MIRAMAR, Fla., April 28, 2017 (GLOBE NEWSWIRE) -- Spirit Airlines, Inc. (NASDAQ:SAVE) today reported first quarter 2017
financial results.
- GAAP net income for the first quarter 2017 was $31.9 million ($0.46 per diluted share), or $35.6 million ($0.51 per diluted
share)1 excluding special items.
- GAAP operating margin for the first quarter 2017 was 10.0 percent, or 11.0 percent excluding special items1.
- Spirit ended the first quarter 2017 with unrestricted cash, cash equivalents, and short-term investments of $918.4 million.
- Spirit's return on invested capital (before taxes and excluding special items) for the twelve months ended March 31,
2017 was 21.0 percent2.
“During the first quarter, our team did an excellent job serving our customers while overcoming challenges caused by the tragic
Fort Lauderdale airport event in early January, as well as dealing with various winter storms. Despite these and other
challenges, we continue to make progress in improving our operational reliability. Our on-time performance3 improved
10.2 percentage points to 75.5 percent for the first quarter 2017. While we still have a ways to go to reach our desired
operational goals, I thank the entire Spirit team for their contributions,” said Bob Fornaro, Spirit’s President and Chief
Executive Officer.
Revenue Performance
For the first quarter 2017, Spirit's total operating revenue was $591.7 million, an increase of 10.0 percent compared to the first
quarter 2016, driven by an 11.9 percent increase in flight volume.
Total revenue per available seat mile (TRASM) for the first quarter 2017 decreased 4.2 percent compared to the same period last
year, driven primarily by the calendar shift of Easter which is estimated to have accounted for approximately 3.5 percentage points
of the year-over-year decline. In addition, it is estimated that the tragic Fort Lauderdale airport event and winter storm
Helena together contributed another 0.75 percentage points of decline year over year in the first quarter 2017 TRASM.
On a per passenger flight segment basis, total revenue for the first quarter 2017 decreased 1.5 percent year over year to
$106.24.
Cost Performance
For the first quarter 2017, total GAAP operating expense, including special items of $5.9 million4 primarily related to
lease termination charges, increased 21.9 percent, or $95.5 million, year over year to $532.3 million. Adjusted operating
expense for the first quarter 2017 increased 25.2 percent, or $106.0 million to $526.5 million5. The increase in
both GAAP and adjusted operating expense was primarily driven by higher fuel rates and an increase in flight volume.
Aircraft fuel expense increased in the first quarter 2017 by 62.6 percent, or $53.8 million, compared to the same period last
year, due to a 45.1 percent increase in the cost of fuel per gallon and a 12.1 percent increase in fuel gallons consumed.
Spirit reported first quarter 2017 cost per available seat mile ("ASM"), excluding special items and fuel (“Adjusted CASM
ex-fuel”), of 5.62 cents5, an increase of 0.5 percent compared to the same period last year, driven primarily by higher
depreciation and amortization and other operating expenses per ASM, largely offset by lower salaries, wages and benefits and lower
aircraft rent per ASM.
"Although our TRASM for the first quarter 2017 was down year over year, primarily due to the timing shift of Easter, we continue
to see good traction from our ticket and non-ticket revenue initiatives. Furthermore, our booking trends for the second
quarter 2017 indicate we will see solid sequential improvement in TRASM, even without including the benefit from the Easter holiday
shift," said Ted Christie, Spirit's Executive Vice President and Chief Financial Officer. "On the cost side, our team did a good
job holding the line on Adjusted CASM ex-fuel despite headwinds from amortization expense related to heavy maintenance events,
depreciation related to purchased aircraft, and higher ground handling rates and other inflationary pressures that resulted in
higher other operating expense."
Labor
Spirit and its pilots, represented by the Airline Pilots Association, remain in open contract negotiations under the supervision of
the National Mediation Board.
Fleet
Spirit took delivery of three new A321ceo aircraft and two used A319 aircraft during the first quarter 2017, ending the quarter
with 100 aircraft in its fleet.
Conference Call/Webcast Detail
Spirit will conduct a conference call to discuss these results today, April 28, 2017, at 9:00 a.m. ET. A live audio
webcast of the conference call will be available to the public on a listen-only basis at http://ir.spirit.com. An archive of the webcast will be available under Webcasts &
Presentations for 60 days.
About Spirit Airlines:
Spirit Airlines (NASDAQ:SAVE) is committed to offering the lowest total price to the places we fly, on average much lower than
other airlines. Our customers start with an unbundled, stripped-down Bare Fare™ and get Frill Control™ which allows them to pay
only for the options they choose - like bags, seat assignments and refreshments - the things other airlines bake right into their
ticket prices. We help people save money and travel more often, create new jobs and stimulate business growth in the communities we
serve. With our Fit Fleet™, the youngest fleet of any major U.S. airline, we operate more than 440 daily flights to 60 destinations
in the U.S., Latin America and the Caribbean. Come save with us at www.spirit.com.
Investors are encouraged to read the Company's periodic and current reports filed with or furnished to the Securities and Exchange
Commission, including its Annual Report on Form 10-K, Quarterly Reports on Form 10-Q, and Current Reports on Form 8-K, for
additional information regarding the Company.
End Notes
(1) See "Reconciliation of Adjusted Net Income, Adjusted Pre-tax Income, and Adjusted Operating Income to GAAP Net Income"
table below for more details.
(2) See "Calculation for Return on Invested Capital" table below for more details.
(3) As defined by the Department of Transportation.
(4) See "Special Items" table for more details.
(5) See "Reconciliation of Adjusted Operating Expense to GAAP Operating Expense" table below for more details.
Forward-Looking Statements
Statements in this release and certain oral statements made from time to time by representatives of the Company contain various
forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended (the Securities Act), and
Section 21E of the Securities Exchange Act of 1934, as amended (the Exchange Act), which are subject to the “safe harbor” created
by those sections. Forward-looking statements are based on our management’s beliefs and assumptions and on information currently
available to our management. All statements other than statements of historical facts are “forward-looking statements” for purposes
of these provisions. In some cases, you can identify forward-looking statements by terms such as “may,” “will,” “should,” “could,”
“would,” “expect,” “plan,” “anticipate,” “believe,” “estimate,” “project,” “predict,” “potential,” and similar expressions intended
to identify forward-looking statements. Such forward-looking statements are subject to risks, uncertainties and other important
factors that could cause actual results and the timing of certain events to differ materially from future results expressed or
implied by such forward-looking statements. Furthermore, such forward-looking statements speak only as of the date of this release.
Except as required by law, we undertake no obligation to update any forward-looking statements to reflect events or circumstances
after the date of such statements. Risks or uncertainties (i) that are not currently known to us, (ii) that we currently deem to be
immaterial, or (iii) that could apply to any company, could also materially adversely affect our business, financial condition, or
future results. References in this report to “Spirit,” “we,” “us,” “our,” or the “Company” shall mean Spirit Airlines, Inc., unless
the context indicates otherwise. Additional information concerning certain factors is contained in the Company's Securities
and Exchange Commission filings, including but not limited to the Company's Annual Report on Form 10-K, Quarterly Reports on Form
10-Q, and Current Reports on Form 8-K.
| SPIRIT AIRLINES, INC. |
| Statement of Operations |
| (unaudited, in thousands, except per share data) |
| |
| |
|
Three Months Ended |
|
|
| |
|
March 31, |
|
Percent |
| |
|
2017 |
|
2016 |
|
Change |
| Operating revenues: |
|
|
|
|
|
|
| Passenger |
|
$ |
299,762 |
|
|
$ |
272,626 |
|
|
10.0 |
|
| Non-ticket |
|
291,984 |
|
|
265,517 |
|
|
10.0 |
|
| Total operating revenues |
|
591,746 |
|
|
538,143 |
|
|
10.0 |
|
| |
|
|
|
|
|
|
| Operating expenses: |
|
|
|
|
|
|
| Salaries, wages and benefits |
|
127,138 |
|
|
116,410 |
|
|
9.2 |
|
| Aircraft fuel |
|
139,782 |
|
|
85,982 |
|
|
62.6 |
|
| Aircraft rent |
|
57,070 |
|
|
52,202 |
|
|
9.3 |
|
| Landing fees and other rents |
|
40,448 |
|
|
34,807 |
|
|
16.2 |
|
| Depreciation and amortization |
|
31,509 |
|
|
23,109 |
|
|
36.3 |
|
| Maintenance, materials and repairs |
|
26,312 |
|
|
20,940 |
|
|
25.7 |
|
| Distribution |
|
26,498 |
|
|
22,933 |
|
|
15.5 |
|
| Special charges |
|
4,776 |
|
|
16,202 |
|
|
nm |
|
| Loss on disposal of assets |
|
1,105 |
|
|
214 |
|
|
nm |
|
| Other operating |
|
77,703 |
|
|
64,045 |
|
|
21.3 |
|
| Total operating expenses |
|
532,341 |
|
|
436,844 |
|
|
21.9 |
|
| |
|
|
|
|
|
|
| Operating income |
|
59,405 |
|
|
101,299 |
|
|
(41.4 |
) |
| |
|
|
|
|
|
|
| Other (income) expense: |
|
|
|
|
|
|
| Interest expense |
|
12,473 |
|
|
8,060 |
|
|
54.8 |
|
| Capitalized interest |
|
(3,580 |
) |
|
(3,325 |
) |
|
7.7 |
|
| Interest income |
|
(1,313 |
) |
|
(1,566 |
) |
|
(16.2 |
) |
| Other expense |
|
3 |
|
|
70 |
|
|
nm |
|
| Total other (income) expense |
|
7,583 |
|
|
3,239 |
|
|
nm |
|
| |
|
|
|
|
|
|
| Income before income taxes |
|
51,822 |
|
|
98,060 |
|
|
(47.2 |
) |
| Provision for income taxes |
|
19,887 |
|
|
36,140 |
|
|
(45.0 |
) |
| Net income |
|
$ |
31,935 |
|
|
$ |
61,920 |
|
|
(48.4 |
) |
| Basic earnings per share |
|
$ |
0.46 |
|
|
$ |
0.87 |
|
|
(47.1 |
) |
| Diluted earnings per share |
|
$ |
0.46 |
|
|
$ |
0.86 |
|
|
(46.5 |
) |
| |
|
|
|
|
|
|
| Weighted average shares, basic |
|
69,348 |
|
|
71,572 |
|
|
(3.1 |
) |
| Weighted average shares, diluted |
|
69,592 |
|
|
71,777 |
|
|
(3.0 |
) |
| SPIRIT AIRLINES, INC. |
| Statements of Comprehensive Income |
| (unaudited, in thousands) |
| |
| |
|
Three Months Ended |
| |
|
March 31, |
| |
|
2017 |
|
2016 |
| Net income |
|
$ |
31,935 |
|
|
$ |
61,920 |
|
Unrealized gain (loss) on short-term investment securities,
net of deferred taxes of ($8) and $0 |
|
(13 |
) |
|
— |
|
Interest rate derivative losses reclassified into earnings,
net of taxes of $31 and $33
|
|
53 |
|
|
57 |
|
| Other comprehensive income (loss) |
|
$ |
40 |
|
|
$ |
57 |
|
| Comprehensive income |
|
$ |
31,975 |
|
|
$ |
61,977 |
|
| SPIRIT AIRLINES, INC. |
| Balance Sheets |
| (unaudited, in thousands) |
| |
| |
|
March 31, |
|
December 31, |
| |
|
2017 |
|
2016 |
| Assets |
|
|
|
|
| Current assets: |
|
|
|
|
| Cash and cash equivalents |
|
$ |
818,110 |
|
|
$ |
700,900 |
|
| Short-term investment securities |
|
100,294 |
|
|
100,155 |
|
| Accounts receivable, net |
|
48,692 |
|
|
41,136 |
|
| Aircraft maintenance deposits |
|
125,758 |
|
|
87,035 |
|
| Prepaid expenses and other current assets |
|
53,677 |
|
|
46,619 |
|
| Total current assets |
|
1,146,531 |
|
|
975,845 |
|
| |
|
|
|
|
| Property and equipment: |
|
|
|
|
| Flight equipment |
|
1,608,959 |
|
|
1,461,525 |
|
| Ground property and equipment |
|
136,126 |
|
|
126,206 |
|
| Less accumulated depreciation |
|
(140,535 |
) |
|
(122,509 |
) |
| |
|
1,604,550 |
|
|
1,465,222 |
|
| Deposits on flight equipment purchase contracts |
|
330,523 |
|
|
325,688 |
|
| Long-term aircraft maintenance deposits |
|
170,631 |
|
|
199,415 |
|
| Deferred heavy maintenance, net |
|
71,870 |
|
|
75,534 |
|
| Other long-term assets |
|
114,509 |
|
|
110,223 |
|
| Total assets |
|
$ |
3,438,614 |
|
|
$ |
3,151,927 |
|
| |
|
|
|
|
| Liabilities and shareholders’ equity |
|
|
|
|
| Current liabilities: |
|
|
|
|
| Accounts payable |
|
39,612 |
|
|
15,193 |
|
| Air traffic liability |
|
308,958 |
|
|
206,392 |
|
| Current maturities of long-term debt |
|
92,672 |
|
|
84,354 |
|
| Other current liabilities |
|
231,932 |
|
|
226,011 |
|
| Total current liabilities |
|
673,174 |
|
|
531,950 |
|
| |
|
|
|
|
| Long-term debt, less current maturities |
|
991,722 |
|
|
897,359 |
|
| Deferred income taxes |
|
327,660 |
|
|
308,143 |
|
| Deferred gains and other long-term liabilities |
|
17,712 |
|
|
19,868 |
|
| Shareholders’ equity: |
|
|
|
|
| Common stock |
|
7 |
|
|
7 |
|
| Additional paid-in-capital |
|
553,820 |
|
|
551,004 |
|
| Treasury stock, at cost |
|
(219,726 |
) |
|
(218,692 |
) |
| Retained earnings |
|
1,095,568 |
|
|
1,063,633 |
|
| Accumulated other comprehensive loss |
|
(1,323 |
) |
|
(1,345 |
) |
| Total shareholders’ equity |
|
1,428,346 |
|
|
1,394,607 |
|
| Total liabilities and shareholders’ equity |
|
$ |
3,438,614 |
|
|
$ |
3,151,927 |
|
| SPIRIT AIRLINES, INC. |
| Statement of Cash Flows |
| (unaudited, in thousands) |
| |
| |
Three Months Ended March
31, |
| |
2017 |
|
2016 |
| Operating activities: |
|
|
|
| Net income |
$ |
31,935 |
|
|
$ |
61,920 |
|
| Adjustments to reconcile net income to net cash provided by operations: |
|
|
|
| Losses reclassified from other comprehensive income |
84 |
|
|
90 |
|
| Equity-based compensation |
2,816 |
|
|
1,790 |
|
| Allowance for doubtful accounts (recoveries) |
(30 |
) |
|
25 |
|
| Amortization of deferred gains and losses and debt issuance
costs |
3,351 |
|
|
1,968 |
|
| Depreciation and amortization |
31,509 |
|
|
23,109 |
|
| Deferred income tax expense |
19,474 |
|
|
21,066 |
|
| Loss on disposal of assets |
1,105 |
|
|
214 |
|
| Lease termination costs |
4,776 |
|
|
16,202 |
|
| Changes in operating assets and liabilities: |
|
|
|
| Accounts receivable |
(7,526 |
) |
|
(4,229 |
) |
| Aircraft maintenance deposits |
(12,774 |
) |
|
(12,311 |
) |
| Prepaid income taxes |
(846 |
) |
|
72,278 |
|
| Long-term deposits and other assets |
(21,267 |
) |
|
(8,495 |
) |
| Accounts payable |
18,937 |
|
|
4,703 |
|
| Air traffic liability |
102,207 |
|
|
46,473 |
|
| Other liabilities |
298 |
|
|
33,296 |
|
| Other |
113 |
|
|
— |
|
| Net cash provided by operating activities |
174,162 |
|
|
258,099 |
|
| Investing activities: |
|
|
|
| Purchase of available-for-sale investment securities |
(24,490 |
) |
|
— |
|
| Proceeds from the maturity of available-for-sale investment
securities |
24,219 |
|
|
— |
|
| Pre-delivery deposits for flight equipment, net of refunds |
(44,752 |
) |
|
(50,358 |
) |
| Capitalized interest |
(1,647 |
) |
|
(2,575 |
) |
| Purchase of property and equipment |
(112,265 |
) |
|
(159,829 |
) |
| Net cash used in investing activities |
(158,935 |
) |
|
(212,762 |
) |
| Financing activities: |
|
|
|
| Proceeds from issuance of long-term debt |
115,526 |
|
|
73,914 |
|
| Proceeds from stock options exercised |
— |
|
|
88 |
|
| Payments on debt and capital lease obligations |
(10,235 |
) |
|
(9,749 |
) |
| Excess tax (deficiency) benefit from equity-based compensation |
— |
|
|
(778 |
) |
| Repurchase of common stock |
(1,034 |
) |
|
(9,601 |
) |
| Debt issuance costs |
(2,274 |
) |
|
(34 |
) |
| Net cash provided by financing activities |
101,983 |
|
|
53,840 |
|
| Net (decrease) increase in cash and cash equivalents |
117,210 |
|
|
99,177 |
|
| Cash and cash equivalents at beginning of period |
700,900 |
|
|
803,632 |
|
| Cash and cash equivalents at end of period |
$ |
818,110 |
|
|
$ |
902,809 |
|
| Supplemental disclosures |
|
|
|
| Cash payments for: |
|
|
|
| Interest, net of capitalized interest |
$ |
3,943 |
|
|
$ |
3,430 |
|
| Income taxes paid, net of refunds |
$ |
2,881 |
|
|
$ |
(64,158 |
) |
| Non-cash transactions: |
|
|
|
| Capital expenditures funded by capital lease borrowings |
$ |
(130 |
) |
|
$ |
(31 |
) |
| SPIRIT AIRLINES, INC. |
| Selected Operating Statistics (unaudited) |
| |
| |
Three Months Ended March 31, |
|
|
| Operating Statistics |
2017 |
|
2016 |
|
Change |
| Available seat miles (ASMs) (thousands) |
6,875,899 |
|
|
5,983,005 |
|
|
14.9 |
% |
| Revenue passenger miles (RPMs) (thousands) |
5,613,422 |
|
|
5,070,313 |
|
|
10.7 |
% |
| Load factor (%) |
81.6 |
|
|
84.7 |
|
|
(3.1 |
) pts |
| Passenger flight segments (thousands) |
5,570 |
|
|
4,988 |
|
|
11.7 |
% |
| Block hours |
104,035 |
|
|
93,545 |
|
|
11.2 |
% |
| Departures |
39,330 |
|
|
35,160 |
|
|
11.9 |
% |
| Total operating revenue per ASM (TRASM) (cents) |
8.61 |
|
|
8.99 |
|
|
(4.2 |
)% |
| Average yield (cents) |
10.54 |
|
|
10.61 |
|
|
(0.7 |
)% |
| Average ticket revenue per passenger flight segment ($) |
53.82 |
|
|
54.65 |
|
|
(1.5 |
)% |
| Average non-ticket revenue per passenger flight segment ($) |
52.42 |
|
|
53.23 |
|
|
(1.5 |
)% |
| Total revenue per passenger flight segment ($) |
106.24 |
|
|
107.88 |
|
|
(1.5 |
)% |
| CASM (cents) |
7.74 |
|
|
7.30 |
|
|
6.0 |
% |
| Adjusted CASM (cents) (1) |
7.66 |
|
|
7.03 |
|
|
9.0 |
% |
| Adjusted CASM ex-fuel (cents) (2) |
5.62 |
|
|
5.59 |
|
|
0.5 |
% |
| Fuel gallons consumed (thousands) |
79,064 |
|
|
70,550 |
|
|
12.1 |
% |
| Average economic fuel cost per gallon ($) |
1.77 |
|
|
1.22 |
|
|
45.1 |
% |
| Aircraft at end of period |
100 |
|
|
83 |
|
|
20.5 |
% |
| Average daily aircraft utilization (hours) |
11.9 |
|
|
12.8 |
|
|
(7.0 |
)% |
| Average stage length (miles) |
985 |
|
|
995 |
|
|
(1.0 |
)% |
(1) Excludes special items.
(2) Excludes economic fuel expense and special items.
The Company is providing a reconciliation of GAAP financial information to non-GAAP financial information as it believes that
non-GAAP financial measures provide management and investors the ability to measure the performance of the Company on a consistent
basis. These non-GAAP financial measures have limitations as analytical tools. Because of these limitations,
determinations of the Company's operating performance excluding unrealized gains and losses or special items should not be
considered in isolation or as a substitute for performance measures calculated in accordance with GAAP.
| Special Items |
|
|
|
|
|
| (unaudited) |
|
|
|
|
|
| |
|
|
|
|
Three Months Ended |
| |
|
|
|
|
March 31, |
| (in thousands) |
|
|
|
|
2017 |
|
2016 |
| Operating special items include the following (1): |
|
|
|
|
|
|
|
| Loss on disposal of assets |
|
|
|
|
1,105 |
|
|
214 |
|
| Special charges |
|
|
|
|
4,776 |
|
|
16,202 |
|
| Total operating special items |
|
|
|
|
$ |
5,881 |
|
|
$ |
16,416 |
|
| Reconciliation of Adjusted Operating Expense to GAAP Operating
Expense |
| (unaudited) |
| |
|
|
| |
|
Three Months Ended |
| |
|
March 31, |
| (in thousands, except CASM data in cents) |
|
2017 |
|
2016 |
| Total operating expenses, as reported |
|
$ |
532,341 |
|
|
$ |
436,844 |
|
| Less operating special items (1) |
|
5,881 |
|
|
16,416 |
|
| Adjusted operating expenses, non-GAAP (2) |
|
526,460 |
|
|
420,428 |
|
| Less: Economic fuel expense |
|
139,782 |
|
|
85,982 |
|
| Adjusted operating expenses excluding fuel, non-GAAP (3) |
|
$ |
386,678 |
|
|
$ |
334,446 |
|
| |
|
|
|
|
| Available seat miles |
|
6,875,899 |
|
|
5,983,005 |
|
| |
|
|
|
|
| CASM (cents) |
|
7.74 |
|
|
7.30 |
|
| Adjusted CASM (cents) (2) |
|
7.66 |
|
|
7.03 |
|
| Adjusted CASM ex-fuel (cents) (3) |
|
5.62 |
|
|
5.59 |
|
(1) Special items include loss on disposal of assets and special charges. Special charges are primarily related to lease
termination costs.
(2) Excludes operating special items.
(3) Excludes operating special items and economic fuel expense as described in the "Reconciliation of Economic Fuel Expense to GAAP
Fuel Expense" table below.
Reconciliation of Adjusted Net Income, Adjusted Pre-Tax
Income, and Adjusted Operating Income
to GAAP Net Income |
| (unaudited) |
| |
| |
Three Months Ended |
| |
March 31, |
| (in thousands, except per share data) |
|
2017 |
|
|
2016 |
| Net income, as reported |
$ |
31,935 |
|
|
$ |
61,920 |
|
| Add: Provision for income taxes |
|
19,887 |
|
|
|
36,140 |
|
| Income before income taxes, as reported |
|
51,822 |
|
|
|
98,060 |
|
| Pre-tax margin, GAAP |
|
8.8 |
% |
|
|
18.2 |
% |
| Add operating special items (1) |
$ |
5,881 |
|
|
$ |
16,416 |
|
| Adjusted income before income taxes, non-GAAP (2) |
|
57,703 |
|
|
|
114,476 |
|
| Adjusted pre-tax margin, non-GAAP (2) |
|
9.8 |
% |
|
|
21.3 |
% |
| Add: Total other (income) expense |
|
7,583 |
|
|
|
3,239 |
|
| Adjusted operating income, non-GAAP(2) |
|
65,286 |
|
|
|
117,715 |
|
| Adjusted operating margin, non-GAAP(2) |
|
11.0 |
% |
|
|
21.9 |
% |
| |
|
|
|
| Provision for adjusted income taxes (3) |
|
22,144 |
|
|
|
42,190 |
|
| Adjusted net income, non-GAAP (2)(3) |
$ |
35,559 |
|
|
$ |
72,286 |
|
| |
|
|
|
| Weighted average shares, diluted |
|
69,592 |
|
|
|
71,777 |
|
| |
|
|
|
|
|
|
|
|
|
| Adjusted net income per share, diluted (2)(3) |
$ |
|
0.51 |
|
|
$ |
|
1.01 |
|
| |
|
|
|
| Total operating revenues |
$ |
591,746 |
|
|
$ |
538,143 |
|
(1) See "Special Items" for more details.
(2) Excludes operating special items.
(3) Assumes same marginal tax rate as is applicable to GAAP net income.
The Company believes economic fuel expense is the best measure of the effect fuel prices are currently having on its business,
because it most closely approximates the net cash outflow associated with purchasing fuel used for its operations during the
period. Economic fuel expense is defined as into-plane fuel expense, realized gains or losses on derivative contracts, plus the
economic premium expense related to fuel option contracts in the period the option is benefiting. The key difference between
aircraft fuel expense as recorded in its statement of operations and economic fuel expense is unrealized mark-to-market changes in
the value of aircraft fuel derivatives outstanding and the timing of premium gain or loss recognition on its outstanding fuel
option contracts. Many industry analysts evaluate airline results using economic fuel expense, and it is used in our internal
management reporting.
| Reconciliation of Economic Fuel Expense to GAAP Fuel
Expense |
| (unaudited) |
| |
| |
|
Three Months Ended |
| |
|
March 31, |
| (in thousands, except per gallon data) |
|
2017 |
|
2016 |
| Fuel expense |
|
|
|
|
| Aircraft fuel, as reported |
|
$ |
139,782 |
|
|
$ |
85,982 |
|
| |
|
|
|
|
| Fuel gallons consumed |
|
79,064 |
|
|
70,550 |
|
| |
|
|
|
|
| Economic fuel cost per gallon, non-GAAP |
|
$ |
1.77 |
|
|
$ |
1.22 |
|
| Calculation of Return on Invested Capital |
| (unaudited) |
| |
| |
|
|
Twelve Months Ended |
| (in thousands) |
|
|
March 31,
2017 |
| Operating income |
|
|
$ |
401,767 |
|
| Add operating special items (1) |
|
|
30,841 |
|
| Adjustment for aircraft rent |
|
|
206,543 |
|
| Adjusted operating income (2) |
|
|
639,151 |
|
| Tax (37.1%) (3) |
|
|
237,125 |
|
| Adjusted operating income, after-tax |
|
|
$ |
402,026 |
|
| Invested capital: |
|
|
|
| Total debt |
|
|
$ |
1,084,394 |
|
| Book equity |
|
|
1,428,346 |
|
| Less: Unrestricted cash, cash equivalents & short-term
investments |
|
|
918,404 |
|
| Add: Capitalized aircraft operating leases (7x Aircraft Rent) |
|
|
1,445,801 |
|
| Total invested capital |
|
|
$ |
3,040,137 |
|
| |
|
|
|
| Return on invested capital (ROIC), pre-tax (2) |
|
|
21.0 |
% |
| Return on invested capital (ROIC), after-tax (2)(3) |
|
|
13.2 |
% |
(1) See "Special Items" for more details.
(2) Excludes special items.
(3) Assumes same marginal tax rate as is applicable to GAAP net income for the twelve months ended March 31, 2017.
Investor Relations Contact: DeAnne Gabel InvestorRelations@Spirit.com (954) 447-7920 Media Contact: Paul Berry Paul.Berry@Spirit.com (954) 628-4827
