Spirit Airlines, Inc. (NASDAQ:SAVE) today reported second quarter
2017 financial results.
- GAAP net income for the second quarter 2017 was $78.1 million
($1.12 per diluted share), or $79.1 million ($1.14 per diluted
share)1 excluding special items.
- GAAP operating margin for the second quarter 2017 was 18.9
percent, or 19.1 percent excluding special items1.
- Spirit ended the second quarter 2017 with unrestricted cash,
cash equivalents, and short-term investments of $969.6
million.
- Spirit's return on invested capital (non-GAAP, before taxes and
excluding special items) for the twelve months ended June 30,
2017 was 20.3 percent2.
“The progress we made with our revenue initiatives, as well as
the underlying revenue trends as we headed into the June quarter,
were encouraging. Unfortunately, given the level of
operational disruptions and the associated financial impact, the
second quarter 2017 performance overall was disappointing. We
sincerely apologize to our customers who were affected by the
flight disruptions during the quarter,” said Bob Fornaro, Spirit’s
President and Chief Executive Officer. “Despite our financial
and operational challenges in the second quarter 2017, the changes
in our pricing and revenue management strategies helped to drive
year-over-year improvement in passenger and non-ticket revenue per
segment -- this is the first time in over two and a half years
either of these metrics increased year over year.”
Revenue Performance For the second quarter 2017, Spirit's total
operating revenue was $701.7 million, an increase of 20.1 percent
compared to the second quarter 2016, driven by a 9.3 percent
increase in flight volume and a 7.1 percent increase in operating
yields.
Total revenue per available seat mile (TRASM) for the second
quarter 2017 increased 5.7 percent compared to the same period last
year. During the second quarter 2017, the Company's results
benefited from the calendar shift of Easter, as well as Company
driven revenue initiatives and a strong underlying demand
environment.
On a per passenger flight segment basis, total revenue for the
second quarter 2017 increased 8.5 percent year over year to $113.07
with ticket revenue per passenger flight segment increasing 13.4
percent to $59.93 and non-ticket per passenger flight segment
increasing 3.5 percent to $53.14.
Cost PerformanceFor the second quarter 2017, total GAAP
operating expense, including special items of $1.5 million3,
increased 23.1 percent, or $106.6 million, year over year to $568.9
million. Adjusted operating expense for the second quarter
2017 increased 25.1 percent, or $113.7 million to $567.5 million4.
The increase in both GAAP and adjusted operating expense was
primarily driven by an increase in flight volume, higher passenger
re-accommodation expense (recorded within other operating
expenses), and higher fuel rates.
Aircraft fuel expense increased in the second quarter 2017 by
25.7 percent, or $29.1 million, compared to the same period last
year, due to a 12.9 percent increase in the cost of fuel per gallon
and a 11.1 percent increase in fuel gallons consumed.
Spirit reported second quarter 2017 cost per available seat mile
("ASM"), excluding special items and fuel (“Adjusted CASM
ex-fuel”), of 5.83 cents4, an increase of 10.0 percent compared to
the same period last year, driven primarily by higher passenger
re-accommodation expense per ASM and higher depreciation and
amortization per ASM.
Pilot-Related CancellationsDuring the second quarter 2017, the
Company had over 850 pilot-related flight cancellations. The
Company estimates these pilot-related cancellations adversely
impacted its second quarter 2017 results by approximately $45
million (approximately $25 million of revenue loss and $20 million
of additional operating costs, primarily related to higher
passenger re-accommodation expense). The Company estimates
that had these cancellations not occurred, TRASM for the second
quarter would have been up approximately 6.5 percent year over year
(with the Easter shift accounting for approximately 400 basis
points of the year over year increase) and Adjusted CASM ex-fuel
would have been up approximately 2.0 percent year over year.
“While our cost performance for the second quarter was not
satisfactory, we do not believe it materially changes our long-term
cost outlook and are confident that we will continue to maintain,
or grow, our relative cost advantage,” said Ted Christie, Spirit’s
Executive Vice President and Chief Financial Officer.
LaborSpirit and its pilots, represented by the Air Line Pilots
Association, remain in open contract negotiations under the
supervision of the National Mediation Board.
FleetSpirit took delivery of three new A320ceo aircraft and one
new A321ceo aircraft during the second quarter 2017, ending the
quarter with 104 aircraft in its fleet.
Recent New Service AnnouncementsHartford - Orlando
(4/27/17)Hartford - Myrtle Beach (4/27/17)*Akron-Canton - Las Vegas
(4/27/17)Akron-Canton - Myrtle Beach (4/27/17)*Newark - Houston
(4/27/17)Houston - Seattle (4/27/17)*Baltimore - New Orleans
(5/25/17)Baltimore - Oakland (5/25/17)*Baltimore - San Diego
(5/25/17)Baltimore - Seattle (5/25/17)Cleveland - New Orleans
(5/25/17)Detroit - Oakland (5/25/17)*Detroit - Seattle (
5/25/17)*Orlando - New Orleans (5/25/17)Pittsburgh - Dallas
(5/25/17)Pittsburgh - Myrtle Beach (5/25/17)*Hartford - Fort
Lauderdale (6/15/17)Pittsburgh - Fort Lauderdale
(6/16/17)Pittsburgh - Las Vegas (6/22/17)Pittsburgh - Orlando
(6/22/17)Pittsburgh - Los Angeles (7/13/17)Pittsburgh - Houston
(7/13/17)Pittsburgh - Fort Myers (11/9/17)**Pittsburgh -
Tampa (11/9/17)**Hartford - Fort Myers (11/9/17)**Hartford - Tampa
(11/9/17)**Baltimore - Cancun (11/9/17)Chicago - Cancun
(11/9/17)
* Seasonal Summer Service** Seasonal Winter Service
Conference Call/Webcast DetailSpirit will conduct a conference
call to discuss these results today, July 27, 2017, at 9:00
a.m. ET. A live audio webcast of the conference call will be
available to the public on a listen-only basis at
http://ir.spirit.com. An archive of the webcast will be
available under Webcasts & Presentations for 60 days.
About Spirit Airlines:Spirit Airlines (NASDAQ:SAVE) is committed
to offering the lowest total price to the places we fly, on average
much lower than other airlines. Our customers start with an
unbundled, stripped-down Bare Fare™ and get Frill Control™ which
allows them to pay only for the options they choose - like bags,
seat assignments and refreshments - the things other airlines bake
right into their ticket prices. We help people save money and
travel more often, create new jobs and stimulate business growth in
the communities we serve. With our Fit Fleet™, the youngest fleet
of any major U.S. airline, we operate more than 470 daily flights
to 60 destinations in the U.S., Latin America and the Caribbean.
Come save with us at www.spirit.com.
Investors are encouraged to read the Company's periodic and
current reports filed with or furnished to the Securities and
Exchange Commission, including its Annual Report on Form 10-K,
Quarterly Reports on Form 10-Q, and Current Reports on Form 8-K,
for additional information regarding the Company.
End Notes(1) See "Reconciliation of Adjusted Net Income,
Adjusted Pre-tax Income, and Adjusted Operating Income to GAAP Net
Income" table below for more details.(2) See "Calculation for
Return on Invested Capital, non-GAAP" table below for more
details.(3) See "Special Items" table for more
details.(4) See "Reconciliation of Adjusted Operating Expense
to GAAP Operating Expense" table below for more details.
Forward-Looking StatementsStatements in this release and certain
oral statements made from time to time by representatives of the
Company contain various forward-looking statements within the
meaning of Section 27A of the Securities Act of 1933, as amended
(the Securities Act), and Section 21E of the Securities Exchange
Act of 1934, as amended (the Exchange Act), which are subject to
the “safe harbor” created by those sections. Forward-looking
statements are based on our management’s beliefs and assumptions
and on information currently available to our management. All
statements other than statements of historical facts are
“forward-looking statements” for purposes of these provisions. In
some cases, you can identify forward-looking statements by terms
such as “may,” “will,” “should,” “could,” “would,” “expect,”
“plan,” “anticipate,” “believe,” “estimate,” “project,” “predict,”
“potential,” and similar expressions intended to identify
forward-looking statements. Such forward-looking statements are
subject to risks, uncertainties and other important factors that
could cause actual results and the timing of certain events to
differ materially from future results expressed or implied by such
forward-looking statements. Furthermore, such forward-looking
statements speak only as of the date of this release. Except as
required by law, we undertake no obligation to update any
forward-looking statements to reflect events or circumstances after
the date of such statements. Risks or uncertainties (i) that are
not currently known to us, (ii) that we currently deem to be
immaterial, or (iii) that could apply to any company, could also
materially adversely affect our business, financial condition, or
future results. References in this report to “Spirit,” “we,” “us,”
“our,” or the “Company” shall mean Spirit Airlines, Inc., unless
the context indicates otherwise. Additional information
concerning certain factors is contained in the Company's Securities
and Exchange Commission filings, including but not limited to the
Company's Annual Report on Form 10-K, Quarterly Reports on Form
10-Q, and Current Reports on Form 8-K.
SPIRIT AIRLINES, INC. |
Statement of Operations |
(unaudited, in thousands, except per share data) |
|
|
|
|
|
|
|
|
|
Three Months Ended |
|
|
|
Six Months Ended |
|
|
|
June 30, |
|
Percent |
|
June 30, |
|
Percent |
|
2017 |
|
2016 |
|
Change |
|
2017 |
|
2016 |
|
Change |
Operating
revenues: |
|
|
|
|
|
|
|
|
|
|
|
Passenger |
$ |
371,922 |
|
|
$ |
296,401 |
|
|
25.5 |
|
|
$ |
671,684 |
|
|
$ |
569,027 |
|
|
18.0 |
|
Non-ticket |
329,760 |
|
|
287,732 |
|
|
14.6 |
|
|
621,744 |
|
|
553,249 |
|
|
12.4 |
|
Total operating
revenues |
701,682 |
|
|
584,133 |
|
|
20.1 |
|
|
1,293,428 |
|
|
1,122,276 |
|
|
15.3 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating
expenses: |
|
|
|
|
|
|
|
|
|
|
|
Salaries,
wages and benefits |
129,892 |
|
|
112,930 |
|
|
15.0 |
|
|
257,030 |
|
|
229,340 |
|
|
12.1 |
|
Aircraft
fuel |
142,294 |
|
|
113,192 |
|
|
25.7 |
|
|
282,076 |
|
|
199,174 |
|
|
41.6 |
|
Aircraft
rent |
52,566 |
|
|
49,864 |
|
|
5.4 |
|
|
109,636 |
|
|
102,066 |
|
|
7.4 |
|
Landing
fees and other rents |
45,592 |
|
|
39,944 |
|
|
14.1 |
|
|
86,040 |
|
|
74,751 |
|
|
15.1 |
|
Depreciation and amortization |
35,331 |
|
|
24,957 |
|
|
41.6 |
|
|
66,840 |
|
|
48,066 |
|
|
39.1 |
|
Maintenance, materials and repairs |
28,985 |
|
|
20,627 |
|
|
40.5 |
|
|
55,297 |
|
|
41,567 |
|
|
33.0 |
|
Distribution |
29,908 |
|
|
24,692 |
|
|
21.1 |
|
|
56,406 |
|
|
47,625 |
|
|
18.4 |
|
Special
charges |
— |
|
|
8,052 |
|
|
nm |
|
|
4,776 |
|
|
24,254 |
|
|
nm |
|
Loss on
disposal of assets |
1,493 |
|
|
529 |
|
|
nm |
|
|
2,598 |
|
|
743 |
|
|
nm |
|
Other
operating |
102,885 |
|
|
67,511 |
|
|
52.4 |
|
|
180,588 |
|
|
131,556 |
|
|
37.3 |
|
Total operating
expenses |
568,946 |
|
|
462,298 |
|
|
23.1 |
|
|
1,101,287 |
|
|
899,142 |
|
|
22.5 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating
income |
132,736 |
|
|
121,835 |
|
|
8.9 |
|
|
192,141 |
|
|
223,134 |
|
|
(13.9 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
Other (income)
expense: |
|
|
|
|
|
|
|
|
|
|
|
Interest
expense |
13,746 |
|
|
10,166 |
|
|
35.2 |
|
|
26,219 |
|
|
18,226 |
|
|
43.9 |
|
Capitalized interest |
(3,342 |
) |
|
(2,771 |
) |
|
20.6 |
|
|
(6,922 |
) |
|
(6,096 |
) |
|
13.5 |
|
Interest
income |
(1,828 |
) |
|
(1,447 |
) |
|
26.3 |
|
|
(3,141 |
) |
|
(3,013 |
) |
|
4.2 |
|
Other
expense |
104 |
|
|
157 |
|
|
(33.8 |
) |
|
107 |
|
|
227 |
|
|
(52.9 |
) |
Total other
(income) expense |
8,680 |
|
|
6,105 |
|
|
42.2 |
|
|
16,263 |
|
|
9,344 |
|
|
74.0 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Income before income
taxes |
124,056 |
|
|
115,730 |
|
|
7.2 |
|
|
175,878 |
|
|
213,790 |
|
|
(17.7 |
) |
Provision for income
taxes |
45,913 |
|
|
42,646 |
|
|
7.7 |
|
|
65,800 |
|
|
78,786 |
|
|
(16.5 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
Net
income |
$ |
78,143 |
|
|
$ |
73,084 |
|
|
6.9 |
|
|
$ |
110,078 |
|
|
$ |
135,004 |
|
|
(18.5 |
) |
Basic earnings
per share |
$ |
1.13 |
|
|
$ |
1.03 |
|
|
9.7 |
|
|
$ |
1.59 |
|
|
$ |
1.90 |
|
|
(16.3 |
) |
Diluted
earnings per share |
$ |
1.12 |
|
|
$ |
1.03 |
|
|
8.7 |
|
|
$ |
1.58 |
|
|
$ |
1.89 |
|
|
(16.4 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average
shares, basic |
69,370 |
|
|
70,770 |
|
|
(2.0 |
) |
|
69,359 |
|
|
71,173 |
|
|
(2.5 |
) |
Weighted average
shares, diluted |
69,561 |
|
|
70,913 |
|
|
(1.9 |
) |
|
69,576 |
|
|
71,347 |
|
|
(2.5 |
) |
SPIRIT AIRLINES, INC. |
Statements of Comprehensive Income |
(unaudited, in thousands) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended |
|
Six Months Ended |
|
|
|
|
|
June 30, |
|
June 30, |
|
|
|
|
|
2017 |
|
2016 |
|
2017 |
|
2016 |
Net
income |
|
|
|
|
$ |
78,143 |
|
|
$ |
73,084 |
|
|
$ |
110,078 |
|
|
$ |
135,004 |
|
Unrealized gain (loss)
on short-term investment securities, net of deferred taxes of ($6),
$0, ($14) and $0 |
|
|
|
|
(11 |
) |
|
— |
|
|
(24 |
) |
|
— |
|
Interest rate
derivative losses reclassified into earnings, net of taxes of $31,
$32, $62 and $65 |
|
|
|
|
53 |
|
|
56 |
|
|
107 |
|
|
113 |
|
Other
comprehensive income (loss) |
|
|
|
|
$ |
42 |
|
|
$ |
56 |
|
|
$ |
83 |
|
|
$ |
113 |
|
Comprehensive
income |
|
|
|
|
$ |
78,185 |
|
|
$ |
73,140 |
|
|
$ |
110,161 |
|
|
$ |
135,117 |
|
SPIRIT AIRLINES, INC. |
Balance Sheets |
(unaudited, in thousands) |
|
|
|
|
|
June 30, |
|
December 31, |
|
2017 |
|
2016 |
Assets |
|
|
|
Current assets: |
|
|
|
Cash and
cash equivalents |
$ |
869,153 |
|
|
$ |
700,900 |
|
Short-term investment securities |
100,464 |
|
|
100,155 |
|
Accounts
receivable, net |
47,996 |
|
|
41,136 |
|
Aircraft
maintenance deposits |
155,093 |
|
|
87,035 |
|
Prepaid
expenses and other current assets |
57,798 |
|
|
46,619 |
|
Total current
assets |
1,230,504 |
|
|
975,845 |
|
|
|
|
|
Property and
equipment: |
|
|
|
Flight
equipment |
1,809,747 |
|
|
1,461,525 |
|
Ground
property and equipment |
140,954 |
|
|
126,206 |
|
Less
accumulated depreciation |
(161,191 |
) |
|
(122,509 |
) |
|
1,789,510 |
|
|
1,465,222 |
|
Deposits on flight
equipment purchase contracts |
317,867 |
|
|
325,688 |
|
Long-term aircraft
maintenance deposits |
146,162 |
|
|
199,415 |
|
Deferred heavy
maintenance, net |
75,858 |
|
|
75,534 |
|
Other long-term
assets |
114,444 |
|
|
110,223 |
|
Total
assets |
$ |
3,674,345 |
|
|
$ |
3,151,927 |
|
|
|
|
|
Liabilities and
shareholders’ equity |
|
|
|
Current
liabilities: |
|
|
|
Accounts
payable |
$ |
33,186 |
|
|
$ |
15,193 |
|
Air
traffic liability |
312,587 |
|
|
206,392 |
|
Current
maturities of long-term debt |
95,428 |
|
|
84,354 |
|
Other
current liabilities |
244,629 |
|
|
226,011 |
|
Total current
liabilities |
685,830 |
|
|
531,950 |
|
|
|
|
|
Long-term
debt, less current maturities |
1,089,159 |
|
|
897,359 |
|
Deferred
income taxes |
372,998 |
|
|
308,143 |
|
Deferred
gains and other long-term liabilities |
18,125 |
|
|
19,868 |
|
Shareholders’
equity: |
|
|
|
Common
stock |
7 |
|
|
7 |
|
Additional paid-in-capital |
555,704 |
|
|
551,004 |
|
Treasury
stock, at cost |
(219,909 |
) |
|
(218,692 |
) |
Retained
earnings |
1,173,711 |
|
|
1,063,633 |
|
Accumulated other comprehensive loss |
(1,280 |
) |
|
(1,345 |
) |
Total
shareholders’ equity |
1,508,233 |
|
|
1,394,607 |
|
Total
liabilities and shareholders’ equity |
$ |
3,674,345 |
|
|
$ |
3,151,927 |
|
SPIRIT AIRLINES, INC. |
Statement of Cash Flows |
(unaudited, in thousands) |
|
|
|
Six Months Ended June 30, |
|
2017 |
|
2016 |
Operating
activities: |
|
|
|
Net
income |
$
|
110,078 |
|
|
$ |
135,004 |
|
Adjustments to
reconcile net income to net cash provided by operations: |
|
|
|
Losses
reclassified from other comprehensive income |
167 |
|
|
178 |
|
Equity-based compensation |
4,671 |
|
|
3,905 |
|
Allowance
for doubtful accounts (recoveries) |
(51 |
) |
|
221 |
|
Amortization of deferred gains and losses and debt issuance
costs |
4,761 |
|
|
2,810 |
|
Depreciation and amortization |
66,840 |
|
|
48,066 |
|
Deferred
income tax expense |
64,789 |
|
|
45,810 |
|
Loss on
disposal of assets |
2,598 |
|
|
743 |
|
Lease
termination costs |
4,777 |
|
|
24,254 |
|
Changes
in operating assets and liabilities: |
|
|
|
Accounts receivable |
(6,808 |
) |
|
(12,662 |
) |
Aircraft maintenance deposits |
(17,940 |
) |
|
(29,721 |
) |
Prepaid income taxes |
(1,598 |
) |
|
69,444 |
|
Long-term deposits and other assets |
(44,900 |
) |
|
(22,055 |
) |
Accounts payable |
16,388 |
|
|
3,024 |
|
Air traffic liability |
105,486 |
|
|
66,531 |
|
Other liabilities |
14,234 |
|
|
25,269 |
|
Other |
238 |
|
|
— |
|
Net cash
provided by operating activities |
323,730 |
|
|
360,821 |
|
Investing
activities: |
|
|
|
Purchase
of available-for-sale investment securities |
(68,459 |
) |
|
— |
|
Proceeds
from the maturity of available-for-sale investment securities
|
67,857 |
|
|
— |
|
Proceeds
from sale of property and equipment |
— |
|
|
50 |
|
Pre-delivery deposits for flight equipment, net of refunds |
(79,357 |
) |
|
(60,772 |
) |
Capitalized interest |
(6,375 |
) |
|
(4,554 |
) |
Purchase
of property and equipment |
(269,519 |
) |
|
(303,175 |
) |
Net cash used
in investing activities |
(355,853 |
) |
|
(368,451 |
) |
Financing
activities: |
|
|
|
Proceeds
from issuance of long-term debt |
255,827 |
|
|
300,547 |
|
Proceeds
from stock options exercised |
29 |
|
|
92 |
|
Payments
on debt and capital lease obligations |
(50,099 |
) |
|
(19,665 |
) |
Excess
tax (deficiency) benefit from equity-based compensation |
— |
|
|
(511 |
) |
Repurchase of common stock |
(1,217 |
) |
|
(62,278 |
) |
Debt
issuance costs |
(4,164 |
) |
|
(107 |
) |
Net cash
provided by financing activities |
200,376 |
|
|
218,078 |
|
Net (decrease) increase
in cash and cash equivalents |
168,253 |
|
|
210,448 |
|
Cash and cash
equivalents at beginning of period |
700,900 |
|
|
803,632 |
|
Cash and cash
equivalents at end of period |
$ |
869,153 |
|
|
$ |
1,014,080 |
|
Supplemental
disclosures |
|
|
|
Cash payments for: |
|
|
|
Interest,
net of capitalized interest |
$ |
16,869 |
|
|
$ |
21,804 |
|
Income
taxes paid, net of refunds |
$ |
4,340 |
|
|
$ |
(36,142 |
) |
Non-cash
transactions: |
|
|
|
Capital
expenditures funded by capital lease borrowings |
$ |
(1,370 |
) |
|
$ |
(31 |
) |
SPIRIT AIRLINES, INC. |
Selected Operating Statistics (unaudited) |
|
|
|
|
|
Three Months Ended June 30,
|
|
|
Operating
Statistics |
2017 |
|
2016 |
|
Change |
Available seat miles
(ASMs) (thousands) |
7,294,578 |
|
|
6,419,419 |
|
|
13.6 |
% |
Revenue passenger miles
(RPMs) (thousands) |
6,219,638 |
|
|
5,549,411 |
|
|
12.1 |
% |
Load factor (%) |
85.3 |
|
|
86.4 |
|
|
(1.1 |
) pts |
Passenger flight
segments (thousands) |
6,206 |
|
|
5,606 |
|
|
10.7 |
% |
Block hours |
109,296 |
|
|
98,399 |
|
|
11.1 |
% |
Departures |
41,563 |
|
|
38,025 |
|
|
9.3 |
% |
Total operating revenue
per ASM (TRASM) (cents) |
9.62 |
|
|
9.10 |
|
|
5.7 |
% |
Average yield
(cents) |
11.28 |
|
|
10.53 |
|
|
7.1 |
% |
Average ticket revenue
per passenger flight segment ($) |
59.93 |
|
|
52.87 |
|
|
13.4 |
% |
Average non-ticket
revenue per passenger flight segment ($) |
53.14 |
|
|
51.32 |
|
|
3.5 |
% |
Total revenue per
passenger flight segment ($) |
113.07 |
|
|
104.19 |
|
|
8.5 |
% |
CASM (cents) |
7.80 |
|
|
7.20 |
|
|
8.3 |
% |
Adjusted CASM (cents)
(1) |
7.78 |
|
|
7.07 |
|
|
10.0 |
% |
Adjusted CASM ex-fuel
(cents) (2) |
5.83 |
|
|
5.30 |
|
|
10.0 |
% |
Fuel gallons consumed
(thousands) |
85,533 |
|
|
77,013 |
|
|
11.1 |
% |
Average economic fuel
cost per gallon ($) |
1.66 |
|
|
1.47 |
|
|
12.9 |
% |
Aircraft at end of
period |
104 |
|
|
87 |
|
|
19.5 |
% |
Average daily aircraft
utilization (hours) |
11.7 |
|
|
12.7 |
|
|
(7.9 |
)% |
Average stage length
(miles) |
982 |
|
|
971 |
|
|
1.1 |
% |
|
|
|
|
|
|
|
Six Months Ended June 30,
|
|
|
Operating
Statistics |
2017 |
|
2016 |
|
Change |
Available seat miles
(ASMs) (thousands) |
14,170,478 |
|
|
12,402,423 |
|
|
14.3 |
% |
Revenue passenger miles
(RPMs) (thousands) |
11,833,060 |
|
|
10,619,724 |
|
|
11.4 |
% |
Load factor (%) |
83.5 |
|
|
85.6 |
|
|
(2.1 |
) pts |
Passenger flight
segments (thousands) |
11,775 |
|
|
10,594 |
|
|
11.1 |
% |
Block hours |
213,332 |
|
|
191,943 |
|
|
11.1 |
% |
Departures |
80,893 |
|
|
73,185 |
|
|
10.5 |
% |
Total operating revenue
per ASM (TRASM) (cents) |
9.13 |
|
|
9.05 |
|
|
0.9 |
% |
Average yield
(cents) |
10.93 |
|
|
10.57 |
|
|
3.4 |
% |
Average ticket revenue
per passenger flight segment ($) |
57.04 |
|
|
53.71 |
|
|
6.2 |
% |
Average non-ticket
revenue per passenger flight segment ($) |
52.80 |
|
|
52.22 |
|
|
1.1 |
% |
Total revenue per
passenger flight segment ($) |
109.84 |
|
|
105.93 |
|
|
3.7 |
% |
CASM (cents) |
7.77 |
|
|
7.25 |
|
|
7.2 |
% |
Adjusted CASM (cents)
(1) |
7.72 |
|
|
7.05 |
|
|
9.5 |
% |
Adjusted CASM ex-fuel
(cents) (2) |
5.73 |
|
|
5.44 |
|
|
5.3 |
% |
Fuel gallons consumed
(thousands) |
164,597 |
|
|
147,563 |
|
|
11.5 |
% |
Average economic fuel
cost per gallon ($) |
1.71 |
|
|
1.35 |
|
|
26.7 |
% |
Average daily aircraft
utilization (hours) |
11.8 |
|
|
12.8 |
|
|
(7.8 |
)% |
Average stage length
(miles) |
983 |
|
|
983 |
|
|
— |
% |
(1) Excludes special items.(2) Excludes economic fuel expense
and special items.
The Company is providing a reconciliation of GAAP financial
information to non-GAAP financial information as it believes that
non-GAAP financial measures provide management and investors the
ability to measure the performance of the Company on a consistent
basis. These non-GAAP financial measures have limitations as
analytical tools. Because of these limitations,
determinations of the Company's operating performance excluding
unrealized gains and losses or special items should not be
considered in isolation or as a substitute for performance measures
calculated in accordance with GAAP.
Special Items(unaudited)
|
Three Months Ended |
|
June 30, |
(in thousands) |
2017 |
|
2016 |
Operating special items
include the following (1): |
|
|
|
Loss on
disposal of assets |
1,493 |
|
|
529 |
|
Special
charges |
— |
|
|
8,052 |
|
Total
operating special items |
$ |
1,493 |
|
|
$ |
8,581 |
|
Reconciliation of Adjusted Operating Expense to GAAP
Operating Expense(unaudited)
|
Three Months Ended |
|
June 30, |
(in thousands, except
CASM data in cents) |
2017 |
|
2016 |
Total operating
expenses, as reported |
$ |
568,946 |
|
|
$ |
462,298 |
|
Less operating special
items (1) |
1,493 |
|
|
8,581 |
|
Adjusted operating
expenses, non-GAAP (2) |
567,453 |
|
|
453,717 |
|
Less: Economic fuel
expense |
142,294 |
|
|
113,192 |
|
Adjusted operating
expenses excluding fuel, non-GAAP (3) |
$ |
425,159 |
|
|
$ |
340,525 |
|
|
|
|
|
Available seat
miles |
7,294,578 |
|
|
6,419,419 |
|
|
|
|
|
CASM (cents) |
7.80 |
|
|
7.20 |
|
Adjusted CASM (cents)
(2) |
7.78 |
|
|
7.07 |
|
Adjusted CASM ex-fuel
(cents) (3) |
5.83 |
|
|
5.30 |
|
(1) Special items include loss on disposal of assets and special
charges. Special charges are primarily related to lease
termination costs.(2) Excludes operating special items.(3) Excludes
operating special items and economic fuel expense as described in
the "Reconciliation of Economic Fuel Expense to GAAP Fuel Expense"
table below.
Reconciliation of Adjusted Net Income,
Adjusted Pre-Tax Income, and Adjusted Operating Income to GAAP Net
Income(unaudited)
|
Three Months Ended |
|
June 30, |
(in thousands, except
per share data) |
2017 |
|
2016 |
Net income, as
reported |
$ |
78,143 |
|
|
$ |
73,084 |
|
Add: Provision for
income taxes |
|
45,913 |
|
|
|
42,646 |
|
Income before income
taxes, as reported |
|
124,056 |
|
|
|
115,730 |
|
Pre-tax margin,
GAAP |
|
17.7 |
% |
|
|
19.8 |
% |
Add operating special
items (1) |
$ |
1,493 |
|
|
$ |
8,581 |
|
Adjusted income before
income taxes, non-GAAP (2) |
|
125,549 |
|
|
|
124,311 |
|
Adjusted pre-tax
margin, non-GAAP (2) |
|
17.9 |
% |
|
|
21.3 |
% |
Add: Total other
(income) expense |
|
8,680 |
|
|
|
6,105 |
|
Adjusted operating
income, non-GAAP(2) |
|
134,229 |
|
|
|
130,416 |
|
Adjusted operating
margin, non-GAAP(2) |
|
19.1 |
% |
|
|
22.3 |
% |
|
|
|
|
Provision for adjusted
income taxes (3) |
|
46,466 |
|
|
|
45,808 |
|
Adjusted net
income, non-GAAP (2)(3) |
$ |
79,083 |
|
|
$ |
78,503 |
|
|
|
|
|
Weighted average
shares, diluted |
|
69,561 |
|
|
|
70,913 |
|
|
|
|
|
Adjusted net income per
share, diluted (2)(3) |
|
$1.14 |
|
|
|
$1.11 |
|
|
|
|
|
Total operating
revenues |
$ |
701,682 |
|
|
$ |
584,133 |
|
(1) See "Special Items" for more details.(2) Excludes operating
special items.(3) Assumes same marginal tax rate as is applicable
to GAAP net income.
The Company tracks a non-GAAP calculation of Return on Invested
Capital, or ROIC, as a way of measuring our efficiency in
delivering returns and in allocating capital. We calculate
ROIC as Adjusted Operating Income (non-GAAP), divided by Total
Invested Capital (non-GAAP), on a pre-tax and after-tax basis,
expressed as a percentage.
Because a substantial portion of our aircraft fleet is held
under operating leases, which do not appear on the balance sheet, a
GAAP-based calculation of our total capital deployed may be
considered understated (which would have the effect of overstating
ROIC, if calculated solely using GAAP line items).
Accordingly, we adjust our total capital, the denominator of the
ROIC measurement, by capitalizing operating leases at a level equal
to seven times our aircraft rent expense, a measure used commonly
in the airline industry and by analysts.
To calculate Adjusted Operating Income (non-GAAP), we add back
aircraft rent to GAAP operating income, in keeping with the
adjustment to total capital discussed above. In order to
remove the effects of non-recurring gains and losses that may
affect GAAP operating income we also exclude special items from
Adjusted Operating Income (non-GAAP). We present Adjusted Operating
Income (non-GAAP) on a pre-tax basis and present Adjusted Operating
Income (non-GAAP) on an after-tax basis, using our effective tax
rate for the period.
Calculation of Return on Invested Capital,
non-GAAP (unaudited)
|
Twelve Months Ended
|
(in thousands) |
June 30, 2017 |
Operating income |
$ |
412,668 |
|
Add operating special
items (1) |
23,753 |
|
Adjustment for aircraft
rent |
209,245 |
|
Adjusted
operating income, non-GAAP |
645,666 |
|
Tax (37.1%) (2) |
239,542 |
|
Adjusted
operating income, after-tax, non-GAAP |
$ |
406,124 |
|
Invested capital: |
|
Total
debt |
$ |
1,184,587 |
|
Book
equity |
1,508,233 |
|
Less:
Unrestricted cash, cash equivalents & short-term investments
|
969,617 |
|
Add:
Capitalized aircraft operating leases (7x Aircraft Rent) |
1,464,715 |
|
Total invested
capital, non-GAAP |
$ |
3,187,918 |
|
|
|
Return on invested
capital (ROIC), pre-tax, non-GAAP |
20.3 |
% |
Return on invested
capital (ROIC), after-tax, non-GAAP (2) |
12.7 |
% |
(1) See "Special Items" for more details.(2) Assumes same
marginal tax rate as is applicable to GAAP net income for the
twelve months ended June 30, 2017.
Investor Relations Contact:
DeAnne Gabel
InvestorRelations@spirit.com
954-447-7920
Media Contact:
Paul Berry
Paul.Berry@spirit.com
954-628-4827
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