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 PerformanceFor 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."
LaborSpirit and its pilots, represented by the Airline Pilots
Association, remain in open contract negotiations under the
supervision of the National Mediation Board.
FleetSpirit 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 DetailSpirit 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 StatementsStatements 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
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