR/ASM to finish 2024 down 72% on 2019, with a maximum 50% deficit required to avoid escalating debt. This drives a focus on Chapter 11 risk.</li>
<li>Management is adamant liquidity is sufficient to allow it to recover but significant margin gains, led by pricing expansion despite aggressive growth plans, are required for financial sustainability.</li>
</ul>


Spirit Airlines finished 2023 as expected and highlights improving pricing momentum in early 2024 which should drive some margin recovery.
However, we still expect EBITDAR/ASM to finish 2024 down 72% on 2019, with a maximum 50% deficit required to avoid escalating debt. This drives a focus on Chapter 11 risk.
Management is adamant liquidity is sufficient to allow it to recover but significant margin gains, led by pricing expansion despite aggressive growth plans, are required for financial sustainability.


Spirit Airlines - Summer 2024 a Critical Test of Organic Recovery Prospects

Frontier Group Holdings / Equity Bottom-Up

<ul>
<li>Frontier Airlines, having suffered a highly challenged 2023, is set to see a significant inflection point for pricing and margins in 2Q24.</li>
<li>Management aims to deliver 3-6% PBT margins in 2024 building to 10-14% in 2025, representing a reversion to pre-pandemic levels. Read across for LCCs globally.</li>
<li>We now expect a small positive FCF in 2024, building to &gt;$200m in 2025, which should help inspire confidence in the ULCC's ability to thrive with higher costs.</li>
</ul>


Frontier Airlines, having suffered a highly challenged 2023, is set to see a significant inflection point for pricing and margins in 2Q24.
Management aims to deliver 3-6% PBT margins in 2024 building to 10-14% in 2025, representing a reversion to pre-pandemic levels. Read across for LCCs globally.
We now expect a small positive FCF in 2024, building to &gt;$200m in 2025, which should help inspire confidence in the ULCC's ability to thrive with higher costs.


Frontier Airlines - 2024 Momentum Buys Time to Deliver on 2025 Targets

<ul>
<li>Coverage launch on Frontier Airlines, JetBlue and Spirit Airlines following the rejection of the JetBlue/Spirit deal by the US.</li>
<li>High leverage and above-sector cost inflation put each carrier in a difficult competitive position, driving the need for significant structural earnings improvements to achieve financial sustainability</li>
<li>We are 10% above consensus 2024 EBITDAR for Frontier, narrowly above for JetBlue but 17% below consensus for Spirit.</li>
</ul>


Coverage launch on Frontier Airlines, JetBlue and Spirit Airlines following the rejection of the JetBlue/Spirit deal by the US.
High leverage and above-sector cost inflation put each carrier in a difficult competitive position, driving the need for significant structural earnings improvements to achieve financial sustainability
We are 10% above consensus 2024 EBITDAR for Frontier, narrowly above for JetBlue but 17% below consensus for Spirit.


US Airlines - Second Tier Strives for Financial Sustainability

United States

Spirit Airlines Inc. is a low-fare airline based in Miramar, Florida. The Airline provides low-cost travel opportunities principally to and from South Florida, the Caribbean and Latin America. Spirit Airlines basic service combines with a range of optional services for additional fees, targets price sensitive leisure travelers and travelers visiting friends and relatives.

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Spirit Airlines (SAVE US)

Spirit Airlines (SAV Bonds) - Tuesday, Jan 16, 2024

Invest in Spirit 8% bonds due 9/20/2025 Spirit Airlines has strong cash position and available credit Bonds are guaranteed by Spirit Airlines and...

Value Investors Club (VIC)

JetBlue – Positive 1Q Momentum Inspires Confidence 2024 Can Beat Expectations

1Q24 momentum at JetBlue sets the scene for a bullish update at Investor Day on 30 May. But we highlight much work to be done to restore JetBlue to...

Neil Glynn

Spirit Airlines - Summer 2024 a Critical Test of Organic Recovery Prospects

Detailed analysis of Spirit's recovery prospects as the market questions if it may need to file for Chapter 11 bankruptcy protection if...

Neil Glynn

Frontier Airlines - 2024 Momentum Buys Time to Deliver on 2025 Targets

The US ULCC sector has struggled through 2023, but we highlight that Frontier Airlines can demonstrate it is possible to recover margins and...

Neil Glynn

US Airlines - Second Tier Strives for Financial Sustainability

Deep dive on the quest for financial sustainability of Frontier Airlines, JetBlue and Spirit Airlines, each with a deteriorated competitive...

Neil Glynn

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