Spirit Airlines Announces Record Third Quarter 2014 Results: Third Quarter 2014 Adjusted Net Income Increases 27.6 Percent to $73.9 Million

MIRAMAR, Fla., Oct. 28, 2014 (GLOBE NEWSWIRE) — Spirit Airlines, Inc. (Nasdaq:SAVE) today reported third quarter 2014 financial results.

Adjusted net income for the third quarter 2014 increased 27.6 percent to $73.9 million ($1.01 per diluted share) compared to $57.9 million ($0.79 per diluted share) for the third quarter 20131. GAAP net income for the third quarter 2014 was $67.0 million ($0.91 per diluted share) compared to $61.1 million ($0.84 per diluted share) in the third quarter 2013.

For the third quarter 2014, Spirit delivered a record adjusted pre-tax margin of 21.3 percent compared to 20.3 percent over the same period in 20131. On a GAAP basis, pre-tax margin for the third quarter 2014 was 19.3 percent compared to 21.4 percent in the third quarter 2013.

Spirit ended the third quarter 2014 with $588.5 million in unrestricted cash.

Spirit’s return on invested capital (before taxes and excluding special items) for the twelve months ended September 30, 2014 was 31.6 percent2.
“I want to say thank you to our team members for their contributions to our strong third quarter performance, achieving a record third quarter adjusted operating margin of 21.3 percent3,” said Ben Baldanza, Spirit’s Chief Executive Officer. “During the third quarter, the benefits of improved operational performance helped to offset cost pressures which included additional pilot costs as a result of new crew duty and rest rules as mandated under FAR 117 and the phasing of our growth. Our Bare Fare™ plus Frill Control™ business model continues to perform very well, and we are excited about the new markets we have planned for next year and are committed to successfully execute on our growth plans.”

Revenue Performance

For the third quarter 2014, Spirit’s total operating revenue was $519.8 million, an increase of 13.8 percent compared to the third quarter 2013. The increase was primarily driven by our growth in flight volume and higher operating yields.

Total revenue per available seat mile (“RASM”) for the third quarter 2014 was 12.45 cents, a decrease of 0.8 percent compared to the third quarter 2013. A year-over-year increase in average stage length for the third quarter 2014 contributed 0.4 percentage points to the decline in RASM. In addition, average load factor for the third quarter 2014 declined 1.5 pts, in part due to increased margin accretive flying on non-peak travel days (Tuesday/Wednesday), contributing to the decrease in RASM.

Passenger flight segment (“PFS”) volume for the third quarter 2014 grew 11.2 percent year over year, and the Company’s total revenue per PFS for the third quarter 2014 increased 2.4 percent year over year to $138.54 driven by increases in both ticket and non-ticket revenue per PFS. Demand and pricing strength in the peak summer travel period drove the increase in ticket revenue per PFS and an increase in seat revenues was the primary driver of non-ticket per PFS.

Cost Performance

Total operating expenses for the third quarter 2014, excluding $10.4 million of special items4, increased 12.5 percent to $409.2 million on a capacity increase of 14.7 percent. Including special items, total operating expenses increased 16.9 percent year over year to $419.6 million.

Spirit reported third quarter 2014 cost per available seat mile excluding special items and fuel (“Adjusted CASM ex-fuel”)4 of 5.92 cents, an increase of 1.0 percent compared to the same period last year. Higher salary, wages, and benefits, landing fees and other rents, and depreciation and amortization per ASM were partially offset by lower passenger re-accommodation expense (recorded within Other operating expense) as a result of improved operational reliability.

During the third quarter 2014, the Company became aware of an underpayment of Federal Excise Tax (“FET”) for fuel purchases during the period between July 1, 2009 and August 31, 2014. The commencement of the period in which the Company underpaid FET coincided with a change in its fuel service provider that took place in July 2009. In its calculation for economic fuel price for the third quarter 2014, the Company excluded the prior years’ additional FET amount of $9.3 million as a special item but included the year-to-date 2014 additional FET amount of $2.1 million.

Selected Balance Sheet and Cash Flow Items

As of September 30, 2014, Spirit had $588.5 million in unrestricted cash and cash equivalents. For the nine months ended September 30, 2014, Spirit incurred capital expenditures of $26.3 million, paid $116.0 million in pre-delivery deposits for future deliveries of aircraft, net of refunds, and recorded an increase of $29.0 million in maintenance deposits, net of reimbursements.

Fleet

In the third quarter 2014, Spirit took delivery of one new A320 aircraft, ending the quarter with 58 aircraft in its fleet. Earlier in the month of October, the Company took delivery of a new A320 aircraft and has six more new A320 aircraft scheduled for delivery by year-end 2014.