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Section 1: 8-K (8-K)

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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
____________________
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): February 5, 2019
____________________
SPIRIT AIRLINES, INC.
(Exact name of registrant as specified in its charter)

Delaware
(State or other jurisdiction of incorporation)

001-35186
(Commission File Number)
38-1747023
(IRS Employer Identification Number)

2800 Executive Way
Miramar, Florida 33025
(Address of principal executive offices, including Zip Code)

(954) 447-7920
(Registrant's telephone number, including area code)
____________________
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
[]
Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
 
 
[]
Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
 
 
[]
Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
 
 
[]
Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
 
  






Item 2.02.
Results of Operations and Financial Condition.
On February 5, 2019, Spirit Airlines, Inc. (the “Company” or “Spirit”) issued a press release announcing its unaudited financial results for the fourth quarter and full year 2018. A copy of the press release is attached hereto as Exhibit 99.1 and is incorporated herein by reference.
Non-GAAP financial measures that reflect adjustments from historical financial data prepared under GAAP, including adjustments for special items, are included in the press release as supplemental disclosures because the Company believes they are useful indicators of the Company's operating performance for comparative purposes. These non-GAAP financial measures are well recognized performance measurements in the airline industry that are frequently used by investors, securities analysts and other interested parties in comparing the operating performance of companies in the airline industry. The non-GAAP financial measures provided have limitations as an analytical tool. Because of these limitations, non-GAAP financial measures should not be considered in isolation or as a substitute for performance measures calculated in accordance with GAAP. The Company has also provided in the press release reconciliations of these non-GAAP financial measures to the appropriate GAAP financial measures.

Item 7.01
Regulation FD Disclosure.
The information in this report furnished pursuant to Item 7.01 shall not be deemed “filed” for the purposes of Section 18 of the Securities and Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liabilities of that section. It may only be incorporated by reference in another filing under the Exchange Act or the Securities Act of 1933, as amended (the “Securities Act”), if such subsequent filing specifically references the information furnished pursuant to Item 7.01 of this report.
On February 5, 2019, the Company provided an update to investors regarding the Company's first quarter and full year 2019 guidance; a copy of which is attached hereto as Exhibit 99.2 and is incorporated herein by reference. The guidance provided therein is only an estimate of what the Company believes is realizable as of the date of this investor update. Actual results may vary from the guidance and the variations may be material. The Company undertakes no intent or obligation to publicly update or revise any of these projections, whether as a result of new information, future events or otherwise, except as required by law.


Item 9.01.
Financial Statements and Exhibits.
(d)    Exhibits

The following is furnished as an exhibit to this report and shall not be deemed “filed” for purposes of Section 18 of the Exchange Act:

Exhibit No.
Description
 
 
99.1
Press Release regarding fourth quarter and full year 2018 financial results.
99.2
Investor Update regarding first quarter and full year 2019 guidance.









SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.


Date: February 5, 2019
SPIRIT AIRLINES, INC.


By: /s/ Thomas Canfield    
Name: Thomas Canfield
Title: Senior Vice President and General Counsel




EXHIBIT INDEX

Exhibit No.
Description
 
 
99.1
99.2

 


(Back To Top)

Section 2: EX-99.1 (EARNINGS RELEASE 4Q18)

Exhibit


396629038_logo3a06.jpg 396629038_logo2a03.jpg
EXHIBIT 99.1

Spirit Airlines Reports Fourth Quarter and Full Year 2018 Results

MIRAMAR, Fla., February 5, 2019 - Spirit Airlines, Inc. (NYSE: SAVE) today reported fourth quarter and full year 2018 financial results.
GAAP net income for the fourth quarter 2018 was $91.9 million ($1.34 per diluted share), or $94.7 million ($1.38 per diluted share)1 excluding special items.

GAAP net income for the full year 2018 was $155.7 million ($2.28 per diluted share), or $300.9 million ($4.40 per diluted share)1 excluding special items.

GAAP operating margin for the fourth quarter 2018 was 15.8 percent, or 16.2 percent excluding special items1. GAAP operating margin for the full year 2018 was 10.6 percent, or 13.5 percent excluding special items1.

Spirit ended 2018 with unrestricted cash, cash equivalents, and short-term investments of $1.1 billion.

“Our robust fourth quarter profit closes out a very successful year for Spirit. Despite cost pressures from significantly higher fuel and pilot wage rates, Spirit produced strong earnings growth for 2018, made great strides in improving our customer satisfaction metrics and delivered excellent operational performance. As measured by the Department of Transportation, for the full year 2018, we achieved a record on-time performance of 81.1 percent and a completion factor of 99.1 percent.  Based on preliminary estimates, these results earned us the rank of fourth among the reporting marketing carriers in both these categories.  In 2018, our initiatives to drive both passenger and ancillary revenue produced healthy top-line revenue growth, and we expect them to drive additional benefit in 2019. Our revenue initiatives, together with our continued strong cost and operational performance position us well to succeed in the year ahead,” said Ted Christie, Spirit’s President and Chief Executive Officer. 

Revenue Performance
For the fourth quarter 2018, Spirit's total operating revenue was $862.8 million, an increase of 29.5 percent compared to the fourth quarter 2017. Total operating revenue per available seat mile ("TRASM") for the fourth quarter 2018 increased 11.4 percent compared to the same period last year. During the fourth quarter 2018, the Company's results continued to benefit from its improved yield management processes, non-ticket revenue initiatives, strategic network re-orientation, and a strong operating environment.
 
On a per passenger flight segment basis, total revenue for the fourth quarter 2018 increased 7.3 percent year over year to $117.15 with fare revenue per passenger flight segment increasing 9.3 percent to $60.45 and non-ticket revenue per passenger flight segment increasing 5.2 percent to $56.702.

Cost Performance
For the fourth quarter 2018, total GAAP operating expenses, increased 26.4 percent year over year to $726.7 million. Adjusted operating expenses for the fourth quarter 2018 increased 25.2 percent year over year to $723.4 million3. These changes were primarily driven by increases in salaries, wages and benefits, fuel rates, and depreciation and amortization.


1




Aircraft fuel expense increased in the fourth quarter 2018 by 31.1 percent year over year, due to a 14.7 percent increase in the cost of fuel per gallon and a 14.4 percent increase in fuel gallons consumed.
 
Spirit reported fourth quarter 2018 cost per available seat mile ("ASM"), excluding special items and fuel (“Adjusted CASM ex-fuel”), of 5.49 cents3, an increase of 5.6 percent compared to the same period last year, primarily due to higher salaries, wages and benefits per ASM largely driven by rate increases pilots received in connection with the new collective bargaining agreement that became effective March 1, 2018. This increase was partially offset by lower aircraft rent per ASM.

“I want to congratulate and thank our entire team for delivering industry-leading cost performance during 2018.  Despite absorbing materially higher pilot rates in connection with our new pilot agreement ratified in the first quarter 2018, our adjusted CASM ex-fuel for the full year 2018 was down 3.8 percent year over year.  We remain confident that over the next five years our relative cost performance versus our primary competitors will continue to increase, further strengthening our competitive position,” said Scott Haralson, Spirit's Chief Financial Officer.

Fleet
Spirit took delivery of seven new aircraft (five new A320ceo and two A320neo) during the fourth quarter 2018, ending the year with 128 aircraft in its fleet.

New Routes
Orlando - Aguadilla, Puerto Rico (10/04/2018)
Orlando - Guatemala City, Guatemala (10/04/2018)
Orlando - Panama City, Panama (10/04/2018)
Orlando - Santo Domingo, Dominican Republic (10/04/2018)
Orlando - San Jose, Costa Rica (10/05/2018)
Orlando - San Pedro Sula, Honduras (10/05/2018)
Orlando - San Salvador, El Salvador (10/06/2018)
Fort Lauderdale - Kansas City (11/08/2018) *
Newark - Santo Domingo (11/08/2018) *
Orlando - Bogotá, Colombia (11/08/2018)
Orlando - St. Thomas, USVI (11/08/2018)
Orlando - Medellín, Colombia (11/09/2018)
Orlando - Cartagena, Colombia (11/10/2018)
Orlando - Myrtle Beach (11/10/2018)
Philadelphia - Fort Myers (12/13/2018) *
Philadelphia - Tampa (12/14/2018) *
Cali, Colombia - Fort Lauderdale (12/20/2018)
Jacksonville - Detroit (12/20/2018)
Jacksonville - Chicago (12/20/2018)
Detroit - Montego Bay (12/20/2018)
Detroit - West Palm Beach (12/21/2018) *

* Indicates seasonal service

Full Year 2018 Highlights
As measured by the Department of Transportation, achieved a record high on-time performance ranking fourth in on-time arrivals among the reportable carriers based on preliminary results.

Named "Value Airline of the Year" by Air Transport World, named the " Most Improved Airline of the Year" by the Airline Passenger Experience Association, and ranked as the country's most on-time Low-Cost airline by FlightGlobal.

Launched a major International expansion from Orlando International Airport to 12 destinations in Latin America and the Caribbean.


2




Launched service to the following new destinations: Columbus; Richmond; Guayaquil, Ecuador; Cap-Haïtien, Haiti; St. Croix, U.S. Virgin Islands; Greensboro; Asheville; Cali, Colombia; and Jacksonville.

Ratified a new five-year agreement with its pilots, represented by the Air Line Pilots Association.

Ratified a new five-year agreement with its dispatchers, represented by the Professional Airline Flight Control Association.

Conference Call/Webcast Detail
Spirit will conduct a conference call to discuss these results tomorrow, February 6, 2018, at 9:30 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 (NYSE: SAVE) is committed to delivering the best value in the sky while providing an exceptional Guest experience.  We are the leader in providing customizable travel options starting with an unbundled fare.  This allows every Guest to pay only for the options they choose - like bags, seat assignments, and refreshments - something we call Á La Smarte.  We make it possible for our Guests to venture further, travel more often, and discover more than ever before.  Our Fit Fleet® is one of the youngest and most fuel-efficient in the U.S.  We operate more than 600 daily flights to 72 destinations in the U.S., Latin America, and the Caribbean, and are dedicated to giving back and improving the communities we serve.  Come save with us at www.spirit.com.  At Spirit Airlines, we go.  We go for you.

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 of Total Non-ticket Revenue per Passenger Segment" 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. 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,

3




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.


4




SPIRIT AIRLINES, INC.
Condensed Statement of Operations
(unaudited, in thousands, except per-share data)


 
Three Months Ended
 
 
 
Year Ended
 
 
 
December 31,
 
Percent
 
December 31,
 
Percent

2018

2017
 
Change
 
2018
 
2017
 
Change
Operating revenues:
 
 
 
 

 
 
 
 
 
 
Passenger
$
846,568

 
$
650,647

 
30.1

 
$
3,260,015

 
$
2,572,887

 
26.7

Other
16,227

 
15,535

 
4.5

 
63,019

 
70,665

 
(10.8
)
Total operating revenues
862,795

 
666,182

 
29.5

 
3,323,034

 
2,643,552

 
25.7

 
 
 
 
 
 
 
 
 
 
 
 
Operating expenses:
 
 
 
 
 
 
 
 
 
 
 
Aircraft fuel
229,680

 
175,205

 
31.1

 
939,324

 
615,581

 
52.6

Salaries, wages and benefits
191,740

 
136,815

 
40.1

 
719,635

 
527,959

 
36.3

Landing fees and other rents
51,903

 
46,117

 
12.5

 
214,677

 
180,655

 
18.8

Aircraft rent
43,023

 
42,820

 
0.5

 
177,641

 
205,852

 
(13.7
)
Depreciation and amortization
47,963

 
36,472

 
31.5

 
176,727

 
140,152

 
26.1

Distribution
33,505

 
28,170

 
18.9

 
137,001

 
113,472

 
20.7

Maintenance, materials and repairs
29,937

 
28,966

 
3.4

 
129,078

 
110,439

 
16.9

Special charges
265

 

 
nm

 
88,921

 
12,629

 
nm

Loss on disposal of assets
3,019

 
1,054

 
nm

 
9,580

 
4,168

 
nm

Other operating
95,695

 
79,267

 
20.7

 
379,536

 
347,820

 
9.1

Total operating expenses
726,730

 
574,886

 
26.4

 
2,972,120

 
2,258,727

 
31.6

 
 
 
 
 
 
 
 
 
 
 
 
Operating income
136,065

 
91,296

 
49.0

 
350,914

 
384,825

 
(8.8
)
 
 
 
 
 
 
 
 
 
 
 
 
Other (income) expense:
 
 
 
 
 
 
 
 
 
 
 
Interest expense
23,505

 
16,065

 
46.3

 
83,777

 
57,302

 
46.2

Capitalized interest
(2,636
)
 
(3,668
)
 
(28.1
)
 
(9,841
)
 
(13,793
)
 
(28.7
)
Interest income
(5,835
)
 
(2,990
)
 
95.2

 
(19,107
)
 
(8,736
)
 
118.7

Other expense
129

 
145

 
nm

 
752

 
366

 
nm

Special charges, non-operating

 

 
nm

 
90,357

 

 
nm

Total other (income) expense
15,163

 
9,552

 
58.7

 
145,938

 
35,139

 
315.3

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Income before income taxes
120,902

 
81,744

 
47.9

 
204,976

 
349,686

 
(41.4
)
Provision (benefit) for income taxes
28,965

 
(165,231
)
 
(117.5
)
 
49,227

 
(65,836
)
 
(174.8
)
 
 
 
 
 
 
 
 
 
 
 
 
Net income
$
91,937

 
$
246,975

 
(62.8
)
 
$
155,749

 
$
415,522

 
(62.5
)
Basic earnings per share
$
1.35

 
$
3.59

 
(62.4
)
 
$
2.28

 
$
6.00

 
(62.0
)
Diluted earnings per share
$
1.34

 
$
3.58

 
(62.6
)
 
$
2.28

 
$
5.99

 
(61.9
)

 
 
 
 
 
 
 
 
 
 
 
Weighted average shares, basic
68,267

 
68,799

 
(0.8
)
 
68,249

 
69,221

 
(1.4
)
Weighted average shares, diluted
68,687

 
68,901

 
(0.3
)
 
68,431

 
69,377

 
(1.4
)

Prior period amounts have been reclassified to reflect the adoption of ASU No. 2014-09, " Revenue from Contracts with
Customers," completed in the first quarter of 2018.



5




SPIRIT AIRLINES, INC.
Condensed Statements of Comprehensive Income (Loss)
(unaudited, in thousands)

 
Three Months Ended
 
Year Ended
 
December 31,
 
December 31,
 
2018
 
2017
 
2018
 
2017
Net income
$
91,937

 
$
246,975

 
$
155,749

 
$
415,522

Unrealized gain (loss) on short-term investment securities, net of deferred taxes of $22, ($34), $44 and ($41)
(40
)
 
(71
)
 
30

 
(82
)
Interest rate derivative loss reclassified into earnings, net of taxes of $9, $279, $75 and $372
68

 
(196
)
 
241

 
(37
)
Other comprehensive income (loss)
$
28

 
$
(267
)
 
$
271

 
$
(119
)
Comprehensive income
$
91,965

 
$
246,708

 
$
156,020

 
$
415,403












































Prior period amounts have been reclassified to reflect the adoption of ASU No. 2014-09, " Revenue from Contracts with Customers," completed in the first quarter of 2018.

6




SPIRIT AIRLINES, INC.
Condensed Balance Sheets
(unaudited, in thousands)
 
December 31,
 
December 31,
 
2018
 
2017
Assets
 
 
 
Current assets:
 
 
 
Cash and cash equivalents
$
1,004,733

 
$
800,849

Short-term investment securities
102,789

 
100,937

Accounts receivable, net
47,660

 
49,323

Aircraft maintenance deposits, net
106,901

 
175,615

Income tax receivable

 
69,844

Prepaid expenses and other current assets
83,383

 
85,542

Total current assets
1,345,466

 
1,282,110

 
 
 
 
Property and equipment:
 
 
 
Flight equipment
3,257,215

 
2,291,110

Ground property and equipment
191,661

 
155,166

Less accumulated depreciation
(332,864
)
 
(207,808
)
 
3,116,012

 
2,238,468

Pre-delivery deposits on flight equipment
236,775

 
253,687

Long-term aircraft maintenance deposits
138,738

 
150,617

Deferred heavy maintenance, net
249,010

 
99,915

Other long-term assets
79,456

 
121,003

Total assets
$
5,165,457

 
$
4,145,800

 
 
 
 
Liabilities and shareholders’ equity
 
 
 
Current liabilities:
 
 
 
Accounts payable
$
39,320

 
$
22,822

Air traffic liability
291,981

 
263,711

Current maturities of long-term debt and capital leases
163,557

 
115,430

Other current liabilities
339,677

 
262,370

Total current liabilities
834,535

 
664,333

 
 
 
 
Long-term debt and capital leases, less current maturities
2,024,774

 
1,387,498

Deferred income taxes
355,141

 
308,814

Deferred gains and other long-term liabilities
22,503

 
22,581

Shareholders’ equity:
 
 
 
Common stock
7

 
7

Additional paid-in-capital
371,225

 
360,153

Treasury stock, at cost
(67,016
)
 
(65,854
)
Retained earnings
1,625,481

 
1,469,732

Accumulated other comprehensive income (loss)
(1,193
)
 
(1,464
)
Total shareholders’ equity
1,928,504

 
1,762,574

Total liabilities and shareholders’ equity
$
5,165,457

 
$
4,145,800


Prior period amounts have been reclassified to reflect the adoption of ASU No. 2014-09, " Revenue from Contracts with Customers," completed in the first quarter of 2018.


7




SPIRIT AIRLINES, INC.
Condensed Statement of Cash Flows
(unaudited, in thousands)
 
Year Ended December 31,
 
2018
 
2017
Operating activities:
 
 
 
Net income
$
155,749

 
$
415,522

Adjustments to reconcile net income to net cash provided by operations:
 
 
 
Losses reclassified from other comprehensive income
315

 
335

Stock-based compensation
11,021

 
8,522

Allowance for doubtful accounts (recoveries)
(11
)
 
(53
)
Amortization of deferred gains and losses and debt issuance costs
8,819

 
7,944

Depreciation and amortization
176,727

 
140,152

Deferred income tax expense (benefit)
46,303

 
(492
)
Loss on disposal of assets
9,580

 
4,168

Lease termination costs

 
12,629

Special charges, non-operating
90,357

 

 
 
 
 
Changes in operating assets and liabilities:
 
 
 
Accounts receivable
1,674

 
(8,134
)
Aircraft maintenance deposits, net
14,019

 
(37,930
)
Long-term deposits and other assets
(4,803
)
 
(50,951
)
Deferred heavy maintenance, net
(190,381
)
 
(78,237
)
Income tax receivable
69,844

 
(69,844
)
Accounts payable
15,317

 
6,030

Air traffic liability
28,270

 
43,527

Other liabilities
74,038

 
31,672

Other
(375
)
 
380

Net cash provided by operating activities
506,463

 
425,240

Investing activities:
 
 
 
Purchase of available-for-sale investment securities
(124,430
)
 
(107,246
)
Proceeds from the maturity of available-for-sale investment securities
122,947

 
105,906

Proceeds from sale of property and equipment
11,400

 

Pre-delivery deposits on flight equipment, net of refunds
(177,424
)
 
(149,477
)
Capitalized interest
(8,729
)
 
(12,305
)
Assets constructed for others
(501
)
 

Purchase of property and equipment
(606,971
)
 
(628,881
)
Net cash used in investing activities
(783,708
)
 
(792,003
)
Financing activities:
 
 
 
Proceeds from issuance of long-term debt
832,099

 
629,725

Proceeds from stock options exercised
51

 
45

Payments on debt obligations
(137,275
)
 
(102,313
)
Payments on capital lease obligations
(205,720
)
 
(425
)
Reimbursement for assets under construction for others
501

 

Repurchase of common stock
(1,162
)
 
(46,580
)
Debt issuance costs
(7,365
)
 
(13,740
)
Net cash provided by financing activities
481,129

 
466,712

Net increase (decrease) in cash and cash equivalents
203,884

 
99,949

Cash and cash equivalents at beginning of period
800,849

 
700,900

Cash and cash equivalents at end of period
$
1,004,733

 
$
800,849

Supplemental disclosures
 
 
 
Cash payments for:
 
 
 
Interest, net of capitalized interest
$
65,123

 
$
37,902

Income taxes paid, net of refunds
$
(73,489
)
 
$
5,826

Non-cash transactions:
 
 
 
Capital expenditures funded by capital lease borrowings
$
(987
)
 
$
(1,370
)

Prior period amounts have been reclassified to reflect the adoption of ASU No. 2014-09, " Revenue from Contracts with Customers," completed in the first quarter of 2018.

 

8




SPIRIT AIRLINES, INC.
Selected Operating Statistics
(unaudited)
 
Three Months Ended December 31,

 
Operating Statistics
2018

2017

Change
Available seat miles (ASMs) (thousands)
8,998,928


7,741,030


16.2
 %
Revenue passenger miles (RPMs) (thousands)
7,606,962


6,319,924


20.4
 %
Load factor (%)
84.5


81.6


2.9
  pts
Passenger flight segments (thousands)
7,365


6,100


20.7
 %
Block hours
130,309


112,695


15.6
 %
Departures
48,073


41,957


14.6
 %
Total operating revenue per ASM (TRASM) (cents)
9.59


8.61


11.4
 %
Average yield (cents)
11.34


10.54


7.6
 %
Fare revenue per passenger flight segment ($)
60.45


55.30


9.3
 %
Non-ticket revenue per passenger flight segment ($)
56.70


53.91


5.2
 %
Total revenue per passenger flight segment ($)
117.15


109.21


7.3
 %
CASM (cents)
8.08


7.43


8.7
 %
Adjusted CASM (cents) (1)
8.04


7.47


7.6
 %
Adjusted CASM ex-fuel (cents) (2)
5.49


5.20


5.6
 %
Fuel gallons consumed (thousands)
101,595


88,838


14.4
 %
Average economic fuel cost per gallon ($)
2.26


1.97


14.7
 %
Aircraft at end of period
128


112


14.3
 %
Average daily aircraft utilization (hours)
11.5


11.3


1.8
 %
Average stage length (miles)
1,019


1,023


(0.4
)%
 
 
 
 
 
 
 
Year Ended December 31,
 
 
Operating Statistics
2018

2017

Change
Available seat miles (ASMs) (thousands)
36,502,982


29,592,819


23.4
 %
Revenue passenger miles (RPMs) (thousands)
30,623,379


24,605,512


24.5
 %
Load factor (%)
83.9


83.1


0.8
  pts
Passenger flight segments (thousands)
29,312


24,183


21.2
 %
Block hours
526,343


438,728


20.0
 %
Departures
192,845


165,449


16.6
 %
Total operating revenue per ASM (TRASM) (cents)
9.10


8.93


1.9
 %
Average yield (cents)
10.85


10.74


1.0
 %
Fare revenue per passenger flight segment ($)
58.14


56.38


3.1
 %
Non-ticket revenue per passenger flight segment ($)
55.23


52.94


4.3
 %
Total revenue per passenger flight segment ($)
113.37


109.32


3.7
 %
CASM (cents)
8.14


7.63


6.7
 %
Adjusted CASM (cents) (1)
7.87


7.59


3.7
 %
Adjusted CASM ex-fuel (cents) (2)
5.30


5.51


(3.8
)%
Fuel gallons consumed (thousands)
412,256


343,709


19.9
 %
Average economic fuel cost per gallon ($)
2.28


1.79


27.4
 %
Average daily aircraft utilization (hours)
12.1


11.6


4.3
 %
Average stage length (miles)
1,032


999


3.3
 %

(1)
Excludes operating special items.
(2)
Excludes economic fuel expense and operating special items.




9




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.
Calculation of Total Non-Ticket Revenue per Passenger Segment
(unaudited)

 
Three Months Ended December 31,
 
Year Ended December 31,
(in thousands, except per segment data)
2018
 
2017
 
2018
 
2017
Operating revenues
 
 
 
 
 
 
 
Fare
$
445,203

 
$
337,324

 
$
1,704,107

 
$
1,363,395

Non-fare
401,365

 
313,323

 
1,555,908

 
1,209,492

Total passenger revenues
846,568

 
650,647

 
3,260,015

 
2,572,887

Other revenues
16,227

 
15,535

 
63,019

 
70,665

Total operating revenues
$
862,795

 
$
666,182

 
$
3,323,034

 
$
2,643,552

 
 
 
 
 
 
 
 
Non-ticket revenues (1)
$
417,592

 
$
328,858

 
$
1,618,927

 
$
1,280,157

 
 
 
 
 
 
 
 
Passenger segments
7,365

 
6,100

 
29,312

 
24,183

 
 
 
 
 
 
 
 
Non-ticket revenue per passenger segment ($)
$
56.70

 
$
53.91

 
$
55.23

 
$
52.94



(1)
Non-ticket revenues equals the sum of non-fare passenger revenues and other revenues.

Special Items
(unaudited)

 
Three Months Ended
 
Year Ended
 
December 31,
 
December 31,
(in thousands)
2018
 
2017
 
2018
 
2017
Operating special items include the following:
 
 
 
 
 
 
 
Supplemental rent credit (1)

 
(4,086
)
 

 
(4,086
)
Loss on disposal of assets
3,019

 
1,054

 
9,580

 
4,168

Operating special charges (2)
265

 

 
88,921

 
12,629

Total operating special items
$
3,284

 
$
(3,032
)
 
$
98,501

 
$
12,711

Non-operating special items include the following:
 
 
 
 
 
 
 
Non-operating special charges (3)

 

 
90,357

 
$

Total non-operating special items
$

 
$

 
$
90,357

 
$

 
 
 
 
 
 
 
 
Total special items
$
3,284

 
$
(3,032
)
 
$
188,858

 
$
12,711


(1)
Supplemental rent adjustment for liability accrued in prior years related to certain maintenance reserves and return conditions that are no longer probable.
(2)
Operating special charges for the full year 2018 include amounts primarily related to a one-time ratification incentive recognized in connection with a new pilot agreement approved in the first quarter 2018.  Operating special charges for 2017 are related to engine and aircraft lease termination costs.
(3)
Non-operating special charges in 2018 are related to the purchase of 14 A319 aircraft, previously operated by the Company under operating leases. Upon execution of the purchase agreement, the lease agreements associated with these aircraft were classified as capital leases on the balance sheet at lower of cost or fair value.  The difference between the resulting capital lease obligation and the purchase price was accreted as interest expense in special charges, non-operating in the statement of operations, through the closing of each individual purchase.  All of the transactions were completed prior to June 30, 2018.

10




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)
2018

2017
 
2018
 
2017
Total operating expenses, as reported
$
726,730

 
$
574,886

 
$
2,972,120

 
$
2,258,727

Less operating special items
3,284

 
(3,032
)
 
98,501

 
12,711

Adjusted operating expenses, non-GAAP (1)
723,446

 
577,918

 
2,873,619

 
2,246,016

Less: Economic fuel expense
229,680

 
175,205

 
939,324

 
615,581

Adjusted operating expenses excluding fuel, non-GAAP (2)
$
493,766

 
$
402,713

 
$
1,934,295

 
$
1,630,435


 
 
 
 
 
 
 
Available seat miles
8,998,928

 
7,741,030

 
36,502,982

 
29,592,819


 
 
 
 
 
 
 
CASM (cents)
8.08

 
7.43

 
8.14

 
7.63

Adjusted CASM (cents) (1)
8.04

 
7.47

 
7.87

 
7.59

Adjusted CASM ex-fuel (cents) (2)
5.49

 
5.20

 
5.30

 
5.51


(1)
Excludes operating special items.
(2)
Excludes operating special items and economic fuel expense.

Reconciliation of Adjusted Net Income, Adjusted Pre-Tax Income, and Adjusted Operating Income to GAAP Net Income
(unaudited)
 
Three Months Ended
 
Year Ended
 
December 31,
 
December 31,
(in thousands, except per share data)
2018
 
2017
 
2018

2017
Net income, as reported
$
91,937

 
$
246,975

 
$
155,749


$
415,522

Add: Provision (benefit) for income taxes (1)
28,965

 
(165,231
)
 
49,227


(65,836
)
Income (loss) before income taxes, as reported
120,902

 
81,744

 
204,976


349,686

Pre-tax margin
14.0
%
 
12.3
%
 
6.2
%

13.2
%
Add special items (2)
$
3,284

 
$
(3,032
)
 
$
188,858


$
12,711

Adjusted income before income taxes, non-GAAP (3)
124,186

 
78,712

 
393,834


362,397

Adjusted pre-tax margin, non-GAAP (3)
14.4
%
 
11.8
%
 
11.9
%

13.7
%
Add: Total other (income) expense (4)
15,163

 
9,552

 
55,581


35,139

Adjusted operating income, non-GAAP (5)
139,349

 
88,264

 
449,415


397,536

Adjusted operating margin, non-GAAP (5)
16.2
%
 
13.2
%
 
13.5
%

15.0
%
 
 
 
 
 





Provision for income taxes
29,494

 
29,123

 
92,920


134,379

Adjusted net income, non-GAAP (3)
$
94,692

 
$
49,589

 
$
300,914


$
228,018

 
 
 
 
 
 
 
 
Weighted average shares, diluted
68,687

 
68,901

 
68,431

 
69,377

 
 
 
 
 
 
 
 
Adjusted net income per share, diluted (3)
$1.38
 
$0.72
 
$4.40
 
$3.29
 
 
 
 
 
 
 
 
Total operating revenues
$
862,795

 
$
666,182

 
$
3,323,034

 
$
2,643,552


(1)
During the fourth quarter of 2017, the Company recorded a non-recurring income tax benefit of $196.7 million due to the enactment of the Tax Cuts and Jobs Act of 2017.
(2)
See "Special Items" for more details.
(3)
Excludes operating and non-operating special items.
(4)
Excludes non-operating special items.
(5)
Excludes operating special items.


11

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Section 3: EX-99.2 (INVESTOR UPDATE 02.05.19)

Exhibit



396629038_logo3a08.jpg
Exhibit 99.2
Investor Update
February 5, 2019
This investor update provides Spirit's first quarter and full year 2019 guidance. All data is based on preliminary estimates.
For the full year 2019, Spirit estimates its available seat miles ("capacity") will increase approximately 15 percent year over year, up slightly more than its previous 2019 guidance due to a more refined view of its aircraft delivery schedule, timing of wi-fi installations, and a higher aircraft utilization assumption.
For the full year 2019, Spirit estimates its cost per available seat mile excluding fuel ("CASM ex-fuel") will be up 1 to 2 percent year over year. The Company's previous guidance for 2019 CASM ex-fuel was flat to up 1 percent year over year. Since providing this initial guidance, the Company has decided to use sale/leaseback financings for the majority of aircraft delivering in 2019 rather than using debt financing. The Company estimates higher aircraft rent will largely be offset by lower depreciation and lower interest expense such that pre-tax income is minimally impacted by the Company's financing decision. A decrease in estimated average stage length for 2019 also contributes to the variance from its initial CASM ex-fuel guide.
The Company will provide additional details regarding its outlook for 2019 on its conference call scheduled for February 6, 2019.
 
 
 
 
 
 
 
 
 
 
 
1Q19E
1Q18A
 
FY19E
FY18A
 
 
Y/Y% Change
 
Y/Y% Change
Capacity - Available Seat Miles (ASMs)(Thousands)
Up ~16.5%
8,408,764
 
Up ~15%
36,502,982

 
 
 
 
 
 
 
 
 
Total Revenue per ASM (TRASM) (% Change/Cents)(1)
Up ~ 5%
8.37
 
 
9.10
 
 
 
 
 
 
 
Adjusted Operating Expense Ex-Fuel per ASM (%Change/Cents)
Up 2% to 3%
5.33
 
Up 1% to 2%
5.30
 
 
 
 
 
 
Average Stage Length (Miles)
1,033
1,025
 
Down 1 to 2%
1,032
 
 
 
 
 
 
 
 
Fuel Expense
 
 
 
 
 
Fuel gallons (Millions)
113
95
 
482
412
Economic fuel cost per gallon ($)(2)
$2.06
$2.15
 
 
$2.28
 
 
 
 
 
 
 
 
 
Interest Expense, net of Capitalized Interest ($Millions)
$14.5
$11.5
 
$51.5
$54.8
 
 
 
 
 
 
 
 
 
Effective Tax Rate, Non-GAAP
22%
24%
 
24%
24%
 
 
 
 
 
 
 
 
Wtd. Average Diluted Share Count (Millions)
68.6
68.2
 
68.7
68.4



1




 
 
 
 
 
Full Year 2019 Guidance
 
 
 
 
Full Year 2019E
Estimated Cash Tax Rate(3)
 
1% to 2%
 
 
 
Capital Expenditures ($Millions)
 
Purchase of property and equipment, net of pre-delivery deposits and refunds:(4)
 
$160
 
Other capital expenditures
 
$50
 
Total capital expenditures
 
$210
 
 
 
Anticipated proceeds from issuance of long-term debt ($Millions)
 
$70
 
 
 
Other Working Capital Requirements ($Millions)
 
Payments for heavy maintenance events(5)
 
$189
 
Pre-paid maintenance deposits, net of reimbursements
 
$12
 
 
 
 
 
 

Footnotes
(1)
Excludes special items which may include loss on disposal of assets, special charges, and other items.
(2)
Includes fuel taxes and into-plane fuel cost.
(3)
Spirit's cash tax rate differs from its effective tax rate primarily due to the benefit related to bonus depreciation on the acquisition of purchased aircraft.
(4)
Excludes capital commitments related to 9 aircraft that the Company anticipates to be financed via sale/leaseback transactions. Includes the purchase of 1 spare engine and other parts.
(5)
Payments for heavy maintenance events are recorded as "Deferred heavy maintenance" within "Changes in operating assets and liabilities" on the Company's cash flow statement.
 
 
 
 
 
 




2




 
 
 
 
 
 
 
 
 
 
 
 
 
 
Spirit Airlines, Inc.
 
 
 
 
 
 
 
 
 
 
 
Aircraft Delivery Schedule (net of Scheduled Retirements) as of February 5, 2019
 
A319

 
A320 CEO

 
A320 NEO

 
A321 CEO

 
Total

 
Total Year-end 2018
31

 
60

 
7

 
30

 
128

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
1Q19
 

 
1

 
4

 

 
5

 
 
 
2Q19
 

 
1

 
1

 

 
2

 
 
 
3Q19
 

 

 
3

 

 
3

 
 
 
4Q19
 

 

 
6

 

 
6

 
Total Year-end 2019
31

 
62

 
21

 
30

 
144

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
1Q20
 

 

 
4

 

 
4

 
 
 
2Q20
 

 

 
4

 

 
4

 
 
 
3Q20
 

 

 
4

 

 
4

 
 
 
4Q20
 

 

 
4

 

 
4

 
Total Year-end 2020
31

 
62

 
37

 
30

 
160

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
2021
 
(1
)
 

 
18

 

 
17

 
Total Year-end 2021
30

 
62

 
55

 
30

 
177

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Seat Configurations
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
A319
145
 
 
 
 
 
 
 
 
 
 
 
A320
182
 
 
 
 
 
 
 
 
 
 
A321
228
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 











3




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. Forward-looking statements include, without limitation, statements regarding the Company's intentions and expectations regarding the delivery schedule of aircraft on order, guidance and estimates for the first quarter and full year 2019, including expectations regarding the delivery schedule of aircraft on order, announced new service routes, revenues, TRASM, cost of operations, operating margin, capacity, CASM, CASM ex-fuel, fuel expense, economic fuel cost, expected unrealized mark-to-market gains or losses, capital expenditures and other working capital requirements, aircraft rent, depreciation and amortization, fuel hedges and tax rates. 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.







4

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