Spirit Airlines, Inc. reported its first quarter 2018 financial results.

• For the first quarter 2018, Spirit reported a GAAP net loss of $44.9 million (loss of $0.66 per diluted share).  Excluding special items, first quarter 2018 net income was $29.9 million ($0.44 per diluted share)¹.
• GAAP operating margin for the first quarter 2018 was negative 5.5 percent.  Excluding special items, operating margin for the first quarter 2018 was 7.3 percent¹.
• Spirit ended the first quarter 2018 with unrestricted cash, cash equivalents, and short-term investments of $999.7 million.

“We ran a very good operation in the first quarter 2018, despite numerous winter storms. We achieved a record high March DOT on-time performance of 85.1 percent, an increase of 10.1 percentage points year over year, contributing to a record high first quarter DOT on-time performance of 83.4 percent.  I congratulate and thank the Spirit family for delivering this operational excellence.  I’m also pleased to say that during the quarter, we finalized a five-year contract with our pilot union.  This new contract provides our pilots increased wage rates and gives the Company the platform to further improve our operational reliability,” said Robert Fornaro, Spirit’s Chief Executive Officer.

Revenue Performance
For the first quarter 2018, Spirit’s total operating revenue was $704.1 million, an increase of 19.4 percent compared to the first quarter 2017, driven by a 14.4 percent increase in flight volume.

Total revenue per available seat mile (“TRASM”) for the first quarter 2018 decreased 2.4 percent compared to the same period last year, primarily driven by a 1.7 percent decrease in operating yields and a 4.1 percent increase in average stage length.  During the first quarter 2018, the Company’s results benefited from the calendar shift of Easter by approximately 200 basis points.

On a per passenger flight segment basis, total revenue for the first quarter 2018 increased 1.7 percent year over year to $107.71, driven by non-ticket revenue per passenger flight segment increasing 5.9 percent to $55.29², partially offset by fare revenue per passenger flight segment decreasing 2.4 percent to $52.42.

Cost Performance
For the first quarter 2018, total GAAP operating expense, including special items of $90.0 million³, increased 39.8 percent, or $211.3 million year over year to $742.9 million.  The year-over-year increase in GAAP operating expense was primarily driven by special charges in connection with the new pilot agreement approved in February 2018; increased flight volume; and higher fuel rates.

Adjusted operating expense for the first quarter 2018 increased 24.2 percent, or $127.2 million to $652.9 million⁴.  The year-over-year increase in adjusted operating expense was primarily driven by increases in flight volume, salaries, wages and benefits, and fuel rates.  In addition, higher rates for crew lodging and ground handling, along with greater deicing expense, drove an increase in other operating expense.

Aircraft fuel expense increased in the first quarter 2018 by 46.4 percent, or $64.9 million, compared to the same period last year, due to a 21.5 percent increase in the cost of fuel per gallon and a 20.2 percent increase in fuel gallons consumed.

Spirit reported first quarter 2018 cost per available seat mile (“ASM”), excluding special items and fuel (“Adjusted CASM ex-fuel”), of 5.33 cents⁴, a decrease of 5.0 percent compared to the same period last year.  The decrease year over year was primarily driven by lower aircraft rent per ASM.

Labor
Spirit and its pilots, represented by the Air Line Pilots Association, announced the ratification of a new five-year working agreement in February 2018.

Fleet
Spirit took delivery of five new A321ceo aircraft and one new A320ceo aircraft during the first quarter 2018, ending the quarter with 118 aircraft in its fleet.

Aircraft Agreement
On March 28, 2018, the Company entered into an agreement with an aircraft lessor to purchase 14 A319 aircraft, which the Company was operating under lease agreements.  The purchases of all 14 aircraft are scheduled throughout the second quarter of 2018, for an aggregate gross purchase price of $285.0 million, which will be reduced by the application of maintenance reserves and security deposits held by the lessor.  Effective March 31, 2018, the lease agreements associated with these aircraft will be classified as capital leases on the balance sheet until the closing of each individual sale.  All transactions are anticipated to be completed prior to June 30, 2018.

Recent New Routes and Service Announcements
Columbus, Ohio – Fort Lauderdale (02/15/2018)
Columbus, Ohio – Orlando (02/15/2018)
Columbus, Ohio – Las Vegas (02/15/2018)
Columbus, Ohio – Fort Myers (02/15/18)*
Columbus, Ohio – Tampa (02/15/2018)*
Richmond – Fort Lauderdale (03/15/2018)
Richmond – Orlando (03/15/2018)
Fort Lauderdale – Guayaquil, Ecuador (03/22/2018)
Baltimore – Denver (03/22/2018)
Baltimore – Montego Bay (03/22/2018)
Columbus, Ohio – Myrtle Beach (03/22/2018)*
Columbus, Ohio – New Orleans (03/22/2018)*
Atlantic City – New Orleans (04/12/2018)
Fort Lauderdale – St. Croix, U.S. Virgin Islands (05/24/2018)

* Indicates seasonal service

End Notes
(1) See “Reconciliation of Adjusted Net Income, Adjusted Pre-tax Income, and Adjusted Operating Income to GAAP Net Income” table below for more details.
(2) See “Calculation of Total Non-ticket Revenue per Passenger Segment” table below for more details.
(3)  See “Special Items” table for more details.
(4) See “Reconciliation of Adjusted Operating Expense to GAAP Operating Expense” table below for more details.

Copyright Photo: Spirit Airlines Airbus A321-231 WL N675NK (msn 7668) FLL (Bruce Drum). Image: 104599.

Spirit Airlines aircraft slide show:

Spirit Airlines, Inc. reported its fourth quarter and full year 2017 financial results.

• GAAP net income for the fourth quarter 2017 was $250.3 million ($3.63 per diluted share).  GAAP net income for the fourth quarter 2017 included a one-time non-cash $199.3 million tax credit¹. Excluding the one-time tax credit and special items², net income for the fourth quarter 2017 was $50.4 million ($0.73 per diluted share)³.
• GAAP net income for the full year 2017 was $420.6 million ($6.06 per diluted share) which included the one-time tax credit¹. Excluding the one-time tax credit and special items², net income for the full year 2017 was $230.8 million ($3.33 per diluted share)³.
• GAAP operating margin for the fourth quarter 2017 was 13.9 percent, or 13.4 percent excluding special items².
• GAAP operating margin for the full year 2017 was 14.7 percent, or 15.2 percent excluding special items².
• Spirit ended 2017 with unrestricted cash, cash equivalents, and short-term investments of $901.8 million.

“I want to thank the Spirit family for their contributions throughout 2017.  Together, we overcame several major operational challenges while still delivering a record on-time performance,” said Robert Fornaro, Spirit’s Chief Executive Officer. “Looking ahead to 2018, we are focused on finalizing a deal with our pilots union, improving upon our operational reliability, continuing to enhance our guest experience, and delivering earnings growth for our shareholders.”

Revenue Performance
For the fourth quarter 2017, Spirit’s total operating revenue was $667.0 million, an increase of 15.3 percent compared to the fourth quarter 2016, driven by a 10.4 percent increase in flight volume.

Total revenue per available seat mile (TRASM) for the fourth quarter 2017 decreased 1.8 percent compared to the same period last year, driven by a 2.2 percent decrease in operating yields.

On a per passenger flight segment basis, total revenue for the fourth quarter 2017 increased 1.1 percent year over year to $109.34 driven by non-ticket revenue per passenger flight segment increasing 3.8 percent to $53.91, partially offset by ticket revenue per passenger flight segment decreasing 1.4 percent to $55.43.

Cost Performance
For the fourth quarter 2017, total GAAP operating expense, including special items credit of $3.0 million², increased 16.5 percent, or $81.4 million, year over year to $574.5 million.  Adjusted operating expense for the fourth quarter 2017 increased 19.2 percent, or $93.1 million to $577.5 million⁴. The year-over-year increase in both GAAP and adjusted operating expense was primarily driven by an increase in flight volume; higher other operating expense, partially driven by increased ground handling rates; higher depreciation and amortization expense; and higher fuel rates.

Aircraft fuel expense increased in the fourth quarter 2017 by 38.5 percent, or $48.7 million, compared to the same period last year, due to a 20.1 percent increase in the cost of fuel per gallon and a 15.5 percent increase in fuel gallons consumed.

Spirit reported fourth quarter 2017 cost per available seat mile (“ASM”), excluding special items and fuel (“Adjusted CASM ex-fuel”), of 5.20 cents⁴, a decrease of 4.4 percent compared to the same period last year.   The decrease year over year was primarily driven by lower aircraft rent and salaries, wages, and benefits per ASM, partially offset by higher depreciation and amortization per ASM.

“For the full year 2017, our team delivered an adjusted CASM ex-fuel of 5.51 cents, up 1.1 percent year over year.  This was an admirable performance considering the hurricanes and other disruptions this year,” said Ted Christie, Spirit’s President and Chief Financial Officer.  “Should the tentative agreement with our pilots be ratified, we will gain tools that will allow us to further improve our operational reliability and drive efficiencies, which gives us confidence that we will be able to maintain or grow our relative cost advantage.”

Labor
Spirit and its pilots, represented by the Air Line Pilots Association, reached a tentative agreement in January 2018 with the assistance of the National Mediation Board.  The tentative agreement is subject to ratification.

Fleet
Spirit took delivery of four new A321ceo aircraft and two new A320ceo aircraft and returned one leased A321ceo aircraft during the fourth quarter 2017, ending the quarter with 112 aircraft in its fleet.

Share Repurchase
During the fourth quarter and full year 2017, Spirit returned approximately $45 million to shareholders by repurchasing 1.2 million shares under our share repurchase program.

Recent New Service Announcements
Columbus, Ohio – Orlando (02/15/2018)
Columbus, Ohio – Fort Lauderdale (02/15/2018)
Columbus, Ohio – Las Vegas (02/15/2018)
Columbus, Ohio – Fort Myers (02/15/2018)**
Columbus, Ohio – Tampa (02/16/2018 )**
Richmond – Orlando (03/15/2018)
Richmond – Fort Lauderdale (03/15/2018)
Baltimore – Montego Bay (03/22/2018)
Baltimore – Denver (03/22/2018)
Columbus, Ohio – New Orleans (03/22/2018)*
Fort Lauderdale – Guayaquil, Ecuador (03/22/2018)
Columbus, Ohio – Myrtle Beach (03/23/2018)*
Fort Lauderdale – Cap-Haïtien, Haiti (04/12/2018)
Fort Lauderdale – Seattle (04/12/2018)*
Minneapolis – Myrtle Beach (04/12/2018)*
Orlando – Las Vegas (04/12/2018)
Tampa – Los Angeles (04/12/2018)
Tampa – Las Vegas (04/12/2018)
Seattle – Chicago (04/12/2018)*
Seattle – Dallas/Ft. Worth (04/12/2018)*
Seattle – Minneapolis/St. Paul (04/12/2018)*
Atlantic City – New Orleans (04/13/2018)
Detroit – Portland, Oregon (04/23/2018)*
Detroit – San Diego (04/23/2018)*

* Seasonal Summer Service
** Seasonal Winter Service

Full Year 2017 Highlights

• As measured by the Department of Transportation, achieved a record high on-time performance
• Added Hartford; Pittsburgh; Columbus; Richmond; Cap-Haïtien, Haiti; and Guayaquil, Ecuador to its list of destinations
• Added 17 new Airbus aircraft (6 A320ceos and 11 A321ceos) and 2 used A319 aircraft to its fleet, and returned 2 A321ceo aircraft, ending the year with 112 aircraft.  As of year-end 2017, Spirit’s Fit Fleet™ had an average age of 5.1 years, the youngest fleet of any major U.S. airline
• Returned approximately $45 million to shareholders by repurchasing approximately 1.2 million shares under our share repurchase program
• Assisted Guests and employees in various regions affected by major hurricanes.  In addition to monetary donations, Spirit transported over 100,000 pounds of relief supplies in joint efforts with the American Red Cross, Operation Puerto Rico Care Lift, and many other organizations

Copyright Photo: Spirit Airlines Airbus A321-231 WL N664NK (msn 7021) FLL (Andy Cripps). Image: 936347.

Spirit Airlines aircraft slide show: