Spirit Airlines, Inc. (Fort Lauderdale/Hollywood) today (October 28) 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 percent.
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.
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.
In the third quarter 2014, Spirit took delivery of one new Airbus 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.
Third Quarter 2014 and Other Current Highlights
Added/announced new service between (service start date):
– Fort Lauderdale and New Orleans (8/1/14)
– Boston and West Palm Beach (11/14/14)5
– Houston and New Orleans (8/1/14)
– Latrobe/Pittsburgh and Tampa (12/18/14)5
– Houston and Atlanta (8/1/14)
– Latrobe/Pittsburgh and Fort Myers (12/19/14)5
– Kansas City and Chicago (8/7/14)
– Denver and San Diego (1/5/15)
– Kansas City and Dallas/Fort Worth (8/7/14)
– Cleveland and Orlando (1/15/15)
– Kansas City and Detroit (8/7/14)
– Cleveland and Tampa (1/15/15)5
– Kansas City and Las Vegas (8/7/14)
– Cleveland and Fort Myers (1/15/15)5
– Kansas City and Houston (8/8/14)
– Cleveland and Fort Lauderdale (2/5/15)
– Fort Lauderdale and Houston (9/3/14)
– Cleveland and Dallas/Fort Worth (2/5/15)
– Houston and San Diego (9/3/14)
– Cleveland and Las Vegas (2/5/15)
– Detroit and Atlanta (10/24/14)
– Cleveland and Los Angeles (4/16/15)
– Chicago and Atlanta (10/24/14)
– Cleveland and Myrtle Beach (4/16/15)5
– Detroit and New Orleans (10/30/14
– Chicago and San Diego (4/16/15)
– Chicago and New Orleans (10/30/14)
– Chicago and Philadelphia (4/16/15)
Maintained its commitment to offer low fares to its valued customers; average ticket revenue per passenger flight segment for the third quarter 2014 was $84.50 with total revenue per passenger flight segment of $138.54.
Copyright Photo: Ken Petersen/AirlinersGallery.com. Airbus A319-132 N502NK (msn 2433) in the new canary yellow “Home of the Bare Fare” livery arrives in Las Vegas.