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Spirit Airlines Reports Fourth Quarter and Full Year 2015 Results

Feb 9, 2016

MIRAMAR, Fla., Feb. 09, 2016 (GLOBE NEWSWIRE) -- Spirit Airlines, Inc. (NASDAQ:SAVE) today reported fourth quarter and full year 2015 financial results.

  • Adjusted net income for the fourth quarter 2015 increased 24.9 percent to $73.3 million ($1.02 per diluted share) compared to the fourth quarter 20141.  GAAP net income for the fourth quarter 2015 increased 33.1 percent year over year to $74.4 million ($1.04 per diluted share) compared to the fourth quarter 2014.
     
  • Adjusted net income for the full year 2015 increased 33.6 percent to $316.2 million ($4.37 per diluted share) compared to the full year 20141.  GAAP net income for the full year 2015 increased 40.7 percent year over year to $317.2 million ($4.38 per diluted share).
     
  • Adjusted pre-tax margin for the fourth quarter 2015 increased 270 basis points to 22.4 percent1.  For the full year 2015, adjusted pre-tax margin increased 420 basis points to 23.4 percent1.  On a GAAP basis, pre-tax margin for the fourth quarter 2015 increased 390 basis points to 22.7 percent and for the full year 2015 increased 520 basis points to 23.5 percent.
     
  • Spirit ended 2015 with unrestricted cash and cash equivalents of $803.6 million.
     
  • Spirit's return on invested capital (before taxes and excluding special items) for the twelve months ended December 31, 2015 was 28.2 percent2.
     

"I want to thank and congratulate our Spirit team members for successfully delivering solid financial results in 2015.  Although increased industry capacity and aggressive competitive pricing pressured our unit revenues, our excellent cost execution and ability to adapt to a changing environment drove improved year-over-year results," said Bob Fornaro, Spirit's Chief Executive Officer.  "I am excited to lead this innovative team.  As CEO, I plan to improve upon the already very strong base of fundamentals that Spirit possesses with a focus on continuing to improve operational reliability and customer service, and maintaining our financial discipline to drive value for all of Spirit's stakeholders."

Revenue Performance
For the fourth quarter 2015, Spirit's total operating revenue was $519.8 million, an increase of 9.6 percent compared to the fourth quarter 2014, driven by an increase in flight volume, partially offset by a decrease in operating yields.

Total revenue per passenger flight segment ("PFS") for the fourth quarter 2015 decreased 12.6 percent year over year to $111.78, primarily driven by a 21.4 percent decrease in ticket revenue per PFS.  The decline in ticket revenue per PFS was driven by lower fare levels as a result of increased competitive pricing pressures as well as a higher percentage of Spirit's markets being under development compared to the same period last year.  Non-ticket revenue remained stable, declining only 0.8 percent year over year on a per flight segment basis to $54.26.

Cost Performance
Adjusted operating expenses for the fourth quarter 2015 increased 5.6 percent to $401.2 million3.  GAAP total operating expenses increased 3.9 percent year over year to $399.5 million.  Operating expenses benefited from fuel expense decreasing 23.8 percent, or $32.8 million, on a fuel volume increase of 27.9 percent.

Spirit reported fourth quarter 2015 cost per available seat mile ("ASM") excluding special items and fuel ("Adjusted CASM ex-fuel")3 of 5.15 cents, a decrease of 8.2 percent compared to the same period last year, driven primarily by lower aircraft rent per ASM and lower labor expense per ASM.  The decrease in aircraft rent per ASM was driven by a change in the mix of leased (rent recorded under aircraft rent) and purchased (depreciation recorded under depreciation and amortization) aircraft. Labor expense per ASM in the fourth quarter 2015 was lower compared to the same period last year primarily due to scale benefits from overall growth and from larger gauge aircraft.  These decreases were partially offset by higher depreciation and amortization expense related to the depreciation of aircraft.

"Spirit's cost performance in the fourth quarter and throughout 2015 should be a source of pride for all our team members," said Ted Christie, Spirit's Chief Financial Officer. "Our ultra-low cost structure is the foundation of our competitive advantage, providing us the platform to define our future."

Fleet
Spirit took delivery of three new A321ceo aircraft during the fourth quarter 2015.

Full Year 2015 Highlights

  • Maintained its commitment to offer low fares to its valued customers; ticket revenue per PFS for 2015 averaged $65.25 with total revenue per PFS averaging $119.49.
  • Launched service on 40 new nonstop routes during 2015.
  • Added Cleveland, Ohio to its list of destinations and announced the addition of service from its newest destination, Seattle-Tacoma, Washington beginning in the Spring of 2016.
  • Added 14 (8 A320ceos and 6 A321ceos) new Airbus aircraft to its fleet, ending the year with 79 aircraft.  As of year-end 2015, Spirit's Fit Fleet™ averaged 5.2 years, the youngest fleet of any major US airline.
  • Issued $576.6 million of enhanced equipment trust certificates, its first aircraft-backed bond publicly offered.
  • Repurchased approximately 1.5 million shares for approximately $99 million during 2015 under an initial share repurchase program and authorized another $100 million share repurchase program.
  • Created over 600 new jobs, bringing our total number of team members to nearly 5,000.
     

Conference Call/Webcast Detail
Spirit will conduct a conference call to discuss these results today, February 9, 2016, at 8:00 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 US airline, we operate more than 385 daily flights to 56 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 to GAAP Net Income" table below for more details.
(2)  See "Calculation for Return on Invested Capital" table below for more details.
(3)  See "Reconciliation of Adjusted Operating Expense to GAAP Operating Expense" table below for more details.

Forward-Looking Statements
Statements 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. Factors that could cause or contribute to such differences include, but are not limited to, those identified below. Furthermore, such forward-looking statements speak only as of the date of this report. 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. Additional 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. You should carefully consider the risks described below and the other information in this report. If any of the following risks materialize, our business could be materially harmed, and our financial condition and results of operations could be materially and adversely affected. 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 these and other 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       Year Ended    
  December 31,   Percent   December 31,   Percent
  2015   2014   Change   2015   2014   Change
Operating revenues:                      
Passenger $ 267,487     $ 271,569     (1.5 )   $ 1,169,338     $ 1,144,972     2.1  
Non-ticket 252,359     202,918     24.4     972,125     786,608     23.6  
Total operating revenues 519,846     474,487     9.6     2,141,463     1,931,580     10.9  
                       
Operating expenses:                      
Aircraft fuel 105,215     138,002     (23.8 )   461,447     612,909     (24.7 )
Salaries, wages and benefits 97,035     81,212     19.5     378,210     313,988     20.5  
Aircraft rent 52,091     51,209     1.7     211,531     195,827     8.0  
Landing fees and other rents 32,590     27,533     18.4     131,077     105,115     24.7  
Distribution 20,656     15,893     30.0     86,576     74,823     15.7  
Maintenance, materials and repairs 18,544     17,515     5.9     80,448     73,956     8.8  
Depreciation and amortization 22,278     13,168     69.2     73,908     46,971     57.3  
Other operating 50,796     38,630     31.5     206,867     149,675     38.2  
Loss on disposal of assets 304     1,350     nm     1,604     3,008     nm  
Special charges         nm     673     45     nm  
Total operating expenses 399,509     384,512     3.9     1,632,341     1,576,317     3.6  
                       
Operating income 120,337     89,975     33.7     509,122     355,263     43.3  
                       
Other (income) expense:                      
Interest expense 7,200     1,659     nm     20,382     2,747     nm  
Capitalized interest (3,161 )   (1,659 )   nm     (11,553 )   (2,747 )   nm  
Interest income (1,581 )   (101 )   nm     (2,125 )   (336 )   nm  
Other expense (267 )   1,048     nm     15     2,605     nm  
Total other (income) expense 2,191     947     nm     6,719     2,269     nm  
                       
Income before income taxes 118,146     89,028     32.7     502,403     352,994     42.3  
Provision for income taxes 43,746     33,119     32.1     185,183     127,530     45.2  
Net income $ 74,400     $ 55,909     33.1     $ 317,220     $ 225,464     40.7  
Basic earnings per share $ 1.04     $ 0.77     35.1     $ 4.39     $ 3.10     41.6  
Diluted earnings per share $ 1.04     $ 0.76     36.8     $ 4.38     $ 3.08     42.2  
                       
Weighted average shares, basic 71,543     72,776     (1.7 )   72,208     72,739     (0.7 )
Weighted average shares, diluted 71,672     73,324     (2.3 )   72,426     73,294     (1.2 )

 

 
SPIRIT AIRLINES, INC.
Statements of Comprehensive Income
(unaudited, in thousands)
 
  Three Months Ended   Year Ended
  December 31,   December 31,
  2015   2014   2015   2014
Net income $ 74,400     $ 55,909     $ 317,220     $ 225,464  
Unrealized gain (loss) on interest rate derivative instruments, net of deferred tax expense (benefit) of $34, ($423), ($500), and $(423), respectively in each period. 58     (718 )   (828 )   (718 )
Other comprehensive income (loss) $ 58     $ (718 )   $ (828 )   $ (718 )
Comprehensive income $ 74,458     $ 55,191     $ 316,392     $ 224,746  

 

 
SPIRIT AIRLINES, INC.
Balance Sheets
(unaudited, in thousands)
 
  December 31,   December 31,
  2015   2014
Assets      
Current assets:      
Cash and cash equivalents $ 803,632     $ 632,784  
Accounts receivable, net 28,266     22,685  
Aircraft maintenance deposits 73,415     29,172  
Prepaid income taxes 72,278      
Prepaid expenses and other current assets 48,749     36,857  
Total current assets 1,026,340     721,498  
       
Property and equipment:      
Flight equipment 827,282     204,462  
Ground and other equipment 82,459     57,012  
Less accumulated depreciation (65,524 )   (36,099 )
  844,217     225,375  
Deposits on flight equipment purchase contracts 286,837     242,881  
Long-term aircraft maintenance deposits 206,485     213,147  
Deferred heavy maintenance, net 89,127     123,108  
Other long-term assets 77,539     66,744  
Total assets $ 2,530,545     $ 1,592,753  
       
Liabilities and shareholders' equity      
Current liabilities:      
Accounts payable $ 17,043     $ 13,402  
Air traffic liability 216,831     188,870  
Current maturities of long-term debt 49,637     10,431  
Other current liabilities 182,729     152,921  
Total current liabilities 466,240     365,624  
       
Long-term debt less current maturities 596,693     135,232  
Long-term deferred income taxes 221,481     66,367  
Deferred gains and other long-term liabilities 20,821     22,455  
Shareholders' equity:      
Common stock 7     7  
Additional paid-in-capital 544,277     526,173  
Treasury stock, at cost (116,182 )   (3,921 )
Retained earnings 798,754     481,534  
Accumulated other comprehensive loss (1,546 )   (718 )
Total shareholders' equity 1,225,310     1,003,075  
Total liabilities and shareholders' equity $ 2,530,545     $ 1,592,753  
 

Note: The Company adopted ASU 2015-17, Balance Sheet Classification of Deferred Taxes, utilizing retrospective application as permitted. As such, certain prior period amounts have been reclassified to conform to the current presentation. In the Balance Sheet as of December 31, 2014, the Company has reclassified $9.6 million from Deferred income taxes in current assets to Deferred income taxes within non-current liabilities. 

 
SPIRIT AIRLINES, INC.
Statement of Cash Flows
(unaudited, in thousands)
 
  Year Ended December 31,
  2015   2014
Operating activities:      
Net income $ 317,220     $ 225,464  
Adjustments to reconcile net income to net cash provided by operations:      
Unrealized (gains) losses on open derivative contracts, net 2,334      
Equity-based compensation, net 9,222     8,797  
Allowance for doubtful accounts (recoveries) 12     (45 )
Amortization of deferred gains and losses 1,165     (185 )
Depreciation and amortization 73,908     46,971  
Deferred income tax expense 155,614     34,118  
Loss on disposal of assets 1,604     3,008  
Changes in operating assets and liabilities:      
Accounts receivable (5,592 )   606  
Prepaid maintenance reserves (32,101 )   (31,925 )
Long-term deposits and other assets (103,613 )   (48,382 )
Accounts payable 2,706     (10,034 )
Air traffic liability 36,387     21,135  
Other liabilities 14,119     13,731  
Other     (2,747 )
Net cash provided by operating activities 472,985     260,512  
       
Investing activities:      
Pre-delivery deposits for flight equipment, net of refunds (142,323 )   (115,802 )
Capitalized interest (10,159 )    
Purchase of property and equipment (548,800 )   (186,569 )
Net cash used in investing activities (701,282 )   (302,371 )
Financing activities:      
Proceeds from issuance of long-term debt 536,780     148,000  
Proceeds from stock options exercised 32     174  
Payments on debt and capital lease obligations (26,364 )   (1,233 )
Proceeds from sale and leaseback transactions 7,300     7,200  
Payments to pre-IPO shareholders pursuant to tax receivable agreement     (5,643 )
Excess tax benefits from equity-based compensation 8,850     1,871  
Repurchase of common stock (112,261 )   (1,630 )
Debt issuance costs (15,192 )   (4,727 )
Net cash provided by financing activities 399,145     144,012  
Net increase in cash and cash equivalents 170,848     102,153  
Cash and cash equivalents at beginning of period 632,784     530,631  
Cash and cash equivalents at end of period $ 803,632     $ 632,784  
Supplemental disclosures      
Cash payments for:      
Interest (net of capitalized interest) $ 7,061     $  
Income taxes paid, net of refunds $ 95,933     $ 89,104  
Non-cash transactions:      
Capital expenditures funded by capital lease borrowings $     $ (173 )

 

 
SPIRIT AIRLINES, INC.
Selected Operating Statistics (unaudited)
 
  Three Months Ended December 31,    
Operating Statistics 2015   2014   Change
Available seat miles (ASMs) (thousands) 5,705,398     4,372,511     30.5 %
Revenue passenger miles (RPMs) (thousands) 4,727,996     3,707,271     27.5 %
Load factor (%) 82.9     84.8     (1.9 ) pts
Passenger flight segments (thousands) 4,651     3,709     25.4 %
Block hours 89,016     70,730     25.9 %
Departures 33,662     27,167     23.9 %
Total operating revenue per ASM (TRASM) (cents) 9.11     10.85     (16.0 )%
Average yield (cents) 11.00     12.80     (14.1 )%
Average ticket revenue per passenger flight segment ($) 57.52     73.21     (21.4 )%
Average non-ticket revenue per passenger flight segment ($) 54.26     54.70     (0.8 )%
Total revenue per passenger flight segment ($) 111.78     127.91     (12.6 )%
CASM (cents) 7.00     8.79     (20.4 )%
Adjusted CASM (cents) (1) 7.03     8.69     (19.1 )%
Adjusted CASM ex-fuel (cents) (2) 5.15     5.61     (8.2 )%
Fuel gallons consumed (thousands) 67,467     52,732     27.9 %
Average economic fuel cost per gallon ($) 1.59     2.56     (37.9 )%
Aircraft at end of period 79     65     21.5 %
Average daily aircraft utilization (hours) 12.5     12.5      
Average stage length (miles) 1,000     983     1.7 %
Airports served in the period (3) 53     53      
                 

 

  Year Ended December 31,    
Operating Statistics 2015   2014   Change
Available seat miles (ASMs) (thousands) 21,246,156     16,340,142     30.0 %
Revenue passenger miles (RPMs) (thousands) 17,995,311     14,159,860     27.1 %
Load factor (%) 84.7     86.7     (2.0 ) pts
Passenger flight segments (thousands) 17,921     14,294     25.4 %
Block hours 337,956     267,305     26.4 %
Departures 128,902     102,594     25.6 %
Total operating revenue per ASM (TRASM) (cents) 10.08     11.82     (14.7 )%
Average yield (cents) 11.90     13.64     (12.8 )%
Average ticket revenue per passenger flight segment ($) 65.25     80.11     (18.5 )%
Average non-ticket revenue per passenger flight segment ($) 54.24     55.03     (1.4 )%
Total revenue per passenger flight segment ($) 119.49     135.14     (11.6 )%
CASM (cents) 7.68     9.65     (20.4 )%
Adjusted CASM (cents) (1) 7.69     9.55     (19.5 )%
Adjusted CASM ex-fuel (cents) (2) 5.50     5.88     (6.5 )%
Fuel gallons consumed (thousands) 255,008     200,498     27.2 %
Average economic fuel cost per gallon ($) 1.82     2.99     (39.1 )%
Average daily aircraft utilization (hours) 12.7     12.7      
Average stage length (miles) 987     980     0.7 %
Airports served in the period (3) 57     56     1.8 %
                 

(1) Excludes special items.
(2) Excludes economic fuel expense and special items.
(3) Includes seasonal airports not served at the end of the period.

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 an analytical tool.  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
 
  Three Months Ended   Year Ended
  December 31,   December 31,
(in thousands) 2015   2014   2015   2014
Operating special items include the following (1):              
Prior years' additional federal excise tax $     $     $     $ 9,278  
Unrealized losses (gains) related to fuel derivative contracts (1,988 )   3,118     (3,880 )   3,881  
Loss on disposal of assets 304     1,350     1,604     3,008  
Special charges         673     45  
Total operating special items $ (1,684 )   $ 4,468     $ (1,603 )   $ 16,212  
               
Non-operating special items include the following (2):              
Settlement paid to Pre-IPO Stockholders $     $     $     $ 1,388  
Total non-operating special items $     $     $     $ 1,388  
               
Total special items $ (1,684 )   $ 4,468     $ (1,603 )   $ 17,600  

 

 
Reconciliation of Adjusted Operating Expense to GAAP Operating Expense
(unaudited)
 
    Three Months Ended   Year Ended
    December 31,   December 31,
(in thousands, except CASM data in cents)   2015   2014   2015   2014
Total operating expenses, as reported   $ 399,509     $ 384,512     $ 1,632,341     $ 1,576,317  
Less operating special items (1)   (1,684 )   4,468     (1,603 )   16,212  
Adjusted operating expenses, non-GAAP (3)   401,193     380,044     1,633,944     1,560,105  
Less: Economic fuel expense   107,203     134,884     465,327     599,750  
Adjusted operating expenses excluding fuel, non-GAAP (4)     $ 293,990     $ 245,160     $ 1,168,617     $ 960,355  
                 
Available seat miles   5,705,398     4,372,511     21,246,156     16,340,142  
                 
CASM (cents)   7.00     8.79     7.68     9.65  
Adjusted CASM (cents) (3)   7.03     8.69     7.69     9.55  
Adjusted CASM ex-fuel (cents) (4)   5.15     5.61     5.50     5.88  
                         

(1) Special items include additional federal excise tax on a minority of fuel volume for the period beginning July 1, 2009 through December 31, 2013, unrealized gains and losses related to outstanding fuel derivative contracts, loss on disposal of assets, and special charges.
(2) Non-operating special charges relate to the settlement paid to the Pre-IPO Stockholders in excess of the liability the Company had previously estimated related to the Company's Tax Receivable Agreement.
(3) Excludes operating special items.
(4) 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 to GAAP Net Income
(unaudited)
 
  Three Months Ended   Year Ended
  December 31,   December 31,
(in thousands, except per share data)   2015       2014       2015       2014  
Net income, as reported $ 74,400     $ 55,909     $ 317,220     $ 225,464  
Add: Provision for income taxes 43,746     33,119     185,183     127,530  
Income before income taxes, as reported 118,146     89,028     502,403     352,994  
Pre-tax margin, GAAP 22.7 %   18.8 %   23.5 %   18.3 %
Add operating special items (1) (1,684 )   4,468     (1,603 )   16,212  
Add non-operating special charges (1)             1,388  
Income before income taxes, non-GAAP (2) 116,462     93,496     500,800     370,594  
Adjusted pre-tax margin, non-GAAP (2) 22.4 %   19.7 %   23.4 %   19.2 %
Provision for income taxes (3) 43,122     34,781     184,592     133,889  
Adjusted net income, non-GAAP (2)(3) $ 73,340     $ 58,715     $ 316,208     $ 236,705  
               
Weighted average shares, diluted 71,672     73,324     72,426     73,294  
               
Adjusted net income per share, diluted (2)(3)   $ 1.02     $ 0.80     $ 4.37     $ 3.23  

 

 
Reconciliation of Adjusted Operating Income to GAAP Operating Income
(unaudited)
 
  Three Months Ended   Year Ended
  December 31,   December 31,
(in thousands) 2015   2014   2015   2014
Operating income, as reported $ 120,337     $ 89,975     $ 509,122     $ 355,263  
Operating margin, GAAP 23.1 %   19.0 %   23.8 %   18.4 %
Add operating special items (1) (1,684 )   4,468     (1,603 )   16,212  
Operating income, non-GAAP (4)       $ 118,653     $ 94,443     $ 507,519     $ 371,475  
Operating margin (4) 22.8 %   19.9 %   23.7 %   19.2 %
                       

(1) See "Special Items" for more details.
(2) Excludes operating and non-operating special items.
(3) Assumes same marginal tax rate as is applicable to GAAP net income.
(4) Excludes special items.

The Company believes economic fuel expense is the best measure of the effect fuel prices are currently having on our business, because it most closely approximates the net cash outflow associated with purchasing fuel used for our operations during the period. Economic fuel expense is defined as into-plane fuel expense, realized gains or losses on derivative contracts, plus the economic premium expense related to fuel option contracts in the period the option is benefiting. The key difference between aircraft fuel expense as recorded in our statement of operations and economic fuel expense is unrealized mark-to-market changes in the value of aircraft fuel derivatives outstanding and the timing of premium gain or loss recognition on our outstanding fuel option contracts. Many industry analysts evaluate airline results using economic fuel expense, and it is used in our internal management reporting.

 
Reconciliation of Economic Fuel Expense to GAAP Fuel Expense
(unaudited)
 
  Three Months Ended   Year Ended
  December 31,   December 31,
(in thousands, except per gallon data) 2015   2014   2015   2014
Fuel expense              
Aircraft fuel, as reported $ 105,215     $ 138,002     $ 461,447     $ 612,909  
Less:              
Prior years' additional federal excise tax             9,278  
Unrealized losses (gains) related to fuel derivative contracts (1,988 )   3,118     (3,880 )   3,881  
Economic fuel expense, non-GAAP $ 107,203     $ 134,884     $ 465,327     $ 599,750  
               
Fuel gallons consumed 67,467     52,732     255,008     200,498  
               
Economic fuel cost per gallon, non-GAAP $ 1.59     $ 2.56     $ 1.82     $ 2.99  

 

 
Calculation of Return on Invested Capital
(unaudited)
 
  Twelve Months Ended
(in thousands) December 31, 2015
Operating income $ 509,122  
Add operating special items (1) (1,603 )
Adjustment for aircraft rent 211,531  
Adjusted operating income (2) 719,050  
Tax (36.9%) (3) 265,035  
Adjusted operating income, after-tax 454,015  
Invested capital  
Total debt $ 646,330  
Book equity 1,225,310  
Less: Unrestricted cash 803,632  
Add: Capitalized aircraft operating leases (7x Aircraft Rent) 1,480,717  
Total invested capital 2,548,725  
   
Return on invested capital (ROIC), pre-tax (2) 28.2 %
Return on invested capital (ROIC), after-tax (2)(3) 17.8 %
     

(1) See "Special Items" for more details.
(2) Excludes special items.
(3) Assumes same marginal tax rate as is applicable to GAAP net income for the twelve months ended December 31, 2015.

 

Investor Relations Contact:
DeAnne Gabel
InvestorRelations@Spirit.com
(954) 447-7920
         
Media Contact:
Paul Berry
Paul.Berry@Spirit.com
(954) 628-4827