Toggle SGML Header (+)


Section 1: 10-Q (10-Q)

Document
false--12-31Q220190001498710P5Y180003900019000460000 0001498710 2019-01-01 2019-06-30 0001498710 2019-07-18 0001498710 2019-04-01 2019-06-30 0001498710 2018-01-01 2018-06-30 0001498710 2018-04-01 2018-06-30 0001498710 save:ProductsAndServicesPassengerMember 2018-01-01 2018-06-30 0001498710 save:ProductsAndServicesPassengerMember 2019-01-01 2019-06-30 0001498710 save:ProductsAndServicesPassengerMember 2018-04-01 2018-06-30 0001498710 save:ProductsAndServicesPassengerMember 2019-04-01 2019-06-30 0001498710 us-gaap:ProductAndServiceOtherMember 2019-01-01 2019-06-30 0001498710 us-gaap:ProductAndServiceOtherMember 2018-01-01 2018-06-30 0001498710 us-gaap:ProductAndServiceOtherMember 2019-04-01 2019-06-30 0001498710 us-gaap:ProductAndServiceOtherMember 2018-04-01 2018-06-30 0001498710 2018-12-31 0001498710 2019-06-30 0001498710 2017-12-31 0001498710 2018-06-30 0001498710 us-gaap:AdditionalPaidInCapitalMember 2018-01-01 2018-03-31 0001498710 us-gaap:AccumulatedOtherComprehensiveIncomeMember 2018-04-01 2018-06-30 0001498710 us-gaap:RetainedEarningsMember 2017-12-31 0001498710 us-gaap:CommonStockMember 2018-03-31 0001498710 us-gaap:AccumulatedOtherComprehensiveIncomeMember 2018-03-31 0001498710 us-gaap:AdditionalPaidInCapitalMember 2018-04-01 2018-06-30 0001498710 2018-01-01 2018-03-31 0001498710 us-gaap:TreasuryStockMember 2018-03-31 0001498710 us-gaap:CommonStockMember 2018-06-30 0001498710 us-gaap:CommonStockMember 2017-12-31 0001498710 us-gaap:AdditionalPaidInCapitalMember 2018-03-31 0001498710 us-gaap:RetainedEarningsMember 2018-06-30 0001498710 us-gaap:AdditionalPaidInCapitalMember 2017-12-31 0001498710 us-gaap:AccumulatedOtherComprehensiveIncomeMember 2017-12-31 0001498710 us-gaap:TreasuryStockMember 2018-01-01 2018-03-31 0001498710 2018-03-31 0001498710 us-gaap:AccumulatedOtherComprehensiveIncomeMember 2018-01-01 2018-03-31 0001498710 us-gaap:TreasuryStockMember 2018-06-30 0001498710 us-gaap:AccumulatedOtherComprehensiveIncomeMember 2018-06-30 0001498710 us-gaap:TreasuryStockMember 2017-12-31 0001498710 us-gaap:AdditionalPaidInCapitalMember 2018-06-30 0001498710 us-gaap:TreasuryStockMember 2018-04-01 2018-06-30 0001498710 us-gaap:RetainedEarningsMember 2018-03-31 0001498710 us-gaap:CommonStockMember 2018-12-31 0001498710 us-gaap:CommonStockMember 2019-06-30 0001498710 us-gaap:TreasuryStockMember 2019-06-30 0001498710 us-gaap:CommonStockMember 2019-03-31 0001498710 us-gaap:AdditionalPaidInCapitalMember 2018-12-31 0001498710 2019-01-01 2019-03-31 0001498710 us-gaap:AdditionalPaidInCapitalMember 2019-04-01 2019-06-30 0001498710 us-gaap:AccumulatedOtherComprehensiveIncomeMember 2019-06-30 0001498710 us-gaap:TreasuryStockMember 2019-04-01 2019-06-30 0001498710 us-gaap:AdditionalPaidInCapitalMember 2019-01-01 2019-03-31 0001498710 us-gaap:TreasuryStockMember 2018-12-31 0001498710 us-gaap:AccumulatedOtherComprehensiveIncomeMember 2018-12-31 0001498710 us-gaap:RetainedEarningsMember 2018-12-31 0001498710 srt:RestatementAdjustmentMember us-gaap:AccountingStandardsUpdate201602Member us-gaap:RetainedEarningsMember 2019-03-31 0001498710 us-gaap:AccumulatedOtherComprehensiveIncomeMember 2019-03-31 0001498710 us-gaap:AdditionalPaidInCapitalMember 2019-03-31 0001498710 us-gaap:RetainedEarningsMember 2019-06-30 0001498710 us-gaap:RetainedEarningsMember 2019-03-31 0001498710 us-gaap:AccumulatedOtherComprehensiveIncomeMember 2019-01-01 2019-03-31 0001498710 2019-03-31 0001498710 us-gaap:AdditionalPaidInCapitalMember 2019-06-30 0001498710 us-gaap:AccumulatedOtherComprehensiveIncomeMember 2019-04-01 2019-06-30 0001498710 us-gaap:TreasuryStockMember 2019-01-01 2019-03-31 0001498710 us-gaap:TreasuryStockMember 2019-03-31 0001498710 us-gaap:AccountingStandardsUpdate201602Member 2019-03-31 0001498710 srt:RestatementAdjustmentMember us-gaap:AccountingStandardsUpdate201602Member 2019-01-01 0001498710 us-gaap:LatinAmericaDestinationMember 2018-04-01 2018-06-30 0001498710 us-gaap:LatinAmericaDestinationMember 2018-01-01 2018-06-30 0001498710 us-gaap:DomesticDestinationMember 2019-04-01 2019-06-30 0001498710 us-gaap:DomesticDestinationMember 2018-01-01 2018-06-30 0001498710 us-gaap:LatinAmericaDestinationMember 2019-04-01 2019-06-30 0001498710 us-gaap:DomesticDestinationMember 2018-04-01 2018-06-30 0001498710 us-gaap:DomesticDestinationMember 2019-01-01 2019-06-30 0001498710 us-gaap:LatinAmericaDestinationMember 2019-01-01 2019-06-30 0001498710 save:ProductsAndServicesNonFareMember 2018-01-01 2018-06-30 0001498710 save:ProductsAndServicesFareMember 2019-01-01 2019-06-30 0001498710 save:ProductsAndServicesFareMember 2018-01-01 2018-06-30 0001498710 save:ProductsAndServicesFareMember 2018-04-01 2018-06-30 0001498710 save:ProductsAndServicesFareMember 2019-04-01 2019-06-30 0001498710 save:ProductsAndServicesNonFareMember 2019-01-01 2019-06-30 0001498710 save:ProductsAndServicesNonFareMember 2019-04-01 2019-06-30 0001498710 save:ProductsAndServicesNonFareMember 2018-04-01 2018-06-30 0001498710 save:PilotsMember 2018-01-01 2018-06-30 0001498710 save:AirbusA319Member us-gaap:CapitalLeaseObligationsMember 2018-01-01 2018-03-31 0001498710 us-gaap:AvailableforsaleSecuritiesMember 2019-01-01 2019-06-30 0001498710 us-gaap:AvailableforsaleSecuritiesMember 2018-12-31 0001498710 us-gaap:AvailableforsaleSecuritiesMember 2019-06-30 0001498710 us-gaap:InterestRateSwapMember 2019-06-30 0001498710 us-gaap:InterestRateSwapMember 2018-12-31 0001498710 us-gaap:InterestRateSwapMember us-gaap:CashFlowHedgingMember 2018-04-01 2018-06-30 0001498710 us-gaap:InterestRateSwapMember us-gaap:CashFlowHedgingMember 2018-01-01 2018-06-30 0001498710 us-gaap:InterestRateSwapMember us-gaap:CashFlowHedgingMember 2019-01-01 2019-06-30 0001498710 us-gaap:InterestRateSwapMember us-gaap:CashFlowHedgingMember 2019-04-01 2019-06-30 0001498710 save:FixedMaintenanceReservePaymentsMember 2019-06-30 0001498710 save:OtherLeasedEquipmentAndPropertyMember srt:MaximumMember 2019-06-30 0001498710 save:AircraftMember srt:MaximumMember 2019-06-30 0001498710 save:AirbusA320Member us-gaap:CapitalLeaseObligationsMember 2019-06-01 2019-06-30 0001498710 save:AircraftMember 2019-01-01 2019-06-30 0001498710 save:SpareEnginesMember 2019-06-30 0001498710 save:AircraftMember 2019-06-30 0001498710 save:AircraftMember srt:MinimumMember 2019-06-30 0001498710 save:LeasedComputerAndOfficeEquipmentMember srt:MaximumMember 2019-06-30 0001498710 save:SpareEnginesMember 2019-01-01 2019-06-30 0001498710 save:LeasedComputerAndOfficeEquipmentMember srt:MinimumMember 2019-06-30 0001498710 save:ThirdPartyLessorMember 2019-01-01 2019-06-30 0001498710 save:A320FamilyMember save:AircraftMember 2019-06-30 0001498710 save:OtherLeasedEquipmentAndPropertyMember 2019-06-30 0001498710 save:AircraftAndSpareEngineLeasesMember 2019-06-30 0001498710 save:PropertyFacilityLeasesMember 2019-06-30 0001498710 srt:A320NeoMember save:AirbusMember 2019-06-30 0001498710 save:AssociationOfFlightAttendantsMember us-gaap:NumberOfEmployeesTotalMember us-gaap:UnionizedEmployeesConcentrationRiskMember 2019-01-01 2019-06-30 0001498710 save:AirLinePilotsAssociationInternationalMember us-gaap:NumberOfEmployeesTotalMember us-gaap:UnionizedEmployeesConcentrationRiskMember 2019-01-01 2019-06-30 0001498710 save:ProfessionalAirlineFlightControlAssociationMember us-gaap:NumberOfEmployeesTotalMember us-gaap:UnionizedEmployeesConcentrationRiskMember 2019-01-01 2019-06-30 0001498710 save:InternationalAssociationOfMachinistsAndAerospaceWorkersMember us-gaap:NumberOfEmployeesTotalMember us-gaap:UnionizedEmployeesConcentrationRiskMember 2019-01-01 2019-06-30 0001498710 save:TransportWorkersUnionMember us-gaap:NumberOfEmployeesTotalMember us-gaap:UnionizedEmployeesConcentrationRiskMember 2019-01-01 2019-06-30 0001498710 us-gaap:CapitalAdditionsMember 2019-06-30 0001498710 us-gaap:NumberOfEmployeesTotalMember us-gaap:UnionizedEmployeesConcentrationRiskMember 2019-06-30 0001498710 save:NonaircraftRelatedCommitmentsMember 2019-06-30 0001498710 save:V2500SelectTWOEngineMember 2019-06-30 0001498710 us-gaap:SecuredDebtMember 2019-06-30 0001498710 us-gaap:HealthInsuranceProductLineMember 2019-06-30 0001498710 save:A2019Member save:AirbusMember 2019-06-30 0001498710 us-gaap:HealthInsuranceProductLineMember 2018-12-31 0001498710 save:A20192021Member save:AirbusMember 2019-06-30 0001498710 save:PurePowerPW1100GJMEngineMember 2019-06-30 0001498710 save:A320andA321Member 2019-06-30 0001498710 us-gaap:NumberOfEmployeesTotalMember us-gaap:UnionizedEmployeesConcentrationRiskMember 2019-01-01 2019-06-30 0001498710 save:AirLinePilotsAssociationInternationalMember 2018-02-01 2018-02-28 0001498710 save:EquipmentNotesSeriesB20171Member 2018-12-31 0001498710 save:EquipmentNotesSeriesC20171Member 2018-12-31 0001498710 save:EquipmentNotesSeriesC20151Member 2019-06-30 0001498710 save:EquipmentNotesSeriesB20171Member 2019-06-30 0001498710 us-gaap:FairValueInputsLevel3Member us-gaap:EstimateOfFairValueFairValueDisclosureMember save:FixedRateLoanMember 2018-12-31 0001498710 us-gaap:FairValueInputsLevel2Member us-gaap:EstimateOfFairValueFairValueDisclosureMember save:EquipmentNotesSeriesA20171Member 2018-12-31 0001498710 us-gaap:FairValueInputsLevel3Member us-gaap:EstimateOfFairValueFairValueDisclosureMember us-gaap:RevolvingCreditFacilityMember 2019-06-30 0001498710 us-gaap:FairValueInputsLevel2Member us-gaap:EstimateOfFairValueFairValueDisclosureMember save:EquipmentNotesSeriesA20171Member 2019-06-30 0001498710 us-gaap:SeniorLoansMember 2018-12-31 0001498710 save:EquipmentNotesSeriesC20171Member 2019-06-30 0001498710 us-gaap:EstimateOfFairValueFairValueDisclosureMember 2018-12-31 0001498710 us-gaap:JuniorLoansMember 2018-12-31 0001498710 us-gaap:FairValueInputsLevel3Member us-gaap:EstimateOfFairValueFairValueDisclosureMember us-gaap:JuniorLoansMember 2018-12-31 0001498710 us-gaap:FairValueInputsLevel2Member us-gaap:EstimateOfFairValueFairValueDisclosureMember save:EquipmentNotesSeriesB20171Member 2019-06-30 0001498710 save:EquipmentNotesSeriesAA20171Member 2019-06-30 0001498710 us-gaap:FairValueInputsLevel3Member us-gaap:EstimateOfFairValueFairValueDisclosureMember us-gaap:JuniorLoansMember 2019-06-30 0001498710 save:FixedRateLoanMember 2018-12-31 0001498710 save:EquipmentNotesSeriesAA20171Member 2018-12-31 0001498710 us-gaap:FairValueInputsLevel2Member us-gaap:EstimateOfFairValueFairValueDisclosureMember save:EquipmentNotesSeriesA20151Member 2019-06-30 0001498710 save:EquipmentNotesSeriesB20151Member 2019-06-30 0001498710 us-gaap:FairValueInputsLevel2Member us-gaap:EstimateOfFairValueFairValueDisclosureMember save:EquipmentNotesSeriesAA20171Member 2018-12-31 0001498710 us-gaap:FairValueInputsLevel2Member us-gaap:EstimateOfFairValueFairValueDisclosureMember save:EquipmentNotesSeriesB20171Member 2018-12-31 0001498710 save:EquipmentNotesSeriesA20151Member 2019-06-30 0001498710 us-gaap:FairValueInputsLevel2Member us-gaap:EstimateOfFairValueFairValueDisclosureMember save:EquipmentNotesSeriesAA20171Member 2019-06-30 0001498710 us-gaap:FairValueInputsLevel2Member us-gaap:EstimateOfFairValueFairValueDisclosureMember save:EquipmentNotesSeriesC20171Member 2019-06-30 0001498710 save:EquipmentNotesSeriesC20151Member 2018-12-31 0001498710 us-gaap:FairValueInputsLevel2Member us-gaap:EstimateOfFairValueFairValueDisclosureMember save:EquipmentNotesSeriesC20151Member 2019-06-30 0001498710 save:EquipmentNotesSeriesA20151Member 2018-12-31 0001498710 us-gaap:FairValueInputsLevel2Member us-gaap:EstimateOfFairValueFairValueDisclosureMember save:EquipmentNotesSeriesC20151Member 2018-12-31 0001498710 us-gaap:FairValueInputsLevel2Member us-gaap:EstimateOfFairValueFairValueDisclosureMember save:EquipmentNotesSeriesC20171Member 2018-12-31 0001498710 us-gaap:RevolvingCreditFacilityMember 2019-06-30 0001498710 us-gaap:EstimateOfFairValueFairValueDisclosureMember 2019-06-30 0001498710 us-gaap:FairValueInputsLevel2Member us-gaap:EstimateOfFairValueFairValueDisclosureMember save:EquipmentNotesSeriesB20151Member 2018-12-31 0001498710 us-gaap:RevolvingCreditFacilityMember 2018-12-31 0001498710 save:EquipmentNotesSeriesB20151Member 2018-12-31 0001498710 us-gaap:JuniorLoansMember 2019-06-30 0001498710 us-gaap:FairValueInputsLevel2Member us-gaap:EstimateOfFairValueFairValueDisclosureMember save:EquipmentNotesSeriesA20151Member 2018-12-31 0001498710 save:EquipmentNotesSeriesA20171Member 2018-12-31 0001498710 us-gaap:FairValueInputsLevel3Member us-gaap:EstimateOfFairValueFairValueDisclosureMember us-gaap:SeniorLoansMember 2018-12-31 0001498710 save:FixedRateLoanMember 2019-06-30 0001498710 us-gaap:SeniorLoansMember 2019-06-30 0001498710 us-gaap:FairValueInputsLevel3Member us-gaap:EstimateOfFairValueFairValueDisclosureMember us-gaap:RevolvingCreditFacilityMember 2018-12-31 0001498710 us-gaap:FairValueInputsLevel3Member us-gaap:EstimateOfFairValueFairValueDisclosureMember us-gaap:SeniorLoansMember 2019-06-30 0001498710 us-gaap:FairValueInputsLevel3Member us-gaap:EstimateOfFairValueFairValueDisclosureMember save:FixedRateLoanMember 2019-06-30 0001498710 save:EquipmentNotesSeriesA20171Member 2019-06-30 0001498710 us-gaap:FairValueInputsLevel2Member us-gaap:EstimateOfFairValueFairValueDisclosureMember save:EquipmentNotesSeriesB20151Member 2019-06-30 0001498710 us-gaap:FairValueInputsLevel2Member us-gaap:FairValueMeasurementsRecurringMember 2018-12-31 0001498710 us-gaap:FairValueInputsLevel3Member us-gaap:FairValueMeasurementsRecurringMember 2018-12-31 0001498710 us-gaap:FairValueMeasurementsRecurringMember 2018-12-31 0001498710 us-gaap:FairValueInputsLevel1Member us-gaap:FairValueMeasurementsRecurringMember 2018-12-31 0001498710 us-gaap:FairValueMeasurementsRecurringMember 2019-06-30 0001498710 us-gaap:FairValueInputsLevel1Member us-gaap:FairValueMeasurementsRecurringMember 2019-06-30 0001498710 us-gaap:FairValueInputsLevel2Member us-gaap:FairValueMeasurementsRecurringMember 2019-06-30 0001498710 us-gaap:FairValueInputsLevel3Member us-gaap:FairValueMeasurementsRecurringMember 2019-06-30 0001498710 save:EquipmentNotesSeriesA20151Member 2018-06-30 0001498710 save:EquipmentNotesSeriesC20151Member 2018-06-30 0001498710 save:EquipmentNotesSeriesA20171Member 2018-06-30 0001498710 us-gaap:RevolvingCreditFacilityMember 2019-04-01 2019-06-30 0001498710 save:EquipmentNotesSeriesAA20171Member 2018-06-30 0001498710 save:EquipmentNotesSeriesB20171Member 2018-06-30 0001498710 us-gaap:JuniorLoansMember 2018-06-30 0001498710 save:EquipmentNotesSeriesB20151Member 2018-06-30 0001498710 save:FixedRateLoanMember 2018-06-30 0001498710 us-gaap:SeniorLoansMember 2018-06-30 0001498710 save:EquipmentNotesSeriesC20171Member 2018-06-30 0001498710 us-gaap:RevolvingCreditFacilityMember 2019-01-01 2019-06-30 0001498710 srt:A320NeoMember save:AirbusMember us-gaap:RevolvingCreditFacilityMember 2019-06-30 0001498710 us-gaap:RevolvingCreditFacilityMember 2019-06-30 0001498710 save:FixedRateLoanMember srt:MaximumMember 2019-06-30 0001498710 save:EquipmentNotesSeriesB20171Member 2019-04-01 2019-06-30 0001498710 save:EquipmentNotesSeriesB20171Member 2018-04-01 2018-06-30 0001498710 save:EquipmentNotesSeriesC20171Member 2019-01-01 2019-06-30 0001498710 save:FixedRateLoanMember 2018-01-01 2018-06-30 0001498710 save:EquipmentNotesSeriesA20171Member 2019-01-01 2019-06-30 0001498710 save:EquipmentNotesSeriesB20171Member 2018-01-01 2018-06-30 0001498710 save:FixedRateLoanMember 2019-01-01 2019-06-30 0001498710 save:FinanceLeaseObligationsMember 2019-01-01 2019-06-30 0001498710 us-gaap:JuniorLoansMember 2018-01-01 2018-06-30 0001498710 save:EquipmentNotesSeriesC20171Member 2019-04-01 2019-06-30 0001498710 save:EquipmentNotesSeriesC20171Member 2018-04-01 2018-06-30 0001498710 save:EquipmentNotesSeriesA20151Member 2018-04-01 2018-06-30 0001498710 save:EquipmentNotesSeriesC20151Member 2019-01-01 2019-06-30 0001498710 save:EquipmentNotesSeriesA20151Member 2018-01-01 2018-06-30 0001498710 save:EquipmentNotesSeriesB20151Member 2019-01-01 2019-06-30 0001498710 save:FinanceLeaseObligationsMember 2019-04-01 2019-06-30 0001498710 save:EquipmentNotesSeriesC20151Member 2019-04-01 2019-06-30 0001498710 save:EquipmentNotesSeriesA20171Member 2018-04-01 2018-06-30 0001498710 us-gaap:SeniorLoansMember 2018-01-01 2018-06-30 0001498710 us-gaap:RevolvingCreditFacilityMember 2018-04-01 2018-06-30 0001498710 save:EquipmentNotesSeriesB20151Member 2018-01-01 2018-06-30 0001498710 save:EquipmentNotesSeriesA20171Member 2019-04-01 2019-06-30 0001498710 save:EquipmentNotesSeriesB20171Member 2019-01-01 2019-06-30 0001498710 us-gaap:SeniorLoansMember 2019-04-01 2019-06-30 0001498710 save:FixedRateLoanMember 2019-04-01 2019-06-30 0001498710 save:EquipmentNotesSeriesC20151Member 2018-04-01 2018-06-30 0001498710 us-gaap:SeniorLoansMember 2019-01-01 2019-06-30 0001498710 save:EquipmentNotesSeriesAA20171Member 2019-04-01 2019-06-30 0001498710 save:FinanceLeaseObligationsMember 2018-01-01 2018-06-30 0001498710 save:EquipmentNotesSeriesAA20171Member 2018-04-01 2018-06-30 0001498710 save:EquipmentNotesSeriesC20171Member 2018-01-01 2018-06-30 0001498710 save:FixedRateLoanMember 2018-04-01 2018-06-30 0001498710 save:EquipmentNotesSeriesB20151Member 2019-04-01 2019-06-30 0001498710 save:FinanceLeaseObligationsMember 2018-04-01 2018-06-30 0001498710 us-gaap:JuniorLoansMember 2018-04-01 2018-06-30 0001498710 us-gaap:JuniorLoansMember 2019-01-01 2019-06-30 0001498710 us-gaap:RevolvingCreditFacilityMember 2018-01-01 2018-06-30 0001498710 us-gaap:SeniorLoansMember 2018-04-01 2018-06-30 0001498710 save:EquipmentNotesSeriesAA20171Member 2019-01-01 2019-06-30 0001498710 save:EquipmentNotesSeriesB20151Member 2018-04-01 2018-06-30 0001498710 us-gaap:JuniorLoansMember 2019-04-01 2019-06-30 0001498710 save:EquipmentNotesSeriesAA20171Member 2018-01-01 2018-06-30 0001498710 save:EquipmentNotesSeriesA20151Member 2019-04-01 2019-06-30 0001498710 save:EquipmentNotesSeriesC20151Member 2018-01-01 2018-06-30 0001498710 save:EquipmentNotesSeriesA20151Member 2019-01-01 2019-06-30 0001498710 save:EquipmentNotesSeriesA20171Member 2018-01-01 2018-06-30 save:aircraft_engine iso4217:USD save:aircraft save:employee_group iso4217:USD xbrli:shares xbrli:shares xbrli:pure


 
 
 
 
 
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
 _______________________________________________________________________
Form 10-Q
_______________________________________________________________________
(Mark One)
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 2019
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from              to             
Commission File Number: 001-35186
_______________________________________________________________________
SPIRIT AIRLINES, INC.
(Exact name of registrant as specified in its charter)
_______________________________________________________________________
Delaware
38-1747023
(State or other jurisdiction of
incorporation or organization)
(I.R.S. Employer
Identification No.)
 
 
 
 
2800 Executive Way
Miramar
Florida
33025
(Address of principal executive offices)
(Zip Code)

(954) 447-7920
(Registrant’s telephone number, including area code) 
_______________________________________________________________________

Title of each class
 
Name of exchange on which registered
 
Trading Symbol
Common Stock, $0.0001 par value
 
New York Stock Exchange
 
SAVE

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes    No  

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).    Yes      No  

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “small reporting company” and "emerging growth company" in Rule 12b-2 of the Exchange Act. (Check one):
Large accelerated filer
Accelerated filer
Non-accelerated filer
Smaller reporting company
(Do not check if a smaller reporting company)
Emerging growth company
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 7(a)(2)(B) of the Securities Act.     
Indicate by check mark whether the registrant is a shell company (as defined by Rule 12b-2 of the Exchange Act).    Yes      No  




Indicate the number of shares outstanding of each of the registrant’s classes of common stock as of the close of business on July 18, 2019:
Class
 
Number of Shares
Common Stock, $0.0001 par value
 
68,440,856




Table of Contents
INDEX
 
 
Page No.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 




PART I. Financial Information
ITEM 1.
UNAUDITED CONDENSED FINANCIAL STATEMENTS
Spirit Airlines, Inc.
Condensed Statements of Operations
(unaudited, in thousands, except per share amounts)
 
 
Three Months Ended June 30,
 
Six Months Ended June 30,
 
2019
 
2018
 
2019
 
2018
Operating revenues:
 
 
 
 
 
 
 
Passenger
$
994,430

 
$
836,350

 
$
1,832,495

 
$
1,525,491

Other
18,526

 
15,421

 
36,257

 
30,418

Total operating revenues
1,012,956

 
851,771

 
1,868,752

 
1,555,909

 
 
 
 
 
 
 
 
Operating expenses:
 
 
 
 
 
 
 
Aircraft fuel
265,006

 
246,180

 
494,642

 
450,826

Salaries, wages and benefits
216,375

 
187,756

 
420,276

 
342,852

Landing fees and other rents
64,711

 
58,602

 
124,360

 
108,232

Aircraft rent
46,522

 
41,745

 
92,304

 
91,936

Depreciation and amortization
54,913

 
45,618

 
105,639

 
84,991

Distribution
40,602

 
34,997

 
76,321

 
65,628

Maintenance, materials and repairs
34,688

 
31,653

 
66,292

 
61,363

Special charges

 
174

 

 
89,342

Loss on disposal of assets
1,550

 
4,644

 
3,463

 
5,492

Other operating
124,651

 
91,881

 
233,713

 
185,523

Total operating expenses
849,018

 
743,250

 
1,617,010

 
1,486,185

 
 
 
 
 
 
 
 
Operating income (loss)
163,938

 
108,521

 
251,742

 
69,724

 
 
 
 
 
 
 
 
Other (income) expense:
 
 
 
 
 
 
 
Interest expense
25,266

 
20,498

 
50,237

 
38,347

Capitalized interest
(2,975
)
 
(2,296
)
 
(5,532
)
 
(4,548
)
Interest income
(7,066
)
 
(4,430
)
 
(13,990
)
 
(8,496
)
Other expense
144

 
188

 
377

 
321

Special charges, non-operating

 
79,412

 


88,613

Total other (income) expense
15,369

 
93,372

 
31,092

 
114,237

 
 
 
 
 
 
 
 
Income (loss) before income taxes
148,569

 
15,149

 
220,650

 
(44,513
)
Provision (benefit) for income taxes
34,068

 
3,895

 
50,073

 
(10,845
)
 
 
 
 
 
 
 
 
Net income (loss)
$
114,501

 
$
11,254

 
$
170,577

 
$
(33,668
)
Basic earnings (loss) per share
$
1.67

 
$
0.16

 
$
2.49

 
$
(0.49
)
Diluted earnings (loss) per share
$
1.67

 
$
0.16

 
$
2.49

 
$
(0.49
)
The accompanying Notes are an integral part of these Condensed Financial Statements.

1




Spirit Airlines, Inc.
Condensed Statements of Comprehensive Income (Loss)
(unaudited, in thousands)

 
Three Months Ended June 30,
 
Six Months Ended June 30,
 
2019
 
2018
 
2019
 
2018
Net income (loss)
$
114,501

 
$
11,254

 
$
170,577

 
$
(33,668
)
Unrealized gain on short-term investment securities, net of deferred taxes of $29, $33, $67 and $26
98

 
101

 
228

 
78

Interest rate derivative loss reclassified into earnings, net of taxes of $19, $18, $46, and $39
54

 
61

 
101

 
120

Other comprehensive income
$
152

 
$
162

 
$
329

 
$
198

Comprehensive income (loss)
$
114,653

 
$
11,416

 
$
170,906

 
$
(33,470
)

The accompanying Notes are an integral part of these Condensed Financial Statements.


2



Spirit Airlines, Inc.
Condensed Balance Sheets
(unaudited, in thousands)
 
 
June 30, 2019
 
December 31, 2018
Assets
 
 
 
Current assets:
 
 
 
Cash and cash equivalents
$
1,110,797

 
$
1,004,733

Short-term investment securities
104,228

 
102,789

Accounts receivable, net
78,125

 
47,660

Aircraft maintenance deposits, net
124,585

 
106,901

Prepaid expenses and other current assets
102,952

 
83,383

Total current assets
1,520,687

 
1,345,466

 
 
 
 
Property and equipment:
 
 
 
Flight equipment
3,514,104

 
3,257,215

Ground property and equipment
215,774

 
191,661

Less accumulated depreciation
(367,712
)
 
(332,864
)
 
3,362,166

 
3,116,012

Operating lease right-of-use assets
1,057,846

 

Pre-delivery deposits on flight equipment
289,902

 
236,775

Long-term aircraft maintenance deposits
84,507

 
138,738

Deferred heavy maintenance, net
309,555

 
249,010

Other long-term assets
38,118

 
79,456

Total assets
$
6,662,781

 
$
5,165,457

 
 
 
 
Liabilities and shareholders’ equity
 
 
 
Current liabilities:
 
 
 
Accounts payable
$
43,848

 
$
39,320

Air traffic liability
402,990

 
291,981

Current maturities of long-term debt and finance leases
270,407

 
163,557

Current maturities of operating leases
114,877

 

Other current liabilities
379,041

 
339,677

Total current liabilities
1,211,163

 
834,535

 
 
 
 
Long-term debt and finance leases, less current maturities
2,025,183

 
2,024,774

Operating leases, less current maturities
915,288

 

Deferred income taxes
399,765

 
355,141

Deferred gains and other long-term liabilities
16,355

 
22,503

Shareholders’ equity:
 
 
 
Common stock

7

 
7

Additional paid-in-capital
377,639

 
371,225

Treasury stock, at cost
(72,264
)
 
(67,016
)
Retained earnings
1,790,509

 
1,625,481

Accumulated other comprehensive income (loss)
(864
)
 
(1,193
)
Total shareholders’ equity
2,095,027

 
1,928,504

Total liabilities and shareholders’ equity
$
6,662,781

 
$
5,165,457

The accompanying Notes are an integral part of these Condensed Financial Statements.

3



Spirit Airlines, Inc.
Condensed Statements of Cash Flows
(unaudited, in thousands) 
 
Six Months Ended June 30,
 
2019
 
2018
Operating activities:

 

Net income (loss)
$
170,577

 
$
(33,668
)
Adjustments to reconcile net income (loss) to net cash provided by operations:

 

Losses reclassified from other comprehensive income
148


159

Share-based compensation
6,413

 
5,381

Allowance for doubtful accounts (recoveries)

 
(12
)
Amortization of deferred gains and losses and debt issuance costs
4,365

 
4,552

Depreciation and amortization
105,639

 
84,991

Deferred income tax expense (benefit)
44,511

 
(17,604
)
Loss on disposal of assets
3,463

 
5,492

Special charges, non-operating

 
88,613

Changes in operating assets and liabilities:
 
 
 
Accounts receivable, net
(30,465
)
 
(9,212
)
Aircraft maintenance deposits, net
(6,214
)
 
11,222

Prepaid income taxes
1,962



Other assets
10,212

 
3,003

Deferred heavy maintenance, net
(88,350
)
 
(94,267
)
Income tax receivable

 
(828
)
Accounts payable
2,024

 
25,413

Air traffic liability
111,009

 
93,936

Other liabilities
6,154

 
83,809

Other
(424
)
 
8

Net cash provided by operating activities
341,024

 
250,988

Investing activities:
 
 
 
Purchase of available-for-sale investment securities
(57,355
)

(73,687
)
Proceeds from the maturity of available-for-sale investment securities
56,595


72,964

Proceeds from sale of property and equipment

 
9,500

Pre-delivery deposits on flight equipment, net of refunds
(75,826
)
 
(92,205
)
Capitalized interest
(4,936
)

(4,178
)
Assets under construction for others
(2,235
)
 

Purchase of property and equipment
(154,702
)
 
(323,229
)
Net cash used in investing activities
(238,459
)
 
(410,835
)
Financing activities:
 
 
 
Proceeds from issuance of long-term debt
94,706


440,340

Proceeds from stock options exercised
1

 
2

Payments on debt obligations
(85,785
)
 
(60,649
)
Payments on finance lease obligations
(1,796
)
 
(205,403
)
Reimbursement for assets under construction for others
2,235

 

Repurchase of common stock
(5,248
)
 
(986
)
Debt issuance costs
(614
)

(1,944
)
Net cash provided by financing activities
3,499

 
171,360

Net increase in cash and cash equivalents
106,064

 
11,513

Cash and cash equivalents at beginning of period
1,004,733

 
800,849

Cash and cash equivalents at end of period
$
1,110,797

 
$
812,362

Supplemental disclosures
 
 
 
Cash payments for:
 
 
 
Interest, net of capitalized interest
$
41,279

 
$
16,769

Income taxes paid, net of refunds
$
7,394

 
$
3,270

Cash paid for amounts included in the measurement of lease liabilities:
 
 
 
Operating cash flows for operating leases
$
95,643

 
$

Operating cash flows for finance leases
$
1,457

 
$

Financing cash flows for finance leases
$
339

 
$

Non-cash transactions:
 
 
 
Capital expenditures funded by finance lease borrowings
$
96,371


$
315

Capital expenditures funded by operating lease borrowings
$
159,548

 
$

The accompanying Notes are an integral part of these Condensed Financial Statements.

4



Spirit Airlines, Inc.
Condensed Statements of Shareholders’ Equity
(In thousands)

 
Three and Six Months Ended June 30, 2018
 
Common Stock
 
Additional Paid-In-Capital
 
Treasury Stock
 
Retained Earnings
 
Accumulated Other Comprehensive Income (Loss)
 
Total
Balance at December 31, 2017
$
7

 
$
360,153

 
$
(65,854
)
 
$
1,469,732

 
$
(1,464
)
 
$
1,762,574

Share-based compensation

 
3,075

 

 

 

 
3,075

Repurchase of common stock

 

 
(959
)
 

 

 
(959
)
Proceeds from options exercised

 
2

 

 

 

 
2

Changes in comprehensive income

 

 

 

 
35

 
35

Net loss

 

 

 
(44,922
)
 

 
(44,922
)
Balance at March 31, 2018
$
7

 
$
363,230

 
$
(66,813
)
 
$
1,424,810

 
$
(1,429
)
 
$
1,719,805

Share-based compensation

 
2,306

 

 

 

 
2,306

Repurchase of common stock

 

 
(27
)
 

 

 
(27
)
Proceeds from options exercised

 

 

 

 

 

Changes in comprehensive income

 

 

 

 
162

 
162

Net income

 

 

 
11,254

 

 
11,254

Balance at June 30, 2018
$
7

 
$
365,536

 
$
(66,840
)
 
$
1,436,064

 
$
(1,267
)
 
$
1,733,500


 
Three and Six Months Ended June 30, 2019
 
Common Stock
 
Additional Paid-In-Capital
 
Treasury Stock
 
Retained Earnings
 
Accumulated Other Comprehensive Income (Loss)
 
Total
Balance at December 31, 2018
$
7

 
$
371,225

 
$
(67,016
)
 
$
1,625,481

 
$
(1,193
)
 
$
1,928,504

Effect of ASU No. 2016-02 implementation (refer to Note 2)

 

 

 
(5,549
)
 

 
(5,549
)
Share-based compensation

 
3,671

 

 

 

 
3,671

Repurchase of common stock

 

 
(5,223
)
 

 

 
(5,223
)
Proceeds from options exercised

 

 

 

 

 

Changes in comprehensive income

 

 

 

 
177

 
177

Net income

 

 

 
56,076

 

 
56,076

Balance at March 31, 2019
$
7

 
$
374,896

 
$
(72,239
)
 
$
1,676,008

 
$
(1,016
)
 
$
1,977,656

Share-based compensation

 
2,742

 

 

 

 
2,742

Repurchase of common stock

 

 
(25
)
 

 

 
(25
)
Proceeds from options exercised

 
1

 

 

 

 
1

Changes in comprehensive income

 

 

 

 
152

 
152

Net income

 

 

 
114,501

 


 
114,501

Balance at June 30, 2019
$
7

 
$
377,639

 
$
(72,264
)
 
$
1,790,509

 
$
(864
)
 
$
2,095,027


The accompanying Notes are an integral part of these Condensed Financial Statements.


5



Notes to Condensed Financial Statements
(unaudited)
1.
Basis of Presentation
The accompanying unaudited condensed financial statements include the accounts of Spirit Airlines, Inc. (the "Company"). These unaudited condensed financial statements reflect all normal recurring adjustments which management believes are necessary to fairly present the financial position, results of operations and cash flows of the Company for the respective periods presented. Certain information and footnote disclosures normally included in the audited annual financial statements prepared in accordance with U.S. generally accepted accounting principles ("GAAP") have been condensed or omitted pursuant to the rules and regulations of the Securities and Exchange Commission for Form 10-Q. These unaudited interim condensed financial statements should be read in conjunction with the audited financial statements of the Company and notes thereto included in the Company's Annual Report on Form 10-K for the year ended December 31, 2018 filed with the Securities and Exchange Commission on February 13, 2019.
The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect both the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results may differ from these estimates.
The interim results reflected in the unaudited condensed financial statements are not necessarily indicative of the results that may be expected for other interim periods or for the full year. The air transportation business is subject to significant seasonal fluctuations as demand is generally greater in the second and third quarters of each year. The air transportation business is also volatile and highly affected by economic cycles and trends.
2.
Recent Accounting Developments

Recently Adopted Accounting Pronouncements

Leases

The Company adopted ASU No. 2016-02, "Leases (Topic 842)," effective January 1, 2019. The Company adopted Topic 842 utilizing the modified retrospective adoption method with an effective date of January 1, 2019 and elected the package of transition practical expedients for expired or existing contracts, which does not require reassessment of: (1) whether any of the Company's contracts are or contain leases, (2) lease classification and (3) initial direct costs. Therefore, the condensed financial statements for 2019 are presented under the new standard, while the comparative periods presented are not adjusted and continue to be reported in accordance with the Company's historical accounting policy. This standard requires all lessees to recognize a right-of-use asset and a lease liability, initially measured at the present value of the lease payments, for all leases with a term greater than 12 months. The adoption of the new lease standard had a significant impact on the Company's condensed balance sheets due to the recognition of $1.0 billion of right-of-use assets for operating leases, $128.1 million of current maturities of operating leases and $895.1 million of operating leases, less current maturities. In addition, the Company recognized a $5.5 million cumulative effect adjustment, net of tax, to retained earnings. This adjustment was driven by the recognition of unamortized deferred gains and losses related to aircraft sale-leaseback transactions entered into in prior periods. Prior to the adoption of Topic 842, gains and losses on sale-leaseback transactions were generally deferred and recognized in income over the lease term. The accounting for finance leases is substantially unchanged. The adoption of Topic 842 did not have a significant impact on the Company's lease classification or a material impact on its statements of operations and liquidity. Additionally, the adoption of Topic 842 did not have a material impact on the Company’s debt-covenant compliance under its current agreements. Refer to Note 9, Leases for information regarding the Company's adoption of Topic 842 and the Company's undiscounted future lease payments and the timing of those payments. 

Recently Issued Accounting Pronouncements Not Yet Adopted

Cloud Computing Arrangements

In August 2018, the FASB issued ASU No. 2018-15, "Intangibles - Goodwill and Other - Internal-Use Software." This new standard requires a customer in a cloud computing arrangement that is a service contract to follow the internal-use software guidance in Accounting Standards Codification ("ASC") 350-40, "Accounting for Internal-Use Software," to determine which implementation costs to capitalize as assets and amortize over the term of the hosting arrangement or expense as incurred. This standard is effective for the Company for fiscal years, and interim periods within those years, beginning

6



January 1, 2020. Early adoption is permitted, including during an interim period. Entities have the option to apply this standard prospectively to all implementation costs incurred after the date of adoption or retrospectively. The Company is evaluating this new standard, but does not expect it to have a significant impact on its financial statement presentation or results.

Accounting for Credit Losses

In June 2016, the FASB issued ASU No. 2016-13, "Financial Instruments - Credit Losses." The standard requires the use of an "expected loss" model on certain types of financial instruments. The standard also amends the impairment model for available-for-sale securities and requires estimated credit losses to be recorded as allowances rather than as reductions to the amortized cost of the securities. This standard is effective for the Company for fiscal years, and interim periods within those years, beginning January 1, 2020, with early adoption permitted. The Company is evaluating the new guidance, but does not expect it to have a material impact on its financial statement presentation or results.

3.
Revenue
Operating revenues is comprised of passenger revenues, which includes fare and non-fare revenues, and other revenues. The following table shows disaggregated operating revenues for the three and six months ended June 30, 2019 and June 30, 2018.
 
Three Months Ended June 30,
 
Six Months Ended June 30,
 
2019
 
2018
 
2019
 
2018
 
(in thousands)
Operating revenues:
 
 
 
 
 
 
 
Fare
$
515,696

 
$
439,549

 
$
932,041

 
$
782,244

Non-fare
478,734

 
396,801

 
900,454

 
743,247

Total passenger revenues
994,430

 
836,350

 
1,832,495

 
1,525,491

Other
18,526

 
15,421

 
36,257

 
30,418

Total operating revenues
$
1,012,956

 
$
851,771

 
$
1,868,752

 
$
1,555,909



The Company is managed as a single business unit that provides air transportation for passengers. Operating revenues by geographic region as defined by the Department of Transportation ("DOT") area are summarized below:
 
Three Months Ended June 30,
 
Six Months Ended June 30,
 
2019
 
2018
 
2019
 
2018
 
(in thousands)
DOT—Domestic
$
890,388

 
$
768,297

 
$
1,644,502

 
$
1,417,433

DOT—Latin America
122,568

 
83,474

 
224,250

 
138,476

Total
$
1,012,956

 
$
851,771

 
$
1,868,752

 
$
1,555,909


The Company defers the amount for award travel obligation as part of loyalty deferred revenue within air traffic liability ("ATL") on the Company's condensed balance sheets and recognizes loyalty travel awards in passenger revenues as the mileage credits are used for travel or expire unused. As of June 30, 2019 and December 31, 2018, the Company had ATL balances of $403.0 million and $292.0 million, respectively. The balance of the Company's ATL is expected to be recognized within 12 months of the respective balance sheet date.

7




4.
Special Charges

Special Charges, Operating

During the six months ended June 30, 2019, the Company had no special charges within operating expenses in the statement of operations.

During the first quarter of 2018, the Company negotiated and amended the collective bargaining agreement with the Air Line Pilots Association, International ("ALPA"), under the guidance of the National Mediation Board ("NMB"). In connection with the amended agreement, the Company recorded a one-time ratification incentive of $80.7 million, including payroll taxes, and an $8.5 million adjustment related to other contractual provisions. These amounts totaling $89.2 million were recorded in special charges within operating expenses in the condensed statement of operations for the six months ended June 30, 2018.
    
Special Charges, Non-Operating

During the six months ended June 30, 2019, the Company had no special charges, non-operating within other (income) expense in the statement of operations.

During the three and six months ended June 30, 2018, the Company recorded $79.4 million and $88.6 million, respectively, in special charges, non-operating within other (income) expense in the statement of operations. During the first quarter of 2018, the Company entered into an aircraft purchase agreement for the purchase of 14 A319 aircraft previously operated under operating leases by the Company. The aggregate gross purchase price for the 14 aircraft was $285.0 million, and the price for each aircraft at the time of the sale was comprised of a cash payment net of the amount of maintenance reserves and security deposits for such aircraft held by the applicable lessor pursuant to the lease for such aircraft. The contract was deemed a lease modification, which resulted in a change of classification from operating leases to finance leases for the 14 aircraft. During the first quarter of 2018, the finance lease assets were recorded at the lower of cost or fair value of the aircraft within flight equipment on the condensed balance sheets. During the second quarter of 2018, the purchase of the 14 aircraft was completed and the obligation was accreted up to the net cash payment price with interest charges recognized in special charges, non-operating in the statement of operations. The Company determined the valuation of the aircraft based on third-party appraisals considering the condition of the aircraft (a Level 3 measurement). 

5.
Earnings (Loss) per Share
The following table sets forth the computation of basic and diluted earnings (loss) per common share:
 
 
Three Months Ended June 30,
 
Six Months Ended June 30,
 
2019
 
2018
 
2019
 
2018
 
(in thousands, except per share amounts)
Numerator
 
 
 
 
 
 
 
Net income (loss)
$
114,501

 
$
11,254

 
$
170,577

 
$
(33,668
)
Denominator
 
 
 
 
 
 
 
Weighted-average shares outstanding, basic
68,439

 
68,251

 
68,410

 
68,237

Effect of dilutive stock awards
181

 
59

 
158

 

Adjusted weighted-average shares outstanding, diluted
68,620

 
68,310

 
68,568

 
68,237

Earnings (loss) per share
 
 
 
 
 
 
 
Basic earnings (loss) per common share
$
1.67

 
$
0.16

 
$
2.49

 
$
(0.49
)
Diluted earnings (loss) per common share
$
1.67

 
$
0.16

 
$
2.49

 
$
(0.49
)
 
 
 
 
 
 
 
 
Anti-dilutive weighted-average shares
127


248

 
143

 
264




8



6.
Short-term Investment Securities

The Company's short-term investment securities are classified as available-for-sale and generally consist of U.S. Treasury and U.S. government agency securities with contractual maturities of 12 months or less. These securities are stated at fair value within current assets on the Company's condensed balance sheets. Realized gains and losses on sales of investments, if any, are reflected in non-operating income (expense) in the condensed statements of operations.

As of June 30, 2019 and December 31, 2018, the Company had $104.2 million and $102.8 million in short-term available-for-sale investment securities, respectively. During the six months ended June 30, 2019, these investments earned interest income at a weighted-average fixed rate of approximately 2.4%. For the three and six months ended June 30, 2019, an unrealized gain of $98 thousand and $228 thousand, net of deferred taxes of $29 thousand and $67 thousand, respectively, was recorded within accumulated other comprehensive income ("AOCI") related to these investment securities. For the three and six months ended June 30, 2018, an unrealized gain of $101 thousand and $78 thousand, net of deferred taxes of $33 thousand and $26 thousand, respectively, was recorded within AOCI related to these investment securities. The Company has not recognized any realized gains or losses related to these securities as the Company has not sold any of these securities. As of June 30, 2019 and December 31, 2018, $154 thousand and $74 thousand, net of tax, respectively, remained in AOCI, related to these instruments.

7.
Accrued Liabilities
Other current liabilities as of June 30, 2019 and December 31, 2018 consist of the following:
 
June 30, 2019
 
December 31, 2018
 
(in thousands)
Federal excise and other passenger taxes and fees payable
$
97,375

 
$
60,604

Salaries and wages
83,379

 
82,900

Airport obligations
64,065

 
52,029

Aircraft maintenance
41,563

 
59,805

Fuel
27,204

 
25,368

Aircraft and facility lease obligations
20,277

 
15,149

Interest payable
17,558

 
18,086

Other
27,620

 
25,736

Other current liabilities
$
379,041

 
$
339,677




8.
Financial Instruments and Risk Management
As part of the Company’s risk management program, the Company from time to time uses a variety of financial instruments to reduce its exposure to fluctuations in the price of jet fuel and in interest rates. The Company does not hold or issue derivative financial instruments for trading purposes.

The Company may be exposed to credit losses in the event of nonperformance by counterparties to these financial instruments. The Company periodically reviews and seeks to mitigate exposure to the financial deterioration and nonperformance of any counterparty by monitoring the absolute exposure levels, each counterparty's credit ratings and the historical performance of the counterparties relating to hedge transactions. The credit exposure related to these financial instruments is limited to the fair value of contracts in a net receivable position at the reporting date. The Company also maintains security agreements that require the Company to post collateral if the value of selected instruments falls below specified mark-to-market thresholds. The Company records financial derivative instruments at fair value, which includes an evaluation of each counterparty's credit risk. As of June 30, 2019, the Company did not hold any derivatives with requirements to post collateral.

Fuel Derivative Instruments

From time to time, the Company may enter into fuel derivative contracts in order to mitigate the risk of future volatility in fuel prices. The Company's fuel derivative contracts, if any, generally consist of United States Gulf Coast jet fuel swaps ("jet fuel swaps") and United States Gulf Coast jet fuel options ("jet fuel options"). Both jet fuel swaps and jet fuel options are used

9



at times to protect the refining price risk between the price of crude oil and the price of refined jet fuel, and to manage the risk of increasing fuel prices. Fair value of the instruments is determined using standard option valuation models.

The Company accounts for any fuel derivative contracts at fair value and recognizes them in the condensed balance sheets in prepaid expenses and other current assets or other current liabilities. The Company did not enter into any fuel derivative instruments during the six months ended June 30, 2019 and 2018, and did not have any outstanding fuel derivatives as of June 30, 2019 and December 31, 2018. Historically, the Company has not elected hedge accounting on any fuel derivative instruments entered into and, as a result, changes in the fair value of fuel derivative contracts, if any, were recorded in aircraft fuel expense.
Interest Rate Swaps
From time to time, the Company may enter into interest rate swaps to fix the benchmark interest rate component of interest payments or for other reasons. These instruments limit the Company's exposure to changes in the benchmark interest rate in the period from the trade date through the date of maturity. Interest rate swaps may be designated as cash flow hedges. The Company generally accounts for interest rate swaps at fair value and recognizes them in the balance sheet in prepaid expenses and other current assets or other current liabilities with changes in fair value recorded within AOCI. As of June 30, 2019 and December 31, 2018, the Company did not have any outstanding interest rate swaps.
Realized gains and losses from cash flow hedges are recorded in the condensed statements of cash flows as a component of cash flows from operating activities. Subsequent to the issuance of each debt instrument, amounts remaining in AOCI are amortized over the life of the fixed-rate debt instrument. During the six months ended June 30, 2019 and 2018, there were no unrealized gains or losses recorded within AOCI related to these instruments as they settled in 2015. For the three and six months ended June 30, 2019, the Company reclassified interest rate swap losses of $54 thousand and $101 thousand, net of tax of $19 thousand and $46 thousand, respectively, into earnings. For the three and six months ended June 30, 2018, the Company reclassified interest rate swap losses of $61 thousand and $120 thousand, net of tax of $18 thousand and $39 thousand, respectively, into earnings. As of June 30, 2019 and December 31, 2018, $1.0 million and $1.1 million, net of tax, respectively, remained in AOCI, related to these instruments.
9.
Leases
The Company leases aircraft, engines, airport terminals, maintenance and training facilities, aircraft hangars, commercial real estate, and office and computer equipment, among other items. Certain of these leases include provisions for variable lease payments which are based on several factors, including, but not limited to, relative leased square footage, enplaned passengers, and airports’ annual operating budgets. Due to the variable nature of the rates, these leases are not recorded on the Company's condensed balance sheets as a right-of-use asset and lease liability. Lease terms are generally 8 years to 18 years for aircraft and up to 30 years for other leased equipment and property.
The Company adopted Topic 842 utilizing the modified retrospective adoption method with an effective date of January 1, 2019. The Company elected not to apply the recognition requirements in Topic 842 to short-term leases (i.e., leases of 12 months or less). Instead, a lessee may recognize the lease payments in profit or loss on a straight-line basis over the lease term. The Company elected this accounting policy for all classes of underlying assets. In addition, in accordance with Topic 842, variable lease payments in the period in which the obligation for those payments is incurred are not included in the recognition of a lease liability or right-of-use asset.
Right-of-use assets represent the Company's right to use an underlying asset for the lease term and lease liabilities represent the Company's obligation to make lease payments arising from the lease. Right-of-use assets and liabilities are recognized at the lease commencement date based on the estimated present value of lease payments over the lease term. When available, the Company uses the rate implicit in the lease to discount lease payments to present value. However, the Company's leases generally do not provide a readily determinable implicit rate. Therefore, the Company estimates the incremental borrowing rate to discount lease payments based on information available at lease commencement. The Company uses publicly available data for instruments with similar characteristics when calculating its incremental borrowing rates. The Company has options to extend certain of its operating leases for an additional period of time and options to early terminate several of its operating leases. The lease term consists of the noncancellable period of the lease, periods covered by options to extend the lease if the Company is reasonably certain to exercise the option, periods covered by an option to terminate the lease if the Company is reasonably certain not to exercise the option and periods covered by an option to extend or not terminate the lease in which the exercise of the option is controlled by the lessor. The Company's lease agreements do not contain any residual value guarantees. The Company has elected to not separate non-lease components from the associated lease component for all underlying classes of assets with lease and non-lease components.

10



As of June 30, 2019, the Company had 46 aircraft financed under operating leases, with lease term expirations between 2022 and 2034. In addition, as of June 30, 2019, the Company had 11 spare engines financed under operating leases with lease term expiration dates ranging from 2019 to 2027. One of the Company's leased aircraft has variable rent payments, which fluctuate based on changes in London Interbank Offered Rate ("LIBOR").
During the six months ended June 30, 2019, the Company took delivery of two aircraft under secured debt arrangements, purchased one previously leased aircraft, and took delivery of five aircraft under operating leases. The Company also purchased two engines and purchased one previously leased engine. Upon purchase off lease, the assets previously recorded in our operating lease right-of-use asset (in accordance with the adoption of Topic 842) were recorded within flight equipment on our condensed balance sheets.
The Company entered into sale leaseback transactions with third-party aircraft lessors for some of its leased aircraft and engines. Upon adoption of Topic 842, the Company recognized a $5.5 million cumulative effect adjustment, net of tax, to retained earnings driven by the recognition of unamortized deferred gains and losses related to aircraft sale-leaseback transactions entered into in prior periods. Prior to the adoption of Topic 842, gains and losses on sale-leaseback transactions were generally deferred and recognized in income over the lease term. Under Topic 842, gains and losses on sale-leaseback transactions, subject to adjustment for off-market terms, are recognized immediately.
Some of the Company’s aircraft and engine master lease agreements provide that the Company pays maintenance reserves to aircraft lessors to be held as collateral in advance of the Company’s required performance of major maintenance activities. A majority of these maintenance reserve payments are calculated based on a utilization measure, such as flight hours or cycles, while some maintenance reserve payments are fixed, time-based contractual amounts. Maintenance reserve payments that are probable of being recovered when the Company performs qualifying maintenance are recorded in aircraft maintenance deposits on the Company's condensed balance sheets. Fixed maintenance reserve payments that are not probable of being recovered are considered lease payments and are included in the right-of-use asset and lease liability. Maintenance reserve payments that are based on a utilization measure and are not probable of being recovered are considered variable lease payments that are recognized when they are probable of being incurred and are not included in the right-of-use asset and lease liability.
Fixed maintenance reserve payments for the Company's aircraft and related flight equipment, including estimated amounts for contractual price escalations, are expected to be $1.4 million for the remainder of 2019, $2.6 million in 2020, $2.6 million in 2021, $2.7 million in 2022, $2.5 million in 2023, and $0.5 million in 2024 and beyond. Some of the master lease agreements do not require that the Company pay maintenance reserves so long as the Company's cash balance does not fall below a certain level. As of June 30, 2019, the Company is in full compliance with those requirements and does not anticipate having to pay reserves related to these master leases in the future.
Under the terms of the lease agreements, the Company will continue to operate and maintain the aircraft. Payments under the majority of the lease agreements are fixed for the term of the lease. The lease agreements contain standard termination events, including termination upon a breach of the Company's obligations to make rental payments and upon any other material breach of the Company's obligations under the leases, and standard maintenance and return condition provisions. These return provisions are evaluated at inception of the lease and throughout the lease terms and are accounted for as either fixed or variable lease payments (depending on the nature of the lease return condition) when it is probable that such amounts will be incurred. When determining probability and estimated cost of lease return obligations, there are various other factors that need to be considered such as the contractual terms of the lease, the ability to swap engines or other aircraft components, current condition of the aircraft, the age of the aircraft at lease expiration, utilization of engines and other components, the extent of repairs needed at return, return locations, current configuration of the aircraft and cost of repairs and materials at the time of return. As a result of the different factors listed above, management assesses the need to accrue lease return costs throughout the lease as facts and circumstances warrant an assessment. The Company expects lease return costs and unrecoverable maintenance deposits will increase as individual aircraft lease agreements approach their respective termination dates and the Company begins to accrue the estimated cost of return conditions for the corresponding aircraft. Upon a termination of the lease due to a breach by the Company, the Company would be liable for standard contractual damages, possibly including damages suffered by the lessor in connection with remarketing the aircraft or while the aircraft is not leased to another party.
Aircraft rent expense consists of monthly lease rents for aircraft and spare engines under the terms of the Company's aircraft and spare engine lease agreements recognized on a straight-line basis. Aircraft rent expense also includes maintenance reserves paid to aircraft lessors in advance of the performance of major maintenance activities that are not probable of being reimbursed and probable lease return condition obligations.


11



The following table provides details of the Company's future minimum lease payments under finance lease liabilities and operating lease liabilities recorded on the Company's condensed balance sheets as of June 30, 2019. The table does not include commitments that are contingent on events or other factors that are currently uncertain or unknown.
 
 
Finance Leases
 
Operating Leases
 
 
 
 
 
Aircraft and Spare Engine Leases
 
Property Facility Leases
 
Other
 
Total
Operating and Finance Lease Obligations
 
(in thousands)
Remainder of 2019
 
$
94,751

 
$
88,536

 
$
1,396

 
$
290

 
$
184,973

2020
 
780

 
172,409

 
2,417

 
517

 
176,123

2021
 
606

 
171,168

 
1,909

 

 
173,683

2022
 
578

 
172,951

 
1,080

 

 
174,609

2023
 
202

 
155,076

 
1,055

 

 
156,333

2024 and thereafter
 

 
592,704

 
4,938

 

 
597,642

Total minimum lease payments
 
$
96,917

 
$
1,352,844

 
$
12,795

 
$
807

 
$
1,463,363

Less amount representing interest
 
535

 
332,667

 
3,583

 
31

 
336,816

Present value of minimum lease payments
 
$
96,382

 
$
1,020,177

 
$
9,212

 
$
776

 
$
1,126,547

Less current portion
 
94,834

 
112,189

 
2,137

 
551

 
209,711

Long-term portion
 
$
1,548

 
$
907,988

 
$
7,075

 
$
225

 
$
916,836


Commitments related to the Company's noncancellable short-term operating leases not recorded on the Company's condensed balance sheets are expected to be $0.5 million for the remainder of 2019 and none in 2020 and beyond.
In June 2019, the Company entered into an aircraft sale agreement to acquire four A320 aircraft previously operated by the Company under operating leases. The agreement provides for the purchase by the Company of each aircraft to occur during the third quarter of 2019. The aggregate gross purchase price for the 4 aircraft was $141.3 million, and the payment of the price for each aircraft at the time of the sale will be comprised of a cash payment net of the amount of maintenance reserves and security deposits for such aircraft held by the applicable lessor pursuant to the lease for such aircraft. The contract was deemed a lease modification, which resulted in a change of classification from operating leases to finance leases for the four aircraft. The Company recorded a finance lease obligation of $94.9 million calculated as the present value of the remaining lease payments, including the final payment to purchase the aircraft and included within current maturities of long-term debt and finance leases on the Company's condensed balance sheets. In addition, the Company recorded finance lease assets of $140.5 million, which include related amounts previously recorded as maintenance reserves and security deposits and included within flight equipment on the Company's condensed balance sheets.
The remainder of the Company's finance lease obligations relate to leased computer and office equipment. Payments under these finance lease agreements are fixed for terms ranging from 3 to 5 years. Accounting for finance leases is substantially unchanged under Topic 842. Finance lease assets are recorded within property and equipment and the related liabilities are recorded within current maturities of long-term debt and finance leases and long-term debt and finance leases, less current maturities in the Company's condensed balance sheets.
The table below presents information for lease costs related to the Company's finance and operating leases:

12



 
Three Months Ended June 30, 2019
 
Six Months Ended June 30, 2019
 
(in thousands)
Finance lease cost
 
 
 
Amortization of leased assets
$
519

 
$
728

Interest of lease liabilities
309

 
339

Operating lease cost
 
 
 
Operating lease cost (1)
48,639

 
98,353

Short-term lease cost (1)
3,509

 
6,958

Variable lease cost (1)
31,653

 
59,770

Total lease cost
$
84,629

 
$
166,148

(1) Expenses are classified within aircraft rent and landing fees and other rents on the Company's condensed statements of operations.
The table below presents lease-related terms and discount rates as of June 30, 2019:
 
June 30, 2019
Weighted-average remaining lease term
 
Operating leases
9.8 years

Finance leases
0.8 years

Weighted-average discount rate
 
Operating leases
6.52
%
Finance leases
3.93
%



10.
Commitments and Contingencies
Aircraft-Related Commitments and Financing Arrangements
The Company’s contractual purchase commitments consist primarily of aircraft and engine acquisitions through manufacturers. As of June 30, 2019, the Company's aircraft orders consisted of the following:
 
 
Airbus
 
 
A320neo
Remainder of 2019
 
8
2020
 
17
2021
 
18
 
 
43


As of June 30, 2019, the Company has no contractual aircraft purchase commitments beyond 2021. The Company also has one spare engine order for a V2500 SelectTwo engine with International Aero Engines ("IAE") and six spare engine orders for PurePower PW1100G-JM engines with Pratt & Whitney. Spare engines are scheduled for delivery from 2020 through 2023. Purchase commitments for these aircraft and engines, including estimated amounts for contractual price escalations and pre-delivery payments, are expected to be $388.5 million for the remainder of 2019, $858.0 million in 2020, $776.1 million in 2021$17.6 million in 2022, $8.3 million in 2023, and none in 2024 and beyond. As of June 30, 2019, the Company has secured sale-leaseback financing commitments for six aircraft being delivered in the remainder of 2019. As of June 30, 2019, the Company does not have financing commitments in place for the remaining 37 Airbus aircraft on firm order, which are scheduled for delivery in the remainder of 2019 through 2021.
Interest commitments related to the secured debt financing of 62 delivered aircraft as of June 30, 2019 are $42.6 million for the remainder of 2019, $78.5 million in 2020, $71.3 million in 2021, $64.3 million in 2022, $54.1 million in 2023, and

13



$157.9 million in 2024 and beyond. For principal commitments related to these financed aircraft, refer to Note 12, Debt and Other Obligations.
The Company is contractually obligated to pay the following minimum guaranteed payments for its reservation system and other miscellaneous subscriptions and services as of June 30, 2019: $6.9 million for the remainder of 2019, $17.4 million in 2020, $14.7 million in 2021, $13.9 million in 2022, $12.7 million in 2023, and $60.0 million thereafter. During the first quarter of 2018, the Company entered into a contract renewal with its reservation system provider which expires in 2028.
Litigation
The Company is subject to commercial litigation claims and to administrative and regulatory proceedings and reviews that may be asserted or maintained from time to time. The Company believes the ultimate outcome of such lawsuits, proceedings and reviews will not, individually or in the aggregate, have a material adverse effect on its financial position, liquidity or results of operations.
Credit Card Processing Arrangements
The Company has agreements with organizations that process credit card transactions arising from the purchase of air travel, baggage charges, and other ancillary services by customers. As is standard in the airline industry, the Company's contractual arrangements with credit card processors permit them, under certain circumstances, to retain a holdback or other collateral, which the Company records as restricted cash, when future air travel and other future services are purchased via credit card transactions. The required holdback is the percentage of the Company's overall credit card sales that its credit card processors hold to cover refunds to customers if the Company fails to fulfill its flight obligations.
The Company's credit card processors do not require the Company to maintain cash collateral provided that the Company satisfies certain liquidity and other financial covenants. Failure to meet these covenants would provide the processors the right to place a holdback resulting in a commensurate reduction of unrestricted cash. As of June 30, 2019 and December 31, 2018, the Company was in compliance with such liquidity and other financial covenants in its credit card processing agreements and the processors were holding back no remittances.
The maximum potential exposure to cash holdbacks by the Company's credit card processors, based upon advance ticket sales and $9 Fare Club memberships as of June 30, 2019 and December 31, 2018, was $450.1 million and $321.0 million, respectively.
Employees
The Company has 5 union-represented employee groups that together represented approximately 80% of all employees at June 30, 2019. The table below sets forth the Company's employee groups and status of the collective bargaining agreements as of June 30, 2019.
Employee Groups
 
Representative
 
Amendable Date
 
Percentage of Workforce
Pilots
 
Air Line Pilots Association, International ("ALPA")
 
February 2023
 
26%
Flight Attendants
 
Association of Flight Attendants ("AFA-CWA")
 
May 2021
 
46%
Dispatchers
 
Professional Airline Flight Control Association ("PAFCA")
 
October 2023
 
1%
Ramp Service Agents
 
International Association of Machinists and Aerospace Workers ("IAMAW")
 
June 2020
 
4%
Passenger Service Agents
 
Transport Workers Union of America ("TWU")
 
NA
 
3%
In August 2015, the Company's collective bargaining agreement with its pilots, represented by ALPA, became amendable. In February 2018, the pilot group voted to approve a new five-year agreement with the Company. In connection with the new agreement, the Company recorded a one-time ratification incentive of $80.7 million, including payroll taxes, and an $8.5 million adjustment related to other contractual provisions. These amounts totaling $89.2 million were recorded in special charges within operating expenses in the condensed statements of operations for the six months ended June 30, 2018. For additional information, refer to Note 4, Special Charges.

In June 2018, the NMB notified the Company that the TWU filed an application seeking a representation election for the Company's passenger service agents. The NMB determined that a representation election would be held and the voting period

14



for the election took place through September 4, 2018. The Company’s passenger service agents voted to be represented by the TWU, but the representation applies only to the Company’s Fort Lauderdale station where the Company has direct employees in the passenger service classification. The Company and the TWU began meeting in late October 2018 to negotiate an initial collective bargaining agreement. As of June 30, 2019, the Company continued to negotiate with the TWU.
The Company is self-insured for healthcare claims, up to a stop-loss amount for eligible participating employees and qualified dependent medical claims, subject to deductibles and limitations. The Company’s liabilities for claims incurred but not reported are determined based on an estimate of the ultimate aggregate liability for claims incurred. The estimate is calculated from actual claim rates and adjusted periodically as necessary. The Company has accrued $5.0 million and $4.4 million in health care claims as of June 30, 2019 and December 31, 2018, respectively.

11.
Fair Value Measurements
Under ASC 820, "Fair Value Measurements and Disclosures," disclosures relating to how fair value is determined for assets and liabilities are required, and a hierarchy for which these assets and liabilities must be grouped is established, based on significant levels of inputs, as follows:
Level 1—Quoted prices in active markets for identical assets or liabilities.
Level 2—Observable inputs other than Level 1 prices such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities.
Level 3—Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities.
Fair value is defined as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. The Company utilizes several valuation techniques in order to assess the fair value of the Company’s financial assets and liabilities.
Fuel Derivative Instruments
From time to time, the Company may enter into fuel derivative contracts in order to mitigate the risk of future volatility in fuel prices. The Company’s fuel derivative contracts generally consist of jet fuel swaps and jet fuel options. These instruments are valued using energy and commodity market data, which is derived by combining raw inputs with quantitative models and processes to generate forward curves and volatilities.
The Company utilizes the market approach to measure fair value for its fuel derivative instruments, if any. The market approach uses prices and other relevant information generated by market transactions involving identical or comparable assets or liabilities.

The Company has not historically elected hedge accounting on its fuel derivative instruments, if any. As a result, the Company would record the fair value adjustment of any fuel derivatives in the accompanying condensed statements of operations within aircraft fuel and on the condensed balance sheets within prepaid expenses and other current assets or other current liabilities, depending on whether the net fair value of the derivatives is in an asset or liability position as of the respective date. Fair values of any fuel derivative instruments are determined using standard option valuation models. The Company also considers counterparty risk and its own credit risk in its determination of all estimated fair values. The Company offsets fair value amounts recognized for any derivative instruments executed with the same counterparty under a master netting arrangement. The Company determines fair value of any jet fuel options utilizing an option pricing model based on inputs that are either readily available in public markets or can be derived from information available in publicly quoted markets. The Company has consistently applied these valuation techniques in all periods presented and believes it has obtained the most accurate information available for the types of derivative contracts it may hold.

The fair value of the Company's jet fuel swaps, if any, are determined based on inputs that are readily available in public markets or can be derived from information available in publicly quoted markets; therefore, the Company categorizes these instruments as Level 2. Due to the fact that certain inputs utilized to determine the fair value of jet fuel options are unobservable (principally implied volatility), the Company categorizes these derivatives as Level 3. Implied volatility of a jet fuel option is the volatility of the price of the underlying commodity that is implied by the market price of the option based on an option pricing model. Thus, it is the volatility that when used in a particular pricing model yields a theoretical value for the

15



option equal to the current market price of that option. Implied volatility, a forward-looking measure, differs from historical volatility because the latter is calculated from known past returns. At each balance sheet date, the Company substantiates and adjusts unobservable inputs. The Company routinely assesses the valuation model's sensitivity to changes in implied volatility. As of June 30, 2019 and December 31, 2018, the Company had no outstanding jet fuel derivatives.
Long-Term Debt
The estimated fair value of the Company's term loan debt agreements and revolving credit facility have been determined to be Level 3 as certain inputs used to determine the fair value of these agreements are unobservable. The Company utilizes a discounted cash flow method to estimate the fair value of the Level 3 long-term debt. The estimated fair value of the Company's publicly and non-publicly held EETC debt agreements has been determined to be Level 2 as the Company utilizes quoted market prices in markets with low trading volumes to estimate the fair value of its Level 2 long-term debt.
The carrying amounts and estimated fair values of the Company's long-term debt at June 30, 2019 and December 31, 2018 were as follows:
 
June 30, 2019
 
December 31, 2018
 
Fair Value Level Hierarchy
 
Carrying Value
 
Estimated Fair Value
 
Carrying Value
 
Estimated Fair Value
 
 
(in millions)