Spirit Airlines Reports Third Quarter 2015 Pre-Tax Margin of 26.9 Percent

MIRAMAR, Fla., Oct. 27, 2015 (GLOBE NEWSWIRE) -- Spirit Airlines, Inc. (NASDAQ:SAVE) today reported third quarter 2015 financial results.

• Adjusted net income for the third quarter 2015 increased 31.6 percent to $97.3 million ($1.35 per diluted share) compared to the third quarter 2014¹. GAAP net income for the third quarter 2015 increased 44.9 percent year over year to $97.1 million ($1.35 per diluted share).
   
• Adjusted pre-tax margin for the third quarter 2015 increased 560 basis points to 26.9 percent. On a GAAP basis, pre-tax margin for the third quarter 2015 increased 760 basis points to 26.9 percent.
   
• Spirit ended the third quarter 2015 with unrestricted cash and cash equivalents of $748.9 million.
   
• Spirit's return on invested capital (before taxes and excluding special items) for the twelve months ended September 30, 2015 was 28.8 percent².

"I thank our team members for their contributions to our record third quarter results, driven by both lower ex-fuel unit costs and lower fuel prices," said Ben Baldanza, Spirit's Chief Executive Officer. "We remain focused on building long-term shareholder value by leveraging our ultra-low cost competitive advantage to continue to grow successfully, even in the midst of a volatile pricing environment."

Revenue Performance

For the third quarter 2015, Spirit's total operating revenue was $574.8 million, an increase of 10.6 percent compared to the third quarter 2014, driven by an increase in flight volume, partially offset by a decrease in operating yields.

Total revenue per passenger flight segment ("PFS") for the third quarter 2015 decreased 13.1 percent year over year to $120.35, primarily driven by a 20.8 percent decrease in ticket revenue per PFS. The decline in ticket revenue per PFS was driven by lower fare levels as a result of increased competitive pressures as well as a higher percentage of Spirit's markets being under development compared to the same period last year. Non-ticket revenue remained stable, declining only 1.2 percent year over year on a per flight segment basis to $53.39. The decrease in non-ticket revenue was primarily attributable to the outsourcing of the Spirit's onboard catering to a third-party provider under a revenue share agreement as well as slightly lower bag revenue per flight segment. These declines were partially offset by higher per segment convenience charges compared to the same period last year.

Cost Performance

Adjusted operating expenses for the third quarter 2015 increased 2.0 percent to $417.3 million³. GAAP total operating expenses decreased 0.5 percent year over year to $417.6 million. Operating expenses benefited from fuel expense decreasing 32.5 percent, or $55.7 million, on a fuel volume increase of 30.9 percent.

Spirit reported third quarter 2015 cost per available seat mile ("ASM") excluding special items and fuel ("Adjusted CASM ex-fuel")³ of 5.39 cents, a decrease of 9.0 percent compared to the same period last year, driven primarily by lower aircraft rent per ASM and lower labor expense per ASM. The decrease in aircraft rent per ASM was driven by a change in the mix of leased (rent recorded under aircraft rent) and purchased (depreciation recorded under depreciation and amortization) aircraft. Labor expense per ASM in the third quarter 2015 was lower compared to the same period last year primarily due to scale benefits from overall growth and from larger gauge aircraft.

"Our team did a great job managing costs during the quarter and we remain on target to deliver a full year 2015 Adjusted CASM ex-fuel decrease of approximately 6 percent year over year," said Ted Christie, Spirit's Chief Financial Officer. "We have several CASM pressures facing us in 2016, including headwinds from accelerated depreciation of heavy maintenance events and additional supplemental rent related to leased aircraft scheduled to return to lessors beginning next year; however, given our team's diligence in controlling costs, I remain confident that the trajectory of our Adjusted CASM ex-fuel will continue to be stable to declining throughout our growth cycle."

Share Repurchase

Spirit has spent approximately $99 million of its $100 million share repurchase authorization, repurchasing approximately 0.5 million shares during the third quarter 2015 and approximately 1.5 million shares year-to-date.

On October 26, 2015, our Board of Directors authorized a new repurchase program of up to $100 million in aggregate value of shares of our Common Stock, par value $0.0001 per share, from time to time in open market or privately negotiated transactions. The authorization will expire on October 26, 2016. The timing and amount of any stock repurchase is subject to prevailing market conditions and other considerations.

Fleet

During the third quarter 2015, Spirit issued $576.6 million of enhanced equipment trust certificates (EETC) with a blended coupon of 4.15 percent. This was the first aircraft-backed bond publicly offered by Spirit. Proceeds from the EETC will be used to finance three new A321 aircraft scheduled for delivery in the fourth quarter 2015 and nine new A321 and three new A320 aircraft currently scheduled for delivery in 2016.

Spirit took delivery of 3 new A321 aircraft during the third quarter 2015, ending the quarter with 76 aircraft in its fleet.

Other Third Quarter 2015 Highlights

• Maintained its commitment to offer low fares to its valued customers; average ticket revenue per PFS for the third quarter 2015 was $66.96 with total revenue per PFS of $120.35.
• Introduced the "Unbundlers" campaign, helping to educate travelers about the hidden costs other airlines bundle into their fares.
• Launched service between the following destinations:
  • Baltimore - Los Angeles (7/9/15)
  • Kansas City - Los Angeles (7/9/15)
  • Atlanta - Los Angeles (8/20/15)
  • Atlanta - Boston (9/10/15)
  • Atlanta - Fort Myers (9/10/15)

Conference Call/Webcast Detail

Spirit will conduct a conference call to discuss these results today, October 27, 2015, at 8:00 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 modern and fuel-efficient all-Airbus fleet, we operate more than 350 daily flights to 56 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 to GAAP Net Income" table below for more details.

(2) See "Calculation for Return on Invested Capital" table below for more details.

(3) 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, and Section 21E of the Securities Exchange Act of 1934, as amended, which represent the Company's expectations or beliefs concerning future events. 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 the Company's objectives, plans or goals, or actions the Company may take in the future, are forward-looking statements. Forward-looking statements include, without limitation, statements regarding the Company's intentions and expectations regarding revenues, cost of operations, the delivery schedule of aircraft on order, and announced new service routes. All forward-looking statements are based upon information available to the Company at the time the statement is made. The Company has no intent, nor undertakes any obligation, to publicly update or revise any forward-looking statement, whether as a result of new information, future events, or otherwise, except as required by law. 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 Annual Report on Form 10-K, Quarterly Reports on Form 10-Q, and Current Reports on Form 8-K. 

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 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. 

The Company believes economic fuel expense is the best measure of the effect fuel prices are currently having on our business, because it most closely approximates the net cash outflow associated with purchasing fuel used for our 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 our 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 our outstanding fuel option contracts. Many industry analysts evaluate airline results using economic fuel expense, and it is used in our internal management reporting. 

CONTACT: Investor Relations Contact:
         DeAnne Gabel
         InvestorRelations@Spirit.com
         (954) 447-7920
         
         Media Contact:
         Paul Berry
         Paul.Berry@Spirit.com
         (954) 628-4827