MIRAMAR, FLORIDA (October 31, 2012) - Spirit Airlines, Inc. (NASDAQ: SAVE) today reported third quarter 2012 financial results.
- Net income, excluding special items, for the third quarter 2012 was $25.2 million, or $0.35 per diluted share1. GAAP net income for the third quarter 2012 was $30.9 million, or $0.43 per diluted share.
- Operating margin, excluding special items, for the third quarter of 2012 was 11.8 percent1. Operating margin on a GAAP basis was 14.5 percent for the third quarter of 2012.
- Adjusted EBITDAR for the third quarter 2012 was $81.8 million, resulting in an Adjusted EBITDAR margin of 23.9 percent.
- Spirit ended the third quarter 2012 with $399.1 million in unrestricted cash.
"As we grow our network, we are pleased to continue to offer our customers the lowest fares in our markets. Giving our customers the freedom to choose only the services and products they value allows them to save money and helps us keep our costs low which, in turn, provides value to our shareholders," said Ben Baldanza, Spirit's President and Chief Executive Officer. "While this quarter reflected previously described difficult revenue comparisons as we lapped the benefit from the Federal Excise Tax holiday last year, we remain on target to achieve our goal of growing capacity 15 to 20 percent while sustaining an annualized EBITDAR margin of 24 to 26 percent for the full year 2012."
For the third quarter 2012, Spirit's total operating revenue was $342.3 million, an increase of $53.6 million, or 18.6 percent, compared to third quarter 2011 on a capacity increase of 22.7 percent.
Total revenue per available seat mile ("RASM") for the third quarter 2012 was 11.52 cents, a decrease of 3.4 percent compared to the third quarter 2011, driven by lower load factor and operating yields against very strong results last year.
Passenger flight segment ("PFS") volume grew 23.2 percent year-over-year in the third quarter 2012 with total revenue per PFS of $121.65. Average non-ticket revenue per PFS for the third quarter 2012 increased 11.5 percent year-over-year to $49.80 while average ticket revenue per PFS for the quarter decreased 12.1 percent year-over-year to $71.85 as Spirit continued its strategy to offer low base fares while increasing revenue from non-ticket sources. In addition, ticket revenue per passenger segment in the third quarter 2011 included the benefit from the Federal Excise Tax holiday.
Total operating expenses in the third quarter 2012 were $292.6 million, an increase of $48.5 million, or 19.9 percent, compared to the same period in 2011, primarily driven by fuel and other expenses associated with increased flight volume, partially offset by a gain associated with the sale of four air carrier slots at Ronald Reagan National Airport. Other expense drivers included passenger re-accommodation costs related to flight cancellations and crew-related costs as a result of network scope changes.
Cost per available seat mile excluding special items and fuel ("Adjusted CASM ex-fuel") for the third quarter 2012 was 6.02 cents, an increase of 4.9 percent year-over-year, largely driven by higher passenger re-accommodation costs related to flight cancellations. Other primary drivers included additional rent for an aircraft temporarily leased from a third-party provider to maintain desired capacity levels during the summer, start-up costs associated with the Company's seat maintenance program and implementation costs of an Enterprise Resource Planning (ERP) system.
During the third quarter 2012, the Company incurred start-up costs related to its seat maintenance program of $2.3 million, bringing its total costs incurred related to this program to $5.4 million. Spirit estimates that total start-up costs related to this program will be approximately $7 million with the remaining balance incurred in the fourth quarter 2012.
Selected Balance Sheet and Cash Flow Items
At the end of the third quarter 2012, Spirit had $399.1 million in unrestricted cash and cash equivalents and no restricted cash balance. As of September 30, 2012, the Company had no debt on its balance sheet and total shareholders' equity of $559.5 million.
During the third quarter 2012, the Company had capital expenditures of $2.5 million, paid $11.5 million in pre-delivery deposits ("PDPs") for future deliveries of aircraft and spare engines and paid $13.0 million in maintenance reserves, net of reimbursements.
Spirit ended the third quarter 2012 with 42 aircraft in its fleet. The Company has two new A320 aircraft scheduled for delivery in the fourth quarter 2012, which deliveries would bring the year-end 2012 fleet to 44 aircraft. In addition, in October 2012, Spirit signed a Letter of Intent with ILFC to lease three used A319 and five A320neo aircraft, subject to final documentation. These aircraft are undergoing customary maintenance checks, and the Company currently expects one A319 aircraft to be delivered in December 2012 with two expected to be delivered in January 2013. Delivery dates for the A320neo aircraft will be confirmed after Spirit has made a decision on its engine type selection for the A320neo.
Third Quarter 2012 and Other Current Highlights
- Recently added/announced new service between (service start date):
- Dallas/Fort Worth and Baltimore/Washington (9/6/12)
- Fort Lauderdale and Baltimore/Washington (9/6/12)
- Dallas/Fort Worth and Houston (9/20/12)
- Houston and Chicago (10/4/12)
- Houston and Las Vegas (10/4/12)
- Denver and Phoenix/Mesa (10/4/12)
- Chicago and Tampa (11/8/12)*
- Chicago and Phoenix/Mesa (11/8/12)*
- Minneapolis/St. Paul and Fort Lauderdale (11/8/12)*
- Minneapolis/St. Paul and Fort Myers (11/8/12)*
- Dallas/Fort Worth and Fort Myers (11/8/12)*
- Boston and Fort Myers (11/8/12)*
- San Diego and Portland, Oregon (11/8/12)
- San Diego and Los Cabos, Mexico (11/8/12)**
- Dallas/Fort Worth and New Orleans (1/24/13)
- Dallas/Fort Worth and Oakland/ San Francisco (4/25/13)
- Dallas/Fort Worth and Los Angeles (4/25/13)
- Dallas/Fort Worth and Cancun, Mexico (4/25/13)
- Dallas/Fort Worth and Minneapolis/St. Paul (4/25/13)
- Dallas/Fort Worth and Philadelphia (4/25/13)
- Dallas/Fort Worth and Los Cabos, Mexico (6/13/12)**
- Dallas/Fort Worth and Latrobe/Pittsburgh (6/14/13)
- Announced opening a Crew Base at Dallas/Fort Worth International Airport on December 1, 2012.
*Seasonal service only
**Spirit has filed with the U.S. Department of Transportation ("DOT") to begin nonstop service between Dallas/Fort Worth and Los Cabos, Mexico and between San Diego and Los Cabos, Mexico, subject to necessary governmental approval.
Investors are urged to read carefully the Company's periodic reports filed with or furnished to the Securities and Exchange Commission, including its Annual Report on Form 10-K and Quarterly Reports on Form 10-Q, for additional information regarding the Company.
(1) See "Reconciliation of Adjusted Net Income to GAAP Net Income" table below for additional information.
Conference Call/Webcast Details
Spirit will conduct a conference call to discuss these results today, October 31, 2012, at 11:00 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) empowers customers to save money on air travel by offering ultra low base fares with a range of optional services for a fee, allowing customers the freedom to choose only the extras they value. This innovative approach grows the traveling market and stimulates new economic activity while creating new jobs. Spirit's modern fleet, configuration and other innovations enable Spirit to burn less fuel per seat than competitors, making Spirit one of the most environmentally-friendly U.S. carriers. Spirit's all-Airbus fleet currently operates more than 200 daily flights to over 50 destinations within the U.S., Latin America and Caribbean. Visit Spirit at www.spirit.com.
Statements in this release contain various forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, which represent the Company's expectations or beliefs concerning future events. When used in this release, the words "expects," "estimates," "plans," "anticipates," "indicates," "believes," "forecast," "guidance," "outlook," "may," "will," "should," "seeks," "targets" and similar expressions are intended to identify forward-looking statements. Similarly, statements that describe the Company's objectives, plans or goals, or actions the Company may take in the future, are forward-looking statements. Forward-looking statements include, without limitation, statements regarding the Company's intentions and expectations regarding the management of future maintenance costs related to the Company's seat maintenance program, the delivery schedule of aircraft on order, announced new service routes and customer savings programs, and expectations regarding future results of operations, including EBITDAR margin and capacity growth. All forward-looking statements in this release are based upon information available to the Company on the date of this release. The Company undertakes no obligation to publicly update or revise any forward-looking statement, whether as a result of new information, future events, or otherwise. Forward-looking statements are subject to a number of factors that could cause the Company's actual results to differ materially from the Company's expectations, including the competitive environment in the airline industry; the Company's ability to keep costs low; changes in fuel costs; the impact of worldwide economic conditions on customer travel behavior; the Company's ability to generate non-ticket revenues; and government regulation. 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 for the year ended December 31, 2011.
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 Spirit'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.
The Company's economic fuel cost per gallon differs from GAAP results in that it only includes the cash settlements related to fuel hedge contracts that settled during the period whereas the GAAP results also include the non-cash mark-to-market impact of all fuel hedge contracts expected to settle in future periods. The Company believes that net fuel hedge adjustments provide management and investors the ability to better assess and compare its performance.
Investor Relations Contact:
Director, Investor Relations
Director, Corporate Communications
954-628-4827/cell (954) 918-9432
Manuel Jaquez (Latin America & Caribbean)
Senior Manager Commercial - Latin America