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Press release from GlobeNewswire (a Nasdaq OMX company)

Spirit Airlines Announces Second Quarter 2011 Earnings

Thursday, July 28, 2011

Spirit Airlines Announces Second Quarter 2011 Earnings02:30 EDT Thursday, July 28, 2011 MIRAMAR, Fla., July 28, 2011 (GLOBE NEWSWIRE) -- Spirit Airlines, Inc. (Nasdaq:SAVE) today reported second quarter 2011 financial results. During the quarter, Spirit completed its initial public offering ("IPO") and began trading on the Nasdaq Global Select Stock Market under the ticker symbol SAVE. Pro forma results assume the IPO and related recapitalization, occurred as of January 1, 2010 and are included to provide investors with meaningful year-over-year comparisons. Pro forma results also exclude unrealized gains and losses and special items. Pro forma net income for the second quarter was $26.8 million, or $0.37 per diluted share. GAAP net income was $16.9 million, or $0.41 per diluted share.    Operating income for the second quarter 2011 was $40.7 million, resulting in a 14.8% operating margin, excluding $3.5 million of unrealized fuel hedge losses and $2.3 million of special items. GAAP second quarter 2011 operating income was $34.9 million, resulting in a 12.7% operating margin.   EBITDAR, excluding unrealized gains and losses and special items, for the second quarter 2011 was $71.5 million, resulting in an EBITDAR margin of 25.9%.   Spirit ended the quarter with $346.9 million in total cash, of which $248.5 million was unrestricted "I am pleased with the results the Spirit team delivered during the second quarter 2011. It is an exciting time for Spirit now that it is a public company and we are happy to report these very positive results," said Ben Baldanza, Spirit's President and Chief Executive Officer. "Our strategy empowers customers to save by choosing the extra services that are of value to them. Passenger growth in excess of our capacity growth illustrates a growing preference for our model by consumers."Revenue Performance For the second quarter 2011, Spirit's total operating revenue was $275.9 million, an increase of $98.5 million, or 55.6%, from the second quarter 2010. Total revenue per available seat mile ("RASM") increased to 11.37 cents, up 22.1% as compared to the second quarter last year driven primarily by a traffic increase of 37.1% on a capacity increase of 27.3%, which resulted in a load factor increase of 6.1 points to 85.9%. Second quarter 2010 revenue was adversely affected by the June 2010 pilot strike. During the second quarter 2011, Spirit continued to stimulate traffic by keeping fares low and offering customers the freedom to pay for only the extra services and products they value.  Total revenue per passenger flight segment ("PFS") increased to $125.39, a 13.9% increase as compared to the second quarter 2010, driven primarily by average non-ticket revenue per PFS increasing to $43.39, up 37.1% from the same period last year. Spirit ended the quarter with 35 aircraft in service. Spirit has 33 Airbus aircraft on order with deliveries scheduled to begin November 2011 and continuing through 2015.Cost Performance Total operating expenses in the second quarter 2011 were $240.9 million, up 37.2% over the same period last year primarily due to an increase in fuel cost per gallon of over 40% and increased flight volume. Second quarter operating cost per available seat mile, excluding special items and fuel ("CASM ex-fuel"), was 5.41 cents, a 10.3% decrease as compared to the second quarter 2010. Spirit remains committed to its ultra low cost strategy, which through cost control allows it to offer low base fares in its markets while sustaining industry leading margins.  Balance Sheet Spirit ended the quarter with $346.9 million in total cash, including net proceeds of $150 million to the Company from the IPO. Total unrestricted cash and cash equivalents at the end of the quarter was $248.5 million. Cash generated by operating activities during the second quarter 2011 was $43.8 million. Capital expenditures during the second quarter 2011 were $5.8 million. In addition, the Company paid pre-delivery deposits of $7.4 million and had purchase deposit refunds of $1.0 million. As a result of the IPO and related recapitalization, at the end of the quarter, Spirit had no debt on its balance sheet.Second Quarter Highlights Launched new service between: Chicago and Los Angeles Fort Lauderdale and San Salvador, El Salvador Fort Lauderdale and Mexico City/Toluca, Mexico Fort Lauderdale and Dallas/Fort Worth Las Vegas and Los Angeles Las Vegas and Dallas/Fort Worth Myrtle Beach and Washington, DC (seasonal) Myrtle Beach and Toronto, Canada/Niagara Falls, New York (seasonal) Myrtle Beach and Pittsburgh/Latrobe (seasonal) Myrtle Beach and Montreal, Canada/Plattsburgh, New York (seasonal) Myrtle Beach and Charleston, West Virginia (seasonal) Announced new service between: Chicago and Dallas Chicago and Boston Chicago and Detroit Chicago and New York LaGuardia Chicago and Orlando Las Vegas and San Diego Las Vegas and Portland, Oregon Las Vegas and Oakland/San Francisco In addition, during the quarter, Spirit announced that beginning November 1, 2011 customers will have the option to save $5 each way by checking in online and printing their own boarding pass before they arrive at the airport or by doing so at an airport kiosk. Spirit believes it is important to give customers the freedom to choose what is important to them; for example, no one pays for checked baggage on Spirit unless they actually check a bag.Conference Call/Webcast Details Spirit Airlines will conduct a live audio webcast of its conference call with analysts and media journalists today at 9:00 a.m. ET. The webcast will be available to the public on a listen-only basis at http://ir.spirit.com. An archive of the webcast will be available under Webcasts & Presentations for 60 days.About Spirit Airlines Spirit Airlines (Nasdaq:SAVE) empowers customers to save money on air travel by offering ultra low base fares with a range of optional services for a fee, allowing customers the freedom to choose only the extras they value. This innovative approach grows the traveling market and stimulates new economic activity while creating new jobs.  Spirit's modern fleet, configuration and other innovations enable Spirit to burn less fuel per seat than competitors, making Spirit the most environmentally-friendly U.S. carrier.  Spirit's all-Airbus fleet currently operates more than 175 daily flights to over 45 destinations throughout the U.S., Latin America and Caribbean.  Visit Spirit at www.spirit.com. The Spirit Airlines logo is available at http://www.globenewswire.com/newsroom/prs/?pkgid=9737Forward-Looking Statements Statements in this release contain various forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, which represent the Company's expectations or beliefs concerning future events. When used in this release, the words "expects," "estimates," "plans," "anticipates," "indicates," "believes," "forecast," "guidance," "outlook," "may," "will," "should," "seeks," "targets" and similar expressions are intended to identify forward-looking statements. Similarly, statements that describe our objectives, plans or goals, or actions we may take in the future, are forward-looking statements. Forward-looking statements include, without limitation, statements regarding the Company's intentions and expectations regarding the delivery schedule of aircraft on order, estimates of the Company's return on investment and effective tax rate for 2011, and announced new service routes and customer savings programs. All forward-looking statements in this release are based upon information available to the Company on the date of this release. The Company undertakes no obligation to publicly update or revise any forward-looking statement, whether as a result of new information, future events, or otherwise. Forward-looking statements are subject to a number of factors that could cause the Company's actual results to differ materially from the Company's expectations, including the competitive environment in the airline industry; the Company's ability to keep costs low; changes in fuel costs; the impact of worldwide economic conditions on customer travel behavior; the Company's ability to generate non-ticket revenues; and government regulation. Additional information concerning these and other factors is contained in the Company's Securities and Exchange Commission filings, including but not limited to the Company's IPO prospectus dated May 25, 2011.SPIRIT AIRLINES, INC. Statement of Operations(in thousands, except per share data)(unaudited)    Three Months Ended  Six Months Ended    June 30,PercentJune 30,Percent  20112010 (1)Change20112010 (1)Change               Passenger  $ 180,418  $ 126,372 42.8%  $ 333,698  $ 263,281 26.7% Non-ticket  95,473  50,987 87.2%  174,855  98,129 78.2%Total operating revenue 275,891  177,359 55.6% 508,553  361,410 40.7%               Aircraft fuel  107,322  60,780 76.6%  188,234  114,606 64.2% Salaries, wages and benefits  45,173  38,720 16.7%  88,366  74,784 18.2% Aircraft rent  29,081  24,873 16.9%  56,789  47,449 19.7% Landing fees and other rents  13,007  11,868 9.6%  24,662  22,612 9.1% Distribution  13,037  10,227 27.5%  24,969  19,515 27.9% Maintenance and repairs  7,480  5,714 30.9%  15,538  12,406 25.2% Depreciation and amortization  1,691  1,430 18.3%  3,237  2,800 15.6% Other operating  21,826  21,985  (0.7)%  42,559  41,323 3.0% Loss on disposal of assets  35  28 25.0%  35  77  (54.5)% Restructuring and termination costs   2,280  (57) na  2,361  (77) naTotal operating expenses 240,932  175,568 37.2% 446,750  335,495 33.2%              Operating income  34,959  1,791 na  61,803  25,915 138.5%               Other expense (income):             Interest expense  9,678  12,667  (23.6)%  23,964  25,439  (5.8)% Capitalized interest  (1,039)  (293) 254.6%  (2,076)  (530) 291.7% Interest income  (71)  (99)  (28.3)%  (157)  (159)  (1.3)% Other expense  76  45 68.9%   124  79 57.0%Total other expense  8,644  12,320  (29.8)% 21,855  24,829  (12.0)%               Income before income taxes  26,315  (10,529) na  39,948   1,086 na Provision (benefit) for income taxes  9,398  (463) na  15,148  (124) naNet income (loss) $ 16,917  $ (10,066) na $ 24,800  $ 1,210 na               Weighted average shares, basic  41,493  26,164 58.6%  33,962  26,111 30.1% Weighted average shares, diluted  41,769  26,164 59.6%  34,270  26,798 27.9%              Net income (loss) per share, basic $ 0.41  $ (0.38) na $ 0.73  $ 0.05 naNet income (loss) per share, diluted $ 0.41  $ (0.38) na $ 0.72  $ 0.05 na   (1) Reflects the adverse effect of the June 2010 pilot strike  SPIRIT AIRLINES, INC. Selected Operating Statistics (unaudited)     Three Months Ended June 30, Percent   2011 2010 (1) ChangeOperating Statistics:       Available seat miles (ASMs) (thousands)  2,425,642  1,905,053 27.3% Revenue passenger miles (RPMs) (thousands)  2,083,804  1,519,609 37.1% Load factor (%)  85.9  79.8 6.1 pts Passenger flight segments (thousands)  2,200  1,611 36.6%         Operating revenue per ASM (RASM) (cents)  11.37  9.31 22.1% Average ticket revenue per passenger flight segment ($)  82.00  78.43 4.6% Average non-ticket revenue per passenger flight segment ($)  43.39  31.64 37.1% Total revenue per passenger flight segment ($)  125.39  110.07 13.9% CASM (cents)  9.93  9.22 7.8% CASM excluding unrealized gains and losses and special items (cents) (2)   9.70  9.10 6.6% CASM excluding fuel & special items (cents) (3)  5.41  6.03 (10.3)%         Fuel gallons consumed (thousands)  31,264  24,965 25.2% Average economic fuel cost per gallon ($)  3.32  2.34 41.9%         Aircraft at end of period  35  31 12.9% Average daily aircraft utilization (hours)  13.1  12.1 8.3% Average stage length (miles)  932  928 0.4% Airports served at end of period  45  38 18.4%           Six Months Ended June 30, Percent   2011 2010 (1) ChangeOperating Statistics:       Available seat miles (ASMs) (thousands)  4,625,739  3,725,184 24.2% Revenue passenger miles (RPMs) (thousands)  3,931,084  2,984,254 31.7% Load factor (%)  85.0  80.1 4.9 pts Passenger flight segments (thousands)  4,063   3,137 29.5%         Operating revenue per ASM (RASM) (cents)  10.99  9.70 13.3% Average ticket revenue per passenger flight segment ($)  82.14  83.93 (2.1)% Average non-ticket revenue per passenger flight segment ($)  43.04  31.28 37.6% Total revenue per passenger flight segment ($)  125.18  115.21 8.7% CASM (cents)  9.66  9.01 7.2% CASM excluding unrealized gains and losses and special items (cents) (2)  9.54  8.96 6.5% CASM excluding fuel & special items (cents) (3)  5.54  5.93 (6.6)%         Fuel gallons consumed (thousands)  59,436  49,165 20.9% Average economic fuel cost per gallon ($)  3.12  2.30 35.7%         Aircraft at end of period  35  31 12.9% Average daily aircraft utilization (hours)  12.9  12.5 3.2% Average stage length (miles)  946  935 1.2% Airports served at end of period  45  38 18.4%   (1) Reflects the adverse effect of the June 2010 pilot strike (2) Excludes unrealized gains and losses and special items as defined in the table below (3) Excludes fuel and special items as defined in the table below The Company is providing a reconciliation of GAAP financial information to non-GAAP financial information as it believes that non-GAAP financial measures provide management and investors the ability to measure the performance of the Company on a consistent basis. These non-GAAP financial measures have limitations as an analytical tool. Because of these limitations, determinations of Spirit's operating performance excluding unrealized gains and losses or special items, as well as pro forma results reflecting the IPO and related recapitalization, should not be considered in isolation or as a substitute for performance measures calculated in accordance with GAAP.Reconciliation of non-GAAP Operating Income to GAAP Operating Income (Unaudited)  Three Months Ended  June 30,  20112010 (1) (in thousands )    Operating income, as reported $ 34,959  $ 1,791       Add: Unrealized mark-to-market gains and losses (2)  3,457  2,294 Add special items:     Restructuring and termination costs (3)  2,280  (57) Loss on disposal of assets  35   28Operating income, non-GAAP (4) $ 40,731  $ 4,056 Operating margin  14.8%  2.3%Reconciliation of non-GAAP Net Income to GAAP Net Income (Unaudited)  Three Months Ended  June 30,  20112010 (1) (in thousands )    Net income, as reported $ 16,917  $ (10,066)       Add: Unrealized mark-to-market gains and losses, net of tax (2)  2,222  2,193 Add special items:     Restructuring and termination costs, net of tax  (3)  1,466  (55) Loss on disposal of assets, net of tax  23  27 Net income, non-GAAP (4) $ 20,628  $ (7,901)   (1) Reflects the adverse effect of the June 2010 pilot strike. (2) Unrealized mark-to-market gains and losses are comprised of non-cash adjustments to aircraft fuel expenses. (3) Restructuring and termination costs include: (i) for 2010 and 2011, amounts relating to exit facility costs associated with moving our Detroit, Michigan maintenance operations to Fort Lauderdale, Florida, (ii) for 2011, $2.3 million in connection with the IPO which included $1.8 million paid to Indigo Partners, LLC to terminate its professional services agreement and $0.5 million paid to three unaffiliated holders of the Company's subordinated notes. (4) Excludes special items as described in the table above. Includes management fees of $0.1 million and $0.2 million for second quarter 2011 and second quarter 2010, respectively, paid by the Company to Indigo Partners, LLC pursuant to the professional services agreement, which was terminated simultaneously with the consummation IPO.Reconciliation of non-GAAP Pro Forma Net Income to GAAP Net Income(1) (Unaudited)  Three Months Ended  June 30, (in thousands except per share data)20112010 (2)Net income, as reported $ 16,917  $ (10,066) Add: Provision (benefit) for income taxes  9,398  (463) Income before income taxes, as reported  26,315  (10,529)     Add: Unrealized mark-to-market gains and losses  3,457  2,294 Add special items:   Restructuring and termination costs  2,280  (57) Loss on disposal of assets  35  28 Income before income taxes, non-GAAP (3)  32,087  (8,264)       Add: Interest expense  9,678  12,667 Pro forma income before income taxes, non-GAAP (1) (3) $ 41,765  $ 4,403 Pro forma provision for income taxes  14,916  1,643      Pro forma net income, non-GAAP (1) (3) $ 26,849  $ 2,760     Pro forma adjusted:   Weighted average shares, basic  72,114   71,844 Weighted average shares, diluted  72,734  72,473    Pro forma net income per share, basic $ 0.37  $ 0.04 Pro forma net income per share, diluted $ 0.37  $ 0.04   (1) Pro forma earnings are presented to give effect to the following as if the IPO occurred as of January 1, 2010: (i) the elimination of all of Spirit's outstanding indebtedness and preferred stock, and the termination of any outstanding letter of credit facility supporting collateral obligations due to Spirit's credit card processors through (x) the application of a portion of the IPO net proceeds, (y) the exchange of any notes not repaid with IPO net proceeds for shares of common stock and (z) the exchange of any shares of preferred stock not redeemed with IPO net proceeds for shares of common stock; (ii) adding back to net income the interest expense recorded in Spirit's statement of operations related to the indebtedness and preferred stock retired; (iii) the issuance of shares of common stock by Spirit in the IPO and in connection with the related recapitalization; and (iv) the estimated tax impact resulting from the above transactions. (2) Reflects the adverse effect of the June 2010 pilot strike. (3) Excludes special items as described in the "Reconciliation of non-GAAP Operating Income to GAAP Operating Income" table above. The Company's economic fuel cost per gallon differs from GAAP results in that it only includes the cash settlements related to fuel hedge contracts that settled during the period whereas the GAAP results also include the non-cash mark-to-market impact of all fuel hedge contracts expected to settle in future periods.   The Company believes that net fuel hedge adjustments provide management and investors the ability to better assess and compare its performance.Reconciliation of non-GAAP Economic Fuel Expense to GAAP Economic Fuel Expense (unaudited)  Three Months Ended Six Months Ended  June 30,June 30,  2011201020112010 (in thousands except per share data)        Fuel Expense, GAAP         Aircraft fuel  $ 107,322  $ 60,780  $ 188,234  $ 114,606           Subtract         Unrealized mark-to-market gains and losses  3,457  2,294  2,911  1,666          Economic fuel expense, non-GAAP $ 103,865  $ 58,486  $ 185,323  $ 112,940           Fuel gallons consumed (000)  31,264  24,965  59,436  49,165          Economic fuel cost per gallon, non-GAAP $ 3.32  $ 2.34  $ 3.12  $ 2.30 Reconciliation of EBITDAR, excluding unrealized gains and losses and special items ("EBITDAR")  (unaudited)  Three Months Ended  June 30,  20112010 (1) (in thousands )  Net Income, as reported $ 16,917  $ (10,066) Add: Provision (benefit) for income taxes  9,398  (463) Income before income taxes, as reported  26,315  (10,529)       Add:     Total other expense  8,644  12,320 Depreciation and amortization  1,691  1,430 EBITDA  36,650  3,221       Add: Aircraft Rent  29,081  24,873EBITDAR, GAAP $ 65,731  $ 28,094 EBITDAR margin, GAAP  23.8%  15.8%       Add: Unrealized mark-to-market gains and losses  3,457  2,294 Add special items:     Restructuring and termination costs  2,280  (57) Loss on disposal of assets  35  28EBITDAR, non-GAAP (2) $ 71,503  $ 30,359 EBITDAR margin, non-GAAP (2)  25.9%  17.1%   (1) Reflects the adverse effect of the June 2010 pilot strike. (2) Excludes unrealized gains and losses and special items as described in the "Reconciliation of non-GAAP Operating Income to GAAP Operating Income" table above.CONTACT: Media Contacts: Misty Pinson Director, Corporate Communications misty.pinson@spirit.com (954) 628-4827/cell (954) 918-9432 Manuel Jaquez (Latin America & Caribbean) Senior Manager Commercial - Latin America manuel.jaquez@spirit.com (954) 628-4898 Investor Relations Contact: DeAnne Gabel Director, Investor Relations (954) 447-7920 InvestorRelations@spirit.com