Spirit Airlines, Inc. (Fort Lauderdale/Hollywood) today (OCtober 31) reported third quarter 2012 financial results.
- Net income, excluding special items, for the third quarter 2012 was $25.2 million, or $0.35 per diluted share1. GAAP net income for the third quarter 2012 was $30.9 million, or $0.43 per diluted share.
- Operating margin, excluding special items, for the third quarter of 2012 was 11.8 percent1. Operating margin on a GAAP basis was 14.5 percent for the third quarter of 2012.
- Adjusted EBITDAR for the third quarter 2012 was $81.8 million, resulting in an Adjusted EBITDAR margin of 23.9 percent.
- Spirit ended the third quarter 2012 with $399.1 million in unrestricted cash.
For the third quarter 2012, Spirit’s total operating revenue was $342.3 million, an increase of $53.6 million, or 18.6 percent, compared to third quarter 2011 on a capacity increase of 22.7 percent.
Total revenue per available seat mile (“RASM”) for the third quarter 2012 was 11.52 cents, a decrease of 3.4 percent compared to the third quarter 2011, driven by lower load factor and operating yields against very strong results last year.
Passenger flight segment (“PFS”) volume grew 23.2 percent year-over-year in the third quarter 2012 with total revenue per PFS of $121.65. Average non-ticket revenue per PFS for the third quarter 2012 increased 11.5 percent year-over-year to $49.80 while average ticket revenue per PFS for the quarter decreased 12.1 percent year-over-year to $71.85 as Spirit continued its strategy to offer low base fares while increasing revenue from non-ticket sources. In addition, ticket revenue per passenger segment in the third quarter 2011 included the benefit from the Federal Excise Tax holiday.
Total operating expenses in the third quarter 2012 were $292.6 million, an increase of $48.5 million, or 19.9 percent, compared to the same period in 2011, primarily driven by fuel and other expenses associated with increased flight volume, partially offset by a gain associated with the sale of four air carrier slots at Ronald Reagan National Airport. Other expense drivers included passenger re-accommodation costs related to flight cancellations and crew-related costs as a result of network scope changes.
Cost per available seat mile excluding special items and fuel (“Adjusted CASM ex-fuel”) for the third quarter 2012 was 6.02 cents, an increase of 4.9 percent year-over-year, largely driven by higher passenger re-accommodation costs related to flight cancellations. Other primary drivers included additional rent for an aircraft temporarily leased from a third-party provider to maintain desired capacity levels during the summer, start-up costs associated with the Company’s seat maintenance program and implementation costs of an Enterprise Resource Planning (ERP) system.
During the third quarter 2012, the Company incurred start-up costs related to its seat maintenance program of $2.3 million, bringing its total costs incurred related to this program to $5.4 million. Spirit estimates that total start-up costs related to this program will be approximately $7 million with the remaining balance incurred in the fourth quarter 2012.
Selected Balance Sheet and Cash Flow Items
At the end of the third quarter 2012, Spirit had $399.1 million in unrestricted cash and cash equivalents and no restricted cash balance. As of September 30, 2012, the Company had no debt on its balance sheet and total shareholders’ equity of $559.5 million.
During the third quarter 2012, the Company had capital expenditures of $2.5 million, paid $11.5 million in pre-delivery deposits (“PDPs”) for future deliveries of aircraft and spare engines and paid $13.0 million in maintenance reserves, net of reimbursements.
Spirit ended the third quarter 2012 with 42 aircraft in its fleet. The Company has two new A320 aircraft scheduled for delivery in the fourth quarter 2012, which deliveries would bring the year-end 2012 fleet to 44 aircraft. In addition, in October 2012, Spirit signed a Letter of Intent with ILFC to lease three used A319 and five A320neo aircraft, subject to final documentation. These aircraft are undergoing customary maintenance checks, and the Company currently expects one A319 aircraft to be delivered in December 2012 with two expected to be delivered in January 2013. Delivery dates for the A320neo aircraft will be confirmed after Spirit has made a decision on its engine type selection for the A320neo.
Third Quarter 2012 and Other Current Highlights
- Recently added/announced new service between (service start date):
|- Dallas/Fort Worth and Baltimore/Washington (9/6/12)||- San Diego and Portland, Oregon (11/8/12)|
|- Fort Lauderdale and Baltimore/Washington (9/6/12)||- San Diego and Los Cabos, Mexico (11/8/12)**|
|- Dallas/Fort Worth and Houston (9/20/12)||- Dallas/Fort Worth and New Orleans (1/24/13)|
|- Houston and Chicago (10/4/12)||- Dallas/Fort Worth and Oakland/|
|- Houston and Las Vegas (10/4/12)||San Francisco (4/25/13)|
|- Denver and Phoenix/Mesa (10/4/12)||- Dallas/Fort Worth and Los Angeles (4/25/13)|
|- Chicago and Tampa (11/8/12)*||- Dallas/Fort Worth and Cancun, Mexico (4/25/13)|
|- Chicago and Phoenix/Mesa (11/8/12)*||- Dallas/Fort Worth and Minneapolis/St. Paul (4/25/13)|
|- Minneapolis/St. Paul and Fort Lauderdale (11/8/12)*||- Dallas/Fort Worth and Philadelphia (4/25/13)|
|- Minneapolis/St. Paul and Fort Myers (11/8/12)*||- Dallas/Fort Worth and Los Cabos, Mexico (6/13/12)**|
|- Dallas/Fort Worth and Fort Myers (11/8/12)*||- Dallas/Fort Worth and Latrobe/Pittsburgh (6/14/13)|
|- Boston and Fort Myers (11/8/12)*|
- Announced opening a Crew Base at Dallas/Fort Worth International Airport on December 1, 2012.
*Seasonal service only
**Spirit has filed with the U.S. Department of Transportation (“DOT”) to begin nonstop service between Dallas/Fort Worth and Los Cabos, Mexico and between San Diego and Los Cabos, Mexico, subject to necessary governmental approval.
Copyright Photo: Tony Storck. Spirit Airlines is now serving Baltimore/Washington. Airbus A320-232 N608NK (msn 4902) prepares to land at BWI.