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Spirit Airlines beats estimates with a 4Q net profit of $41.0 million and $177.5 million for 2013

Spirit Airlines, Inc. (Fort Lauderdale/Hollywood) today reported fourth quarter and full year 2013 financial results.

  • Adjusted net income for the fourth quarter 2013 increased 109.9 percent to $41.0 million ($0.56 per diluted share) compared to $19.5 million ($0.27 per diluted share) for the fourth quarter 20121. GAAP net income for the fourth quarter 2013 was $43.2 million ($0.59 per diluted share) compared to $19.6 million ($0.27 per diluted share) in the fourth quarter 2012.
  • Adjusted net income for the full year 2013 increased 71.0 percent to $177.5 million ($2.43 per diluted share) compared to $103.8 million ($1.43 per diluted share) for the full year 20121. GAAP net income for the full year 2013 was $176.9 million ($2.42 per diluted share) compared to $108.5 million ($1.49 per diluted share) for the full year 2012.
  • For the fourth quarter 2013, Spirit achieved an adjusted pre-tax margin of 15.4 percent, an improvement of 5.7 percentage points over the same period in 20121. On a GAAP basis, pre-tax margin for the fourth quarter 2013 was 16.2 percent, compared to 9.7 percent in the fourth quarter 2012. For the full year 2013, Spirit’s adjusted pre-tax margin was 17.1 percent, compared to 12.7 percent in 20121. Pre-tax margin on a GAAP basis for the full year 2013 was 17.1 percent, compared to 13.2 percent in 2012.
  • Spirit ended 2013 with $530.6 million in unrestricted cash.
  • Spirit’s return on invested capital (before taxes and excluding special items) for the twelve months ended December 31, 2013 was 31.8 percent. See “Calculation for Return on Invested Capital” table below for more details.

“For the full year 2013, we delivered record profitability and return as demand for our low-cost, ultra-low fare model remained very high. These strong financial results reflect our vigilance on maintaining our cost discipline and low fare strategy while executing on our growth plan and delivering high returns for our shareholders,” said Ben Baldanza, Spirit’s Chief Executive Officer. “I thank all our team members who helped us achieve these results.”

Revenue Performance

For the fourth quarter 2013, Spirit’s total operating revenue was $420.0 million, an increase of 27.9 percent compared to the fourth quarter 2012. The year-over-year increase was driven by continued strong demand and our growth in capacity. The increase was also partly attributable to the negative revenue impact in the fourth quarter 2012 related to Hurricane Sandy.

Total revenue per available seat mile (“RASM”) for the fourth quarter 2013 was 11.43 cents, an increase of 3.0 percent compared to the fourth quarter 2012 as a result of both higher average passenger yields and load factors.

Passenger flight segment (“PFS”) volume for the fourth quarter 2013 grew 19.4 percent year over year. Average revenue per PFS for the fourth quarter 2013 increased 7.1 percent year over year to $132.86 primarily driven by an increase in ticket revenue per PFS.

For the full year 2013, total operating revenue increased 25.5 percent to $1,654.4 million compared to the full year 2012 and total RASM increased 2.8 percent to 11.94 cents.

Cost Performance

Total operating expenses for the fourth quarter 2013 increased 18.8 percent year over year to $351.9 million on a capacity increase of 24.3 percent.

Spirit reported fourth quarter 2013 cost per available seat mile excluding special items and fuel (“Adjusted CASM ex-fuel”) of 5.78 cents, a decrease of 2.5 percent compared to the same period last year. Better operational performance during the fourth quarter 2013 compared to fourth quarter 2012 helped to drive lower wage expense and lower passenger re-accommodation expense. These decreases were partially offset by higher depreciation and amortization expense related to the amortization of an increased number of heavy maintenance events.

In its Investor Update dated January 15, 2014, the Company estimated that it would record $8 million of expense related to the repair and damage of the engine and aircraft associated with the engine failure experienced in October 2013. The Company now believes it will receive insurance proceeds covering all related expenses in excess of a $750,000 deductible, which was expensed in the fourth quarter.

Total operating expense for the full year 2013 was $1,372.1 million, up 19.9 percent year over year driven primarily by fuel and other expenses associated with increased flight volume. Adjusted CASM ex-fuel for the full year 2013 decreased 1.5 percent year over year to 5.91 cents.

Selected Balance Sheet and Cash Flow Items

As of December 31, 2013, Spirit had $530.6 million in unrestricted cash and cash equivalents, no restricted cash, no debt on its balance sheet, and total shareholders’ equity of $769.1 million.

For the full year 2013, Spirit incurred capital expenditures of $19.8 million. The Company paid $70.3 million in pre-delivery deposits for future deliveries of aircraft, net of refunds, and recorded an increase of $24.1 million in maintenance deposits, net of reimbursements.

Fleet

In the fourth quarter 2013, Spirit took delivery of three new A320 aircraft, ending the year with 54 aircraft in its fleet.

Full Year 2013 and Other Current Highlights 

  • Added/announced new service between (service start date):
 – Dallas/Fort Worth and New Orleans (1/24/13)  – Houston and Denver (6/13/13)
 – Houston and Orlando (2/14/13)  – Houston and Detroit (6/13/13)
 – Detroit and Denver (2/14/13)  – Phoenix Sky Harbor and Dallas/Fort Worth (10/24/13)
 – Dallas/Fort Worth and Minneapolis-St. Paul (4/4/13)  – Phoenix Sky Harbor and Chicago/O’Hare (11/7/13)2
 – Dallas/Fort Worth and Philadelphia (4/5/13)  – Phoenix Sky Harbor and Denver (11/7/13)
 – Houston and Los Angeles (4/25/13)  – Minneapolis-St. Paul and Los Angeles (11/7/13)
 – Dallas/Fort Worth and Oakland/  – Minneapolis-St. Paul and Orlando (11/7/13)2
San Francisco (4/25/13)  – Minneapolis-St. Paul and Phoenix (11/7/13)2
 – Dallas/Fort Worth and Los Angeles (4/25/13)  – Minneapolis-St. Paul and Tampa (11/7/13)2
 – Dallas/Fort Worth and Cancun, Mexico (4/25/13)  – Minneapolis-St. Paul and Houston (5/1/14)2
 – Baltimore/Washington and Las Vegas (4/25/13)  – Minneapolis-St. Paul and Baltimore/
 – Baltimore/Washington and Myrtle Beach (4/25/13)2 Washington (5/1/14)2
 – Philadelphia and Myrtle Beach (4/25/13)2  – Chicago O’Hare and Oakland/San Francisco (5/1/14)
 – Philadelphia and Las Vegas (4/25/13)  – Minneapolis-St. Paul and Detroit (5/22/14)2
 – Minneapolis-St. Paul and Denver (4/25/13)2  – Chicago O’Hare and Baltimore/Washington (5/22/14)2
 – Dallas/Fort Worth and Los Cabos, Mexico (6/13/13)  – Chicago O’Hare and Portland, OR (5/22/14)2
 – Dallas/Fort Worth and Latrobe/Pittsburgh (6/14/13)
  • Launched service to 25 new markets in 2013.
  • Ratified a new five-year contract with its dispatchers which are represented by the Transport Workers Union.
  • Elected H. McIntyre (Mac) Gardner as Chairman of the Board of Directors.
  • Ordered an additional 20 new A321 aircraft, converted 10 existing A320 orders to A321 orders, and converted 5 A321ceo orders to A321neo orders. These aircraft are scheduled to deliver between 2015 and 2018. The Company also advanced 4 A320 aircraft originally scheduled to deliver in 2015 to deliver in 2014, bringing its total planned aircraft deliveries in 2014 to 11.
  • Maintained its commitment to offer low fares to its valued customers (average ticket revenue per passenger flight segment for the full year 2013 was $79.43).

Additionally, Spirit Airlines on May 22 will introduce nonstop Minneapolis/St. Paul – Detroit service, offering one daily flight with Airbus A319 aircraft.

Copyright Photo: Jay Selman/AirlinersGallery.com. Still wearing the old 2004 black livery, Airbus A319-132 N523NK (man 2898) “Spirit of Tampa” prepares to land in Las Vegas. With the new color scheme, Spirit dropped the practice of naming its aircraft after cities. Instead it now offers a promotional package to generate income.

Spirit Airlines: AG Slide Show