Spirit Airlines Announces Fourth Quarter and Full Year 2014 Results; Capacity Growth of 17.9 Percent Contributes to Adjusted Net Income Growth of 33.3 Percent for Full Year 2014

MIRAMAR, Fla., Feb. 10, 2015 (GLOBE NEWSWIRE) — Spirit Airlines, Inc. (Nasdaq:SAVE) today reported fourth quarter and full year 2014 financial results.

Adjusted net income for the fourth quarter 2014 increased 43.2 percent to $58.7 million ($0.80 per diluted share) compared to the fourth quarter 20131. GAAP net income for the fourth quarter 2014 increased 29.4 percent year over year to $55.9 million ($0.76 per diluted share).
Adjusted net income for the full year 2014 increased 33.3 percent year over year to $236.7 million ($3.23 per diluted share)1. GAAP net income for the full year 2014 increased 27.4 percent year over year to $225.5 million ($3.08 per diluted share).
Adjusted pre-tax margin for the fourth quarter 2014 was 19.7 percent, up 4.3 percentage points year over year. For the full year 2014, adjusted pre-tax margin was 19.2 percent, up 2.1 percentage points compared to 20131. On a GAAP basis, pre-tax margin for the fourth quarter 2014 was 18.8 percent and for the full year 2014 was 18.3 percent.
Spirit ended 2014 with an unrestricted cash and cash equivalents balance of $632.8 million.
Spirit’s return on invested capital (before taxes and excluding special items) for the twelve months ended December 31, 2014 was 30.1 percent2.
“I want to thank our team members that contributed to our solid operational and financial performance in 2014. During 2014, we improved our customers’ understanding of our Bare Fare™ plus Frill Control™ product design, which led to increased customer satisfaction, improved our financial results, and maintained a very high completion rate while improving our on-time performance by 600 basis points,” said Ben Baldanza, Spirit’s Chief Executive Officer. “We have the right team, resources, and business model to continue to successfully grow our business. I’m pleased to be a part of the Spirit team and am excited about bringing our ultra-low fares to even more people in more places.”

Revenue Performance

For the fourth quarter 2014, Spirit’s total operating revenue was $474.5 million, an increase of 13.0 percent compared to the fourth quarter 2013, driven by an increase in flight volume.

Total revenue per available seat mile (“RASM”) for the fourth quarter 2014 decreased 5.1 percent compared to the fourth quarter 2013 on a capacity increase of 18.9 percent. The decrease was driven by a mix of lower passenger yields and a 1.4 point decline in load factor.

Total revenue per passenger flight segment (“PFS”) for the fourth quarter 2014 decreased 3.7 percent year over year to $127.91, driven by a 6.1 percent decrease in ticket revenue per PFS and a 0.3 percent decrease in non-ticket revenue per PFS. During the fourth quarter, the Company transitioned its onboard catering to a third-party provider under a revenue share agreement. As a result of this change, in the fourth quarter 2014, the Company recorded lower non-ticket revenue and correspondingly lower costs than it would have otherwise.

Cost Performance

Total operating expenses for the fourth quarter 2014, excluding $4.5 million of special items3, increased 6.9 percent to $380.0 million. Including special items, total operating expenses increased 9.3 percent year over year to $384.5 million.

Spirit reported fourth quarter 2014 cost per available seat mile (“ASM”) excluding special items and fuel (“Adjusted CASM ex-fuel”)3 of 5.61 cents, a decrease of 2.9 percent compared to the same period last year driven in part by lower distribution expense, maintenance expense, and aircraft rent per ASM. Distribution expense per ASM in the fourth quarter 2014 was lower compared to the same period last year primarily due to a one-time litigation settlement gain of approximately $2.9 million and a larger percentage of tickets being booked directly through spirit.com, the Company’s lowest cost distribution channel. The decrease in maintenance expense per ASM year over year was driven by an expense reversal in the fourth quarter 2014 associated with an insurance claim, along with a one-time $750,000 insurance deductible expense in the fourth quarter 2013. The decrease in aircraft rent per ASM was driven by a change in the mix of leased (rent recorded under aircraft rent) and purchased (amortization recorded under depreciation and amortization) aircraft.

“I am extremely proud of the cost improvements our team continues to deliver. Full year 2014 Adjusted CASM ex-fuel decreased 0.5 percent despite 200 basis points of pressure from depreciation and amortization related to the amortization of heavy maintenance events, and increases in pilot costs as a result of FAR 117,” said Ted Christie, Spirit’s Chief Financial Officer. “Our team’s dedication and commitment to improve our ultra-low cost structure positions us well to deliver a step function change in our cost structure for 2015 and to further increase our competitive cost advantage.”

Fleet

In the fourth quarter 2014, Spirit took delivery of seven new A320 aircraft, ending the year with 65 aircraft in its fleet.

Full Year 2014 Highlights

Maintained its commitment to offer low fares to its valued customers; average ticket revenue per PFS for the fourth quarter 2014 was $73.21 with total revenue per PFS of $127.91.
Launched service in 24 new nonstop routes in 2014 and added Kansas City, Missouri as Spirit’s 56th destination.
Announced service in 26 new nonstop routes starting in 2015, including new routes to Cleveland, Ohio as Spirit’s 57th destination.
Improved on-time performance and maintained one of the highest completion factors in the industry.
Named Value Airline of the Year by Air Transport World and the Most Fuel-efficient Airline by the International Council on Clean Transportation.
Announced a $100 million share buyback authorization.
Purchased its first A320 aircraft using on-balance sheet debt, and finished the year with four owned aircraft.
Revealed a new logo, revitalized digital presence, including introducing fun videos and more, all designed to help customers learn the keys to saving on Spirit.
Created over 600 new jobs, bringing our total number of team members to 4,338.