February 19, 2013

Spirit Airlines Reports 4th Consecutive Year of Profitability and Record Full Year 2012 Net Income

MIRAMAR, Fla., Feb. 19, 2013 (GLOBE NEWSWIRE) -- Spirit Airlines, Inc. (Nasdaq:SAVE) today reported fourth quarter 2012 and full year 2012 financial results.

  • Net income for the fourth quarter 2012 was $19.5 million, or $0.27 per diluted share. Results for the fourth quarter and full year 2012 include an estimated $25 million negative revenue impact ($24 million pre-tax income, $15 million after tax) from Hurricane Sandy.
     
  • Adjusted CASM ex-fuel for the fourth quarter 2012 decreased 2.5 percent year-over-year. See "Reconciliation of Adjusted CASM ex-fuel to CASM" table below for more details.
     
  • Net income, excluding special items, for the full year 2012 was a record $103.8 million, or $1.43 per diluted share1. GAAP net income for the full year 2012 was a record $108.5 million, or $1.49 per diluted share.
     
  • For the fourth quarter 2012, Spirit achieved an operating margin, excluding special items, of 9.7 percent (15.8 percent adjusted for Hurricane Sandy)1. For the full year 2012, Spirit's operating margin, excluding special items, was 12.6 percent (14.2 percent adjusted for Hurricane Sandy). Operating margin on a GAAP basis was 9.7 percent and 13.2 percent for the fourth quarter and full year 2012, respectively.
     
  • Spirit ended 2012 with $416.8 million in unrestricted cash.
     
  • Spirit's return on invested capital (before taxes and excluding special items) was 26.5 percent (28.8 percent adjusted for Hurricane Sandy) for the year ended December 31, 2012. See "Calculation for Return on Invested Capital" table below for more details.

"2012 was a very exciting year for Spirit. We successfully grew our business, delivered strong financial results and remained committed to our low-cost, low-fare strategy. This low-cost, low-fare strategy helped us to achieve among the highest margins in the industry," said Ben Baldanza, Spirit's President and Chief Executive Officer. "I want to thank and congratulate our team members that contributed to our success."

Revenue Performance

For the fourth quarter 2012, Spirit's total operating revenue was $328.3 million, an increase of 19.8 percent, compared to fourth quarter 2011.

Total revenue per available seat mile ("RASM") for the fourth quarter 2012 was 11.10 cents, a decrease of 6.6 percent compared to the fourth quarter 2011 due to the negative revenue impact from Hurricane Sandy and a 5.3 percent increase in average stage length.  

Passenger flight segment ("PFS") volume grew 22.0 percent year-over-year in the fourth quarter 2012 with average non-ticket revenue per PFS for the fourth quarter 2012 increasing 9.4 percent year-over-year to $52.73 and average ticket revenue per PFS for the quarter decreasing 8.6 percent year-over-year to $71.30.   The growth in non-ticket revenue per PFS was primarily driven by a passenger usage fee increase implemented late in the fourth quarter of 2011.

For the full year 2012, total operating revenue increased 23.1 percent to $1.3 billion compared to the same period last year on a 21.3 percent increase in available seat miles.

Cost Performance

Total operating expenses in the fourth quarter 2012 were $296.3 million, an increase of 25.6 percent compared to the same period in 2011. The increase in operating expenses was primarily driven by fuel and other expenses associated with additional available seat miles ("capacity") which grew by 28.3 percent year-over-year. 

Cost per available seat mile excluding special items and fuel ("Adjusted CASM ex-fuel") for the fourth quarter 2012 decreased 2.5 percent year-over-year to 5.93 cents.   Primary drivers of the decrease included lower labor expense per ASM year-over-year due to lower unit overhead costs, lower distribution expense per ASM as a result of a decrease in credit card fees, and an increase in average stage length. These benefits were partially offset by start-up costs related to Spirit's seat maintenance program of $1.4 million during the fourth quarter 2012, bringing the total start-up costs related to this program to $6.8 million, and higher depreciation and amortization expense related to amortization of heavy maintenance events.

Total operating expense for the full year 2012 was $1.1 billion, up 23.5 percent as compared to the full year 2011, largely driven by fuel and other expenses associated with capacity increasing by 21.3 percent year-over-year.

Selected Balance Sheet and Cash Flow Items

As of December 31, 2012, Spirit had $416.8 million in unrestricted cash and cash equivalents, no restricted cash, no debt on its balance sheet, and total shareholders' equity of $582.5 million. 

During the fourth quarter 2012, Spirit incurred capital expenditures of $2.1 million, paid $5.8 million in pre-delivery deposits ("PDPs") for future deliveries of aircraft, net of reimbursements, and paid $2.1 million in maintenance reserves, net of reimbursements. 

Fleet

Spirit ended 2012 with 45 aircraft in its fleet.  The Company has nine aircraft scheduled for delivery in 2013, including seven new Airbus A320 aircraft and two used A319s.    

Fourth Quarter 2012 and Other Current Highlights 

  • Recently added/announced new service between (service start date):  
- Houston and Chicago (10/4/12) - Dallas/Fort Worth and Minneapolis/St. Paul (4/4/13)
- Houston and Las Vegas (10/4/12) - Dallas/Fort Worth and Philadelphia (4/4/13)
- Denver and Phoenix/Mesa (10/4/12)2 - Houston and Los Angeles (4/25/13)
- Chicago and Tampa (11/8/12)2 - Dallas/Fort Worth and Oakland/
- Chicago and Phoenix/Mesa (11/8/12)2 San Francisco (4/25/13)
- Minneapolis/St. Paul and Fort Lauderdale (11/8/12)2 - Dallas/Fort Worth and Los Angeles (4/25/13)
- Minneapolis/St. Paul and Fort Myers (11/8/12)2 - Dallas/Fort Worth and Cancun, Mexico (4/25/13)
- Dallas/Fort Worth and Fort Myers (11/8/12)2 - Baltimore/Washington and Las Vegas (4/25/13)
- Boston and Fort Myers (11/8/12)2 - Baltimore/Washington and Myrtle Beach (4/25/13)2
- San Diego and Portland, Oregon (11/8/12) - Philadelphia and Myrtle Beach (4/25/13)2
- San Diego and Los Cabos, Mexico (11/8/12) - Philadelphia and Las Vegas (4/25/13)
- Dallas/Fort Worth and New Orleans (1/24/13) - Minneapolis/St. Paul and Denver (4/25/13)2
- Houston and Orlando (2/14/13) - Dallas/Fort Worth and Los Cabos, Mexico (6/13/13)
- Detroit and Denver (2/14/13) - Dallas/Fort Worth and Latrobe/Pittsburgh (6/14/13)
  • Opened a Crew Base at Dallas/Fort Worth International Airport on December 1, 2012.
  • Became the Official Airline of the MiaGreen Conference & Expo.
  • Partnered with the AIDS Foundation Houston and 24th Annual AIDS Walk Houston 2013.
  • Sponsored the 200-Mile Ragnar Florida Keys Relay benefiting the Special Olympics Florida and HERA Women's Cancer Foundation.
  • Spirit maintained its commitment to offer low fares to its valued customers (average ticket revenue per passenger flight segment for the fourth quarter 2012 was $71.30).

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.

Conference Call/Webcast Details

Spirit will conduct a conference call to discuss these results today, February 19, 2013, 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, 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 in the U.S., Latin America and the Caribbean.  Visit Spirit at www.spirit.com.   

The Spirit Airlines logo is available at http://www.globenewswire.com/newsroom/prs/?pkgid=9737

End Notes

(1) See "Reconciliation of Adjusted Net Income to GAAP Net Income" table below for additional information.

(2) Seasonal service only.

Forward-Looking Statements

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 delivery schedule of aircraft on order, announced new service routes and customer savings programs. 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.

SPIRIT AIRLINES, INC.
Statement of Operations (1)
(in thousands, except per share data)
(unaudited)
             
 Three Months Ended
December 31,
PercentTwelve Months Ended
December 31,
Percent
 20122011Change20122011Change
Operating revenues:            
Passenger  $ 188,721  $ 169,270 11.5  $ 782,792  $ 689,650 13.5
Non-ticket 139,547 104,649 33.3 535,596 381,536 40.4
Total operating revenue328,268273,91919.81,318,3881,071,186 23.1
             
Operating expenses:            
Aircraft fuel 120,789 94,827 27.4 471,763 388,046 21.6
Salaries, wages and benefits 58,363 48,228 21.0 218,919 181,742 20.5
Aircraft rent 37,103 30,476 21.7 143,572 116,485 23.3
Landing fees and other rents 17,128 14,166 20.9 68,368 52,794 29.5
Distribution 13,109 12,203 7.4 56,668 51,349 10.4
Maintenance, materials and repairs 12,206 8,115 50.4 49,460 34,017 45.4
Depreciation and amortization 5,244 2,464 112.8 15,256 7,760 96.6
Other operating 32,024 24,396 31.3 127,886 91,172 40.3
Loss on disposal of assets 474 216 na 956 255 na
Special charges (credits)(2) (105) 805 na (8,450) 3,184 na
Total operating expenses296,335235,896 25.61,144,398926,804 23.5
        
Operating income31,93338,023 (16.0)173,990144,382 20.5
             
Other (income) expense:            
Interest expense 6 373 (98.4) 1,350 24,781 (94.6)
Capitalized interest (6) (371) (98.4) (1,350) (2,890) (53.3)
Interest income (159) (319) (50.2) (925) (575) 60.9
Other expense 95 70 35.7 331 235 40.9
Total other (income) expense (64) (247) (74.1) (594) 21,551 na
Income before income taxes31,99738,270(16.4)174,584122,83142.1
Provision for income taxes 12,431 14,279 (12.9) 66,124 46,383 42.6
Net income $ 19,566  $ 23,991 (18.4) $ 108,460  $ 76,448 41.9
Net income per share, basic $ 0.27  $ 0.33 (18.2) $ 1.50  $ 1.44 4.2
Net income per share, diluted $ 0.27  $ 0.33 (18.2) $ 1.49  $ 1.43 4.2
             
Weighted average shares, basic 72,442 72,242 0.3 72,386 53,241 36.0
Weighted average shares, diluted 72,623 72,473 0.2 72,591 53,515 35.6
             
(1) Certain prior period amounts have been reclassified to conform to the current year's presentation.            
(2) Special charges (credits) for 2012 include recognition of a gain on the sale of four carrier slots at Ronald Reagan National Airport and secondary offering costs related to the sale of 9.4 million shares by Oaktree Capital Management; and for 2011, include amounts relating to exit facility costs associated with moving our Detroit, Michigan maintenance operations to Fort Lauderdale, Florida and termination costs in connection with the IPO during the three months ended June 30, 2011 comprised of amounts paid to Indigo Partners, LLC to terminate its professional service agreement with Spirit and fees paid to three individual, unaffiliated holders of the Company's subordinated notes.
 
SPIRIT AIRLINES, INC.
Condensed Balance Sheets (1)
(unaudited, in thousands)
     
 December 31,
2012
December 31,
2011
Assets    
Current assets:    
Cash and cash equivalents  $ 416,816  $ 343,328
Accounts receivable, net 22,740 15,425
Deferred income taxes 12,591 20,738
Other current assets 95,210 63,217
Total current assets547,357442,708
     
Property and equipment:    
Flight equipment 2,648 4,182
Ground and other equipment 43,580 46,608
Less accumulated depreciation (17,825) (27,580)
  28,403 23,210
Deposits on flight equipment purchase contracts 96,692 91,450
Aircraft maintenance deposits 122,379 120,615
Deferred heavy maintenance and other long-term assets 125,053 67,830
Total assets $ 919,884  $ 745,813
Liabilities and shareholders' equity    
Current liabilities:    
Accounts payable  $ 24,166  $ 15,928
Air traffic liability 131,414 112,280
Other current liabilities 121,314 98,856
Total current liabilities276,894227,064
Long-term deferred income taxes 33,216 12,108
Deferred credits and other long-term liabilities 27,239 39,935
Shareholders' equity:    
Common stock 7 6
Additional paid-in-capital 504,527 496,136
Treasury stock (1,151) (129)
Retained earnings (deficit) 79,152 (29,308)
Total shareholders' equity582,535466,706
Total liabilities and shareholders' equity $ 919,884  $ 745,813
     
(1) Certain prior period amounts have been reclassified to conform to the current year's presentation.    
 
SPIRIT AIRLINES, INC.
Condensed Statement of Cash Flows
(unaudited, in thousands)
     
 Twelve Months Ended December 31,
 20122011
Operating activities:    
Net income $ 108,460  $ 76,448
Adjustments to reconcile net income to net cash provided by operations:    
Changes in fair value of open fuel hedge contracts 46 3,204
Equity based stock compensation, net 4,327 530
Allowance for doubtful accounts 78 27
Amortization of deferred gains, losses and debt issuance costs (830) (1,047)
Depreciation and amortization 15,256 7,760
Deferred income tax benefit 29,255 44,180
Loss on disposal of assets 956 255
Gain on slot sale (9,060)
Interest and dividends incurred but not paid 21,875
Capitalized interest (1,350) (2,890)
Changes in operating assets and liabilities:    
Restricted cash 72,736
Accounts receivable (7,393) (5,728)
Prepaid maintenance reserves (31,567) (36,848)
Long-term deposits and other assets (68,248) (15,992)
Accounts payable 8,452 2,457
Air traffic liability 19,134 6,573
Other liabilities 46,115 (2,189)
Other (153)
Net cash provided by operating activities113,631171,198
Investing activities:    
Proceeds from sale of property and equipment 14 150
Proceeds from sale of slots 9,060
Pre-delivery deposits for flight equipment, net of refunds (12,626) (53,274)
Purchase of property and equipment (23,771) (14,093)
Net cash used in investing activities(27,323)(67,217)
Financing activities:    
Proceeds from issuance of common stock, net offering expenses 170,828
Proceeds from options exercised 469 423
Payments on debt and capital lease obligations (18,221)
Proceeds from sale leaseback transactions 12,540 4,481
Payments to pre-IPO shareholders pursuant to tax receivable agreement (26,905)
Excess tax benefits from share-based compensation 2,098
Repurchase of common stock (1,022) (886)
Debt issuance costs 8
Net cash (used in) provided by financing activities(12,820)156,633
Net increase (decrease) in cash and cash equivalents 73,488 260,614
Cash and cash equivalents at beginning of period343,32882,714
Cash and cash equivalents at end of period$ 416,816$ 343,328
Supplemental disclosures    
Cash payments for:    
Interest  $ 303  $ 10,562
Taxes  $ 40,204  $ 1,477
Non-cash transactions:    
Exchange of notes due to related parties for common stock  $ — $ 279,206
Exchange of mandatorily redeemable preferred stock for common stock $ — $ 81,747
Liability and equity related to tax receivable agreement $ (1,497) $ 36,488
 
SPIRIT AIRLINES, INC.
Selected Operating Statistics (unaudited)
       
 Three Months Ended December 31,  
Operating Statistics20122011Change
Available seat miles (ASMs) (thousands) 2,956,150 2,303,852 28.3%
Revenue passenger miles (RPMs) (thousands) 2,519,392 1,966,545 28.1%
Load factor (%) 85.2 85.4 (0.2) pts
Passenger flight segments (thousands) 2,647 2,170 22.0%
Block hours 49,625 40,375 22.9%
Departures 19,908 16,843 18.2%
Operating revenue per ASM (RASM) (cents) 11.10 11.89 (6.6)%
Average yield (cents) 13.03 13.93 (6.5)%
Average ticket revenue per passenger flight segment ($) 71.30 78.00 (8.6)%
Average non-ticket revenue per passenger flight segment ($) 52.73 48.22 9.4%
Total revenue per passenger flight segment ($) 124.03 126.22 (1.7)%
CASM (cents) 10.02 10.24 (2.1)%
Adjusted CASM (cents) (1) 10.03 10.25 (2.1)%
Adjusted CASM ex-fuel (cents) (2) 5.93 6.08 (2.5)%
Fuel gallons consumed (thousands) 36,670 29,954 22.4%
Average economic fuel cost per gallon ($) 3.31 3.21 3.1%
Aircraft at end of period 45 37 21.6%
Average daily aircraft utilization (hours) 12.6 12.3 2.4%
Average stage length (miles) 932 885 5.3%
Airports served at end of period 51 48 6.3%
       
 Twelve Months Ended December 31,  
Operating Statistics20122011Change
Available seat miles (ASMs) (thousands) 11,344,731 9,352,553 21.3%
Revenue passenger miles (RPMs) (thousands) 9,663,721 8,006,748 20.7%
Load factor (%) 85.2 85.6 (0.4) pts
Passenger flight segments (thousands) 10,423 8,518 22.4%
Block hours 192,403 161,898 18.8%
Departures 78,582 65,565 19.9%
Operating revenue per ASM (RASM) (cents) 11.62 11.45 1.5%
Average yield (cents) 13.64 13.38 1.9%
Average ticket revenue per passenger flight segment ($) 75.11 80.97 (7.2)%
Average non-ticket revenue per passenger flight segment ($) 51.39 44.79 14.7%
Total revenue per passenger flight segment ($) 126.50 125.76 0.6%
CASM (cents) 10.09 9.91 1.8%
Adjusted CASM (cents) (1) 10.15 9.84 3.2%
Adjusted CASM ex-fuel (cents) (2) 6.00 5.72 4.9%
Fuel gallons consumed (thousands) 142,991 121,030 18.1%
Average economic fuel cost per gallon ($) 3.30 3.18 3.8%
Average daily aircraft utilization (hours) 12.8 12.7 0.8%
Average stage length (miles) 909 921 (1.3)%
       
(1)  Excludes unrealized mark-to-market (gains) and losses and special items as described in the "Reconciliation of Adjusted Net Income to GAAP Net Income" table below.
(2)  Excludes all components of fuel expense, including realized and unrealized mark-to-market hedge (gains) and losses, and special items as described in the "Reconciliation of Adjusted Net Income to GAAP Net Income" table below.

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.

Reconciliation of Adjusted Net Income to GAAP Net Income         
(unaudited)        
         
 Three Months Ended
December 31,
Twelve Months Ended
December 31,
(in thousands, except per share data)201220112012Pro forma
2011 (1)
Net income, as reported $ 19,566  $ 23,991  $ 108,460  $ 76,448
Add: Provision for income taxes 12,431 14,279 66,124 46,383
Income before income taxes, as reported 31,997 38,270 174,584 122,831
         
Add: Unrealized mark-to-market (gains) and losses (2) (414) (1,203) 46 3,204
Add special items (3):        
Loss on disposal of assets 474 216 956 255
Special charges (credits) (4) (105) 805 (8,450) 3,184
Income before income taxes, non-GAAP (5) 31,952 38,088 167,136 129,474
         
Add: Interest expense 23,964
Income before income taxes, non-GAAP (5) 31,952 38,088 167,136 153,438
Provision for income taxes (6) 12,414 14,211 63,303 57,941
Adjusted net income, non-GAAP (5) $ 19,538  $ 23,877  $ 103,833  $ 95,497
         
Weighted average shares, basic 72,442 72,242 72,386 72,138
Weighted average shares, diluted 72,623 72,473 72,591 72,413
         
Adjusted net income per share, basic $ 0.27  $ 0.33  $ 1.43  $ 1.32
Adjusted net income per share, diluted $ 0.27  $ 0.33  $ 1.43  $ 1.32
         
(1)  Pro forma earnings for full year 2011 are presented to give effect to the following as if the IPO occurred as of January 1, 2010: (i) the elimination of all of Spirit's outstanding indebtedness and preferred stock, and the termination of any outstanding letter of credit facility supporting collateral obligations due to Spirit's credit card processors through (x) the application of a portion of the IPO net proceeds, (y) the exchange of any notes not repaid with IPO net proceeds for shares of common stock and (z) the exchange of any shares of preferred stock not redeemed with IPO net proceeds for shares of common stock; (ii) adding back to net income the interest expense recorded in Spirit's statement of operations related to the indebtedness and preferred stock retired; (iii) the issuance of shares of common stock by Spirit in the IPO and in connection with the related recapitalization; and (iv) the estimated tax impact resulting from the above transactions.
(2)  Unrealized mark-to-market (gains) and losses are comprised of non-cash adjustments to aircraft fuel expenses.     
(3)  Special items include loss on disposal of assets and special charges (credits).         
(4)  Special charges (credits) for 2012 include recognition of a gain on the sale of four carrier slots at Ronald Reagan National Airport and secondary offering costs related to the sale of 9.4 million shares by Oaktree Capital Management; and for 2011, include amounts relating to exit facility costs associated with moving our Detroit, Michigan maintenance operations to Fort Lauderdale, Florida and termination costs in connection with the IPO during the three months ended June 30, 2011 comprised of amounts paid to Indigo Partners, LLC to terminate its professional service agreement with Spirit and fees paid to three individual, unaffiliated holders of the Company's subordinated notes.
(5)  Excludes unrealized mark-to-market (gains) and losses and special items.         
(6)  Assumes same marginal tax rate as is applicable to GAAP net income.         
       
Reconciliation of Adjusted CASM ex-fuel to CASM       
(unaudited)        
         
 Three Months Ended
December 31,
Twelve Months Ended
December 31,
(in thousands, except CASM data in cents)2012201120122011
Total operating expenses, as reported $ 296,335  $ 235,896  $ 1,144,398  $ 926,804
Less: Unrealized mark-to-market (gains) and losses (414) (1,203) 46 3,204
Less special items:        
Loss on disposal of assets 474 216 956 255
Special charges (credits) (105) 805 (8,450) 3,184
Operating expenses, non-GAAP (1) 296,380 236,078 1,151,846 920,161
Less: Economic fuel expense, non-GAAP 121,203 96,030 471,717 384,842
Operating expenses excluding fuel, non-GAAP (1) (2) $ 175,177  $ 140,048  $ 680,129  $ 535,319
         
Available seat miles 2,956,150 2,303,852 11,344,731 9,352,553
         
CASM (cents) 10.02 10.24 10.09 9.91
Adjusted CASM (cents) (1) 10.03 10.25 10.15 9.84
Adjusted CASM ex-fuel (cents) (2) 5.93 6.08 6.00 5.72
 
Reconciliation of Adjusted Operating Income and Hurricane Sandy-Adjusted Pro Forma Operating Income to GAAP Operating Income 
(unaudited)        
         
 Three Months Ended
December 31,
Twelve Months Ended
December 31,
(in thousands)2012201120122011
Operating income, as reported $ 31,933  $ 38,023  $ 173,990  $ 144,382
Operating margin, GAAP 9.7% 13.9% 13.2% 13.5%
Add: Unrealized mark-to-market (gains) and losses (414) (1,203) 46 3,204
Add special items:        
Loss on disposal of assets 474 216 956 255
Special charges (credits) (105) 805 (8,450) 3,184
Operating income, non-GAAP (1) $ 31,888  $ 37,841  $ 166,542  $ 151,025
Operating margin (1)9.7%13.8%12.6%14.1%
         
Estimated net operating impact from Hurricane Sandy  $ 24,000    $ 24,000  
Hurricane Sandy-Adjusted Pro Forma Operating Income $ 55,888   $ 190,542  
         
Estimated revenue impact from Hurricane Sandy  $ 25,000    $ 25,000  
Hurricane Sandy-Adjusted Pro Forma Total Operating Revenue $ 353,268   $ 1,343,388  
Hurricane Sandy-Adjusted Pro Forma Operating Margin 15.8%   14.2%  
         
(1)  Excludes unrealized fuel hedge (gains) and losses and special items as described in the "Reconciliation of Adjusted Net Income to GAAP Net Income" table above.
(2)  Excludes all components of fuel expense, including realized and unrealized fuel hedge (gains) and losses, and special items as described in the "Reconciliation of Adjusted Net Income to GAAP Net Income" table above.

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.

Reconciliation of non-GAAP Economic Fuel Expense to GAAP Fuel Expense     
(unaudited)        
         
 Three Months Ended
December 31,
Twelve Months Ended
December 31,
(in thousands, except per gallon data)2012201120122011
Fuel Expense        
Aircraft fuel, as reported  $ 120,789  $ 94,827  $ 471,763  $ 388,046
Less: Unrealized mark-to-market (gains) and losses (414) (1,203) 46 3,204
Economic fuel expense, non-GAAP $ 121,203  $ 96,030  $ 471,717  $ 384,842
         
Fuel gallons consumed 36,670 29,954 142,991 121,030
         
Economic fuel cost per gallon, non-GAAP $ 3.31  $ 3.21  $ 3.30  $ 3.18
       
Calculation of Return on Invested Capital       
 (unaudited)      
       
(in thousands)Twelve Months Ended
December 31, 2012
Hurricane Sandy
Adjustments
Hurricane Sandy-
Adjusted
Operating Income  $ 173,990  $ 24,000  $ 197,990
Add: Unrealized mark-to-market and losses (1) 46   46
Add special items:      
Special charges (credits) (1) (8,450)   (8,450)
Loss on disposal of assets 956   956
Adjustment for Aircraft Rent 143,572   143,572
Adjusted Operating Income (1) $ 310,114  $ 24,000  $ 334,114
Tax (37.9%) (2) 117,533 9,096 126,629
Adjusted Operating Income, after-tax $ 192,581  $ 14,904  $ 207,485
Invested Capital      
Total Debt $ —    $ —
Book Equity 582,535 14,904 597,439
Less: Unrestricted Cash 416,816 24,000 440,816
Add: Capitalized Aircraft Operating Leases (7x Aircraft Rent) 1,005,004   1,005,004
Total Invested Capital $ 1,170,723  $ (9,096) $ 1,161,627
       
Return on Invested Capital (ROIC), pre-tax 26.5%   28.8%
Return on Invested Capital (ROIC), after-tax 16.4%   17.9%
       
(1)  Excludes unrealized mark-to-market (gains) and losses and special items as described in the "Reconciliation of Adjusted Net Income to GAAP Net Income" table below.
(2)  Assumes same marginal tax rate as is applicable to GAAP net income.       
CONTACT: Investor Relations Contact:

         DeAnne Gabel

         Director, Investor Relations

         954-447-7920

         InvestorRelations@spirit.com

         

         Media Contacts:

         Misty Pinson

         Director, Corporate Communications

         misty.pinson@spirit.com

         954-628-4827/cell 954-918-9432

         

         Manuel Jaquez (Latin America & Caribbean)

         Senior Manager Commercial - Latin America

         manuel.jaquez@spirit.com

         954-628-4898


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