Spirit Airlines reports fourth quarter and full year 2021 results

Spirit Airlines, Inc. today reported fourth quarter and full year 2021 financial results.

Ended the year 2021 with $1.7 billion of unrestricted cash, cash equivalents, short-term investment securities and liquidity available under the Company’s revolving credit facility.

As Reported

(unaudited)

Fourth Quarter 2021

Fourth Quarter 2020

Fourth Quarter 2019

Total Operating Revenues

$987.6 million

$498.5 million

$969.8 million

Pre-tax Income (Loss)

$(91.8) million

$(204.5) million

$106.8 million

Net Income (Loss)

$(87.2) million

$(157.3) million

$81.2 million

Diluted Earnings (Loss) Per Share

$(0.80)

$(1.61)

$1.18

Adjusted1

Fourth Quarter 2021

Fourth Quarter 2020

Fourth Quarter 2019

Adjusted EBITDA

$14.9 million

$(91.1) million

$187.7 million

Adjusted EBITDA Margin

1.5%

(18.3)%

19.4%

Adjusted Pre-tax Income (Loss)

$(90.3) million

$(207.9) million

$108.0 million

Adjusted Net Income (Loss)

$(69.4) million

$(159.5) million

$82.1 million

Adjusted Net Income (Loss) Per Share, Diluted

$(0.64)

$(1.63)

$1.20

“Our fourth quarter 2021 results came in better-than-expected, despite the negative impact from Omicron-related flight disruptions, primarily due to very strong demand over the peak December holiday period. I want to thank the entire Spirit team for their professionalism and commitment to providing excellent service to our Guests,” said Ted Christie, Spirit’s President and Chief Executive Officer.

“Looking ahead to the first quarter 2022, we have seen sequential improvement in bookings since mid-January and early trends indicate travel demand in the second half of the first quarter should be quite strong. Also, today we announced that Spirit and Frontier have signed a definitive merger agreement under which we plan to combine to bring more ultra-low fares to more travelers in more destinations across the United StatesLatin America and the Caribbean. We are excited about this combination and believe it will have tremendous benefits for consumers, Team Members, and shareholders.”

COVID-19
Since its initial onset in early 2020, the impact of the COVID-19 pandemic has evolved and continues to be fluid. Therefore, the Company’s financial and operational outlook remains subject to change. The Company continues to monitor the impact of the pandemic on its operations and financial condition, and to adjust its mitigation and operational strategies accordingly. Spirit has implemented measures for the safety of its Guests and Team Members as well as to mitigate the impact of COVID-19 on its financial position and operations. Please see the Company’s Annual Report on Form 10-K for the period ending December 31, 2021 for additional disclosures regarding these measures.

The Company believes that providing analysis of financial and operational performance compared to fourth quarter 2019 is a more relevant measure of performance due to the severe impacts from the COVID-19 pandemic on our financial results and operational performance for 2020.

Fourth Quarter 2021 Results
Adjusted EBITDA for the fourth quarter 2021 was $14.9 million. The Company had an unusual number of operational disruptions and flight cancellations during the peak December 2021 holiday period, due to staffing shortages as a result of the rapid spread of the Omicron variant. The irregular operations during the peak December 2021 holiday period negatively impacted fourth quarter 2021 Adjusted EBITDA by approximately $30 million, primarily due to additional passenger re-accommodation expenses and higher labor expenses, partially offset by lower fuel expense and landing fees. Despite this impact, Adjusted EBITDA margin for the fourth quarter 2021 was 1.5 percent, better than the Company’s initial expectations of flat to negative 5 percent.

Capacity and Operations
Load factor for the fourth quarter 2021 was 79.8 percent on a 9.5 percent capacity increase versus fourth quarter 2019. Spirit’s fourth quarter 2021 DOT on-time performancewas 78.1 percent and its Completion Factor2 was 97.7 percent.

The Company’s operations stabilized during the first week of January 2022 and for the full month of January 2022, the Company’s on-time performance2 was 73.8% and Completion Factor2 was 96.5%.

Revenue Performance  
Total operating revenues for the fourth quarter 2021 came in better than expected at $987.6 million, an increase of 1.8 percent versus fourth quarter 2019. The irregular operations over the peak December 2021 holiday period negatively impacted total operating revenues by approximately $7 million.

On a per passenger flight segment basis, for the fourth quarter 2021 total revenue per passenger flight segment (“Segment”) increased 3.1 percent compared to the same period in 2019 to $114.15. Fare revenue per Segment increased 0.5 percent to $52.93 and Non-ticket revenue per Segment increased 5.5 percent to $61.223. Investments in enhanced product offerings and improved merchandising as well as the realized benefits from revenue management initiatives continue to drive the improvement in Non-Ticket revenue performance.

Cost Performance
Compared to the fourth quarter 2019, total GAAP operating expenses for the fourth quarter 2021 increased 24.1 percent to $1,049.1 million. Adjusted operating expenses for the fourth quarter 2021 increased 24.7 percent compared to the fourth quarter 2019 to $1,047.6 million4. Compared to the fourth quarter 2019, in addition to costs driven by increased flight volume and a greater number of aircraft, these increases were primarily driven by passenger re-accommodation expense incurred as a result of the irregular operations over the peak December 2021 holiday period and rate increases related to fuel, labor, and airport rents.

For the fourth quarter 2021, the Company’s adjusted operating expenses came in better than expected as the net costs related to the December irregular operations were more than offset by lower average fuel rates, lower airport costs, and overall effective cost management.

“Our Adjusted EBITDA margin for the fourth quarter 2021 was 1.5 percent, 400 basis points better than the mid-point of our guide on higher revenue and lower costs,” said Scott Haralson, Spirit’s Chief Financial Officer. “Over the next year we will leverage opportunities to restore and optimize our network and we will continue to push the horizon on non-ticket production. We will also remain keenly focused on managing costs and finding efficiencies to offset inflationary cost headwinds we face.”

Fleet
Spirit took delivery of five new A320neo aircraft during the fourth quarter 2021. The Company ended the year with 173 aircraft in its fleet.

Liquidity and Capital Deployment
Spirit ended fourth quarter 2021 with unrestricted cash, cash equivalents, short-term investment securities and liquidity available under the Company’s revolving credit facility of $1.7 billion.

Total capital expenditures for the twelve months ended December 31, 2021 were $333.1 million, primarily related to pre-delivery deposits associated with future aircraft deliveries and the purchase of four aircraft and two engines off lease, and two spare engines purchased with cash. In addition, one of the three aircraft delivered under sale-leaseback transactions during the fourth quarter 2021 did not qualify to be accounted for as a sale-leaseback; therefore, it is being accounted for as an aircraft financed through fixed-rate long-term debt. The net purchase price of this aircraft was recorded within capital expenditures in the fourth quarter 2021.