Tag Archives: Spirit Airlines

Spirit Airlines loses $99.1 million in the third quarter

Spirit Airlines, Inc. today reported third quarter 2020 financial results.

Ended the third quarter 2020 with $2.1 billion of unrestricted cash, cash equivalents
and short-term investment securities   

Third Quarter 2020 Third Quarter 2019
As Reported Adjusted As Reported Adjusted
(GAAP) (non-GAAP)1 (GAAP) (non-GAAP)1
Total Operating Revenues $401.9 million $401.9 million $992.0 million $992.0 million
Pre-tax Income (Loss) $(128.5) million $(276.8) million $109.0 million $118.1 million
Pre-tax Margin (32.0)% (68.9)% 11.0% 11.9%
Net Income (Loss) $(99.1) million $(215.4) million $83.5 million $90.5 million
Diluted Earnings (Loss) Per Share $(1.07) $(2.32) $1.22 $1.32

“Our future is very bright. While the pandemic continues to affect demand for air travel, we do not believe it changes our competitive position. Our excellent operational performance, strong Guest satisfaction metrics, and industry-leading cost structure, position us well to be among the first to reach sustained profitability,” said Ted Christie, Spirit’s President and Chief Executive Officer. “I thank the entire Spirit team for how well they have navigated the challenges in this incredibly dynamic time, shoring up our resources, and putting us in a position of strength to fully participate when demand recovers.”

COVID-19
As the COVID-19 pandemic continues to evolve, the Company’s financial and operational outlook remains subject to change. The Company continues to monitor the impacts of the pandemic on its operations and financial condition, and to implement mitigation strategies while working to preserve cash and protect the long-term sustainability of the Company. 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 Quarterly Report on Form 10-Q for the period ending September 30, 2020 for additional disclosures regarding these measures.

Capacity and Operations
The Company continues to experience a significant decline in demand due to COVID-19. Load factor for the third quarter 2020 was 68.1 percent on a year-over-year capacity decrease of 33 percent.

For the fourth quarter 2020, Spirit estimates its capacity will be down approximately 25 percent year over year. On a monthly basis, Spirit estimates its capacity for October will be down approximately 36 percent and that November and December will both be down about 20 percent compared to the same periods last year. The situation remains fluid and actual capacity adjustments may be different than what the Company currently expects.

As measured by the DOT, for the third quarter 2020, Spirit’s Completion Factor2 was 99.8 percent, which earned Spirit a first-place ranking among reporting carriers. Spirit achieved on-time performance2 of 90 percent or better for each of the three months during the third quarter 2020. Year-to-date ended September 30, 2020, Spirit’s Completion Factor2 was 97.3 percent, second among reporting carriers, and its on-time performance2 was 86.2 percent, third among reporting carriers.

Revenue Performance
Total operating revenue for the third quarter 2020 was $401.9 million, a decrease of 59.5 percent year over year as demand for air travel remains depressed due to the COVID-19 pandemic.

Based on current demand and level of operation assumptions, Spirit estimates its fourth quarter total operating revenue will be down approximately 43 to 45 percent year over year.

For the third quarter 2020, total revenue per passenger flight segment (“Segment”) decreased 21.1 percent year over year to $86.94. While both average fare and non-ticket spend per passenger declined year over year, as expected, non-ticket revenue per Segment declined much less than fare revenue per Segment. Fare revenue per Segment decreased 35.1 percent to $35.57 while non-ticket revenue per Segment only decreased 7.2 percent to $51.373.

Cost Performance
For the third quarter 2020, total GAAP operating expenses, including $148.3 million of special items, were $501.4 million, a decrease of 42.2 percent, year over year. Adjusted operating expenses for the third quarter 2020 were $649.7 million4, a decrease of 24.3 percent year over year. These changes were primarily driven by a 62.9 percent decrease in aircraft fuel expense due to decreases in both fuel rate and volume. In addition, other expenses, such as distribution, ground handling, and crew accommodation expenses were lower year over year due to a 37.4 percent decrease in flight volume. Better operational performance also drove a significant decrease in passenger re-accommodation expense compared to the same period last year. Despite a significant decrease in flight volume compared to the third quarter last year, other rents and landing fees increased year over year due to airport signatory adjustments and rate increases at various airports Spirit serves.

In late August 2020, the Company and its unions and work group representatives worked to find a solution to mitigate planned furloughs that were set to take effect on October 1, 2020. Various voluntary time-off programs in place through May 2021 will enable the Company to capture savings similar to what would have been achieved with the planned furloughs while preserving jobs, and maintaining options, should demand trends worsen or recover faster than expected.

For the fourth quarter 2020, Spirit estimates its total operating expenses, excluding special items will range between $675 to $685 million. This is similar to its third quarter 2020 adjusted operating expenses on an estimated approximately 10 percent more capacity in the fourth quarter 2020 than third quarter 2020.

Fleet
Spirit took delivery of one new A320neo aircraft during the third quarter 2020, which was debt financed. Spirit ended the quarter with 155 aircraft in its fleet. Earlier in October 2020, Spirit took delivery of its two remaining 2020 deliveries, one of which was debt financed and the other was secured under a sale/leaseback transaction.

Liquidity and Capital Deployment
Spirit ended the third quarter 2020 with unrestricted cash, cash equivalents, and short-term investment securities of $2.1 billion.

“Our team continues to adapt to the fluid environment caused by the challenges of COVID-19. In addition to flexing our network as we see shifts in demand, we are taking proactive measures to manage costs, conserve cash, and enhance our liquidity profile. Our average daily cash burn5 for the third quarter 2020 was $2.3 million, better than our most recent guidance of approximately $3 million per day, primarily due to better top-line sales and timing of payments. We estimate our average daily cash burn5 for the fourth quarter 2020 will average about $2 million per day, slightly better than what we experienced for the third quarter 2020. Given that we have fortified our liquidity position making cash burn as a metric less relevant, we now intend to migrate our guidance towards more traditional metrics such as EBITDA and EBITDA margin that better reflect a company’s cash generation capabilities. For the fourth quarter 2020, we estimate our EBITDA margin will range between negative 9 percent to negative 14 percent,” said Scott Haralson, Spirit’s Chief Financial Officer. “We have a solid foundation and, as we move towards recovery, I am confident that the strength of our business model will be a key differentiator of our success.”

Since the onset of the pandemic, Spirit has been focused on reducing costs and preserving and enhancing its liquidity position. During the third quarter 2020, the Company:

  • Completed a private offering of an aggregate of $850 million principal amount of 8.00% senior secured notes due 2025. The Notes are guaranteed by Spirit and certain subsidiaries of Spirit. The Notes are secured by, among other things, a first priority lien on the core assets of Spirit’s loyalty programs (comprised of cash proceeds from its Free Spirit co-branded credit card programs, its $9 Fare Club program membership fees, and certain intellectual property required or necessary to operate the loyalty programs) as well as Spirit’s brand intellectual property. Upon successful completion of this offering, the Company announced that it had elected not to participate in the U.S. Department of the Treasury (“Treasury”) loan program under the CARES Act;
  • Completed the sale of 9,000,000 shares of its common stock pursuant to the at-the-market offering program entered into on July 22, 2020. The Company received proceeds of $156.7 million, net of issuance costs, from this program.

In April 2020, Spirit entered into a Payroll Support Program (“PSP”) agreement with the Treasury pursuant to the Coronavirus Aid, Relief and Economic Security Act (“CARES Act”), for an initial amount of $334.7 million, of which the Company received $301.3 million in the second quarter 2020 and the remaining $33.4 million in the third quarter 2020. Of the $334.7 million, $70.4 million was in the form of a low-interest, 10-year loan. In late September 2020, the Company was notified by the Treasury that Spirit would receive $9.7 million of additional PSP funds. Of the additional $9.7 million, $2.9 million is in the form of a low-interest, 10-year loan. Also, in connection with its participation in the PSP, the Company has issued warrants to the Treasury to purchase up to 520,797 shares of the Company’s common stock at a strike price of $14.08 per share with a fair value of $3.9 million, net of issuance costs. The remaining amount of $266.8 million, net of issuance costs, is in the form of a grant and was recognized in special credits in the Company’s condensed consolidated statements of operations during the second and third quarters 2020. The Company booked the additional $9.7 million as a receivable in the third quarter 2020 and received the funds in early October 2020.

Total capital expenditures for 2020 are estimated to be approximately $545 million (approximately $200 million net of financings), of which approximately $45 million (approximately $5 million net of financings) is expected to be incurred in the fourth quarter of 2020.
Spirit expects to take delivery of 16 aircraft in 2021. Of the 2021 aircraft deliveries, ten are secured under direct lease arrangements and six are not yet secured under financing agreements. The Company anticipates that it will use sale/leaseback transactions to finance these six aircraft. Based on this assumption, the Company estimates total capital expenditures in 2021 will consist of approximately $40 million of pre-delivery deposits, net of refunds, and another $60 to $85 million of other capital expenditures primarily related to aircraft, including one spare engine and other spare parts.

Tax Rate
The Company recorded a $1.2 million discrete tax benefit in the third quarter 2020 related to the finalization of the Net Operating Loss carryback to tax year 2013. On a GAAP basis, the Company’s tax rate for third quarter 2020 was 22.9 percent. Excluding this discrete tax benefit and special items, the Company’s effective tax rate for the third quarter 2020 was 22.2 percent.

Spirit Airlines aircraft photo gallery:

Spirit Airlines adds Orange County, expanding Los Angeles-area flying

Spirit Airlines has made this announcement:

The brightest planes in the sky are soaring over Southern California. Spirit Airlines has announced daily nonstop flights from John Wayne Airport (SNA) to Las Vegas and Oakland beginning November 17.

Spirit touched down in California more than 20 years ago with its first flight to Los Angeles (LAX), launching two decades of growth across the Golden State. In the years that followed, the airline expanded its options for Guests in the L.A. basin with service to Burbank (BUR), and grew to serve Sacramento (SMF), Oakland (OAK) and San Diego (SAN) as well.

Spirit Airlines in California*
Airport: Flights Available:
John Wayne (SNA) 3x daily
Los Angeles (LAX) Up to 25x daily
San Diego (SAN) up to 5x daily
Oakland (OAK) up to 5x daily
Sacramento (SMF) up to 3x daily
Burbank (BUR) up to 2x daily

*Flight Information for November 2020

Spirit’s arrival at SNA opens one-stop access to cities across the country. The airline will offer Guests two daily flights from SNA to Oakland International Airport (OAK) along with daily service to Las Vegas McCarran International Airport (LAS). The flight to LAS comes with convenient connections to another 15 major U.S. cities. Vacationers arriving at SNA will find themselves closer to Disneyland than ever, thanks to the airport’s magical location.

Guest Safety

Spirit’s commitment to Safe Travels includes a multi-layered safety approach that requires all Guests and Team Members to wear face coverings. Each passenger agrees to that policy as part of a health and safety acknowledgement prior to boarding the aircraft. Every plane in our Fit Fleet® uses state-of-the-art, high-efficiency particulate air (HEPA) filters that capture 99.97% of particles and filter the air for contaminants every 3 minutes.

Between each flight, enhanced cleaning procedures focus on high-touch areas such as tray tables and armrests using hospital-grade disinfectants. Spirit also uses two EPA-registered fogging treatments. The first applies a safe, high-grade disinfectant that’s effective against coronaviruses. The second uses an antimicrobial product that forms an invisible barrier on all surfaces that kills bacteria and viruses on contact for 30 days. Please visit Spirit’s COVID-19 Information Center for more information on safety enhancements.

Spirit Airlines and ALPA agree to a job-preserving program to eliminate pilot furloughs

ALPA made this announcement:

Spirit Airlines pilots, represented by the Air Line Pilots Association, Intl. (ALPA), recently reached an agreement with management to save hundreds of the airline’s pilots from furlough. Nearly half of the more than 2,500 Spirit pilots have agreed to temporarily work fewer hours each month to prevent 800 pilots from being furloughed beginning October 1.

“At a time where airlines struggle to keep pace with the ever-changing demand for air travel and airline crews struggle to keep themselves and their families healthy, Spirit Airlines pilots and management worked together to reach an agreement that mitigates the remaining furloughs planned for October 2020. Effective immediately, the 600 planned furloughs have been canceled,” said Capt. Scott Vallach, chairman of ALPA’s Spirit Airlines Master Executive Council.

More than 11,000 airline pilots in the United States have already received notices of potential furlough. Currently, dozens of other ALPA pilot groups are exploring various furlough mitigation plans to preserve as many jobs as possible until the industry recovers.

“I’m extremely proud of the willingness of our pilots to help each other and ensure that no Spirit pilot goes without a paycheck. I also want to thank Spirit management for partnering with us to sit down and find a path that helps our airline survive while keeping all of our pilots employed,” Vallach added.

Spirit Airlines reports first quarter $27.8 million loss, fleet grows to 151 aircraft

Spirit Airlines, Inc. reported first quarter 2020 financial results.  These results reflect the adverse impact of the material decline in demand for both international and domestic travel resulting from the spread of novel coronavirus (COVID-19).

First Quarter 2020 First Quarter 2019
As Reported Adjusted As Reported Adjusted
(GAAP) (non-GAAP)1 (GAAP) (non-GAAP)1
Revenue $771.1 million $771.1 million $855.8 million $855.8 million
Pre-tax Income (Loss) $(74.6) million $(74.6) million $72.1 million $74.0 million
Pre-tax Margin (9.7)% (9.7)% 8.4% 8.6%
Net Income (Loss) $(27.8) million $(58.9) million $56.1 million $57.5 million
Diluted Earnings (Loss) Per Share $(0.41) $(0.86) $0.82 $0.84

Prior to March 2020, the Company was on track to meet or beat its first quarter 2020 pre-tax margin guidance of 6.5 percent to 7.5 percent.  However, beginning with the second week of March through the end of the month, load factors and yields declined significantly as events across the U.S. were canceled, theme parks closed, and travel restrictions were implemented and broadened, resulting in a significant drop in passenger demand and bookings.

“The health crisis, loss of demand, and corresponding economic impact caused by COVID-19 is unprecedented.  I want to thank all of our Team Members for their dedication to the safety and well-being of our Guests and each other, and for pulling together to help the Company meet the financial challenges we are facing.  I am very proud of the Spirit team and I am confident that given our quick action to adjust, our industry-leading low-cost structure, our strong balance sheet, and the resiliency and commitment of our Team Members, we will emerge from this crisis ready to deliver on our promise of high quality and low fares,” said Ted Christie, Spirit’s President and Chief Executive Officer.

In response to COVID-19, the Government approved a financial stabilization assistance package through the Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act”).  Spirit commends President Trump, the Administration and members of Congress, for their support of the airline assistance programs included in the CARES Act.  The benefits under the CARES Act help to position Spirit to support the economic recovery in the destinations it serves by continuing to provide low fare air travel to millions of Guests annually.

COVID-19 Response

Capacity Reductions, Expense Management, and Liquidity Measures

In response to government restrictions on travel and drastically reduced consumer demand compared to its original 2020 plan, Spirit has taken many steps to reduce costs and to preserve and enhance liquidity, including:

  • Reduced capacity for April 2020 by approximately 75 percent, and for May and June by approximately 95 percent.  However, the situation is very fluid and actual capacity adjustments may be different than what the Company currently expects;
  • Entered into a senior secured revolving credit facility (“RCF”) for an initial commitment amount of $110 million (with an option to increase overall commitment amount up to $350 million with the consent of any increasing lenders).  The RCF commitment was recently increased to $135 million, which was fully drawn during the month of April 2020.  In May, we received a commitment to increase the RCF by $30 million to $165 million effective May 18, 2020, subject to the satisfaction of certain conditions precedent;
  • Reduced planned discretionary capital spend in 2020 by approximately $50 million. The Company also is in discussions with Airbus to defer some 2020 and 2021 aircraft deliveries and related pre-delivery payments.  The Company expects to reduce aircraft-related capital spend by approximately $185 million if those discussions are successful;
  • Reduced 2020 planned non-fuel operating costs by $20 million to $30 million, excluding savings related to reduced capacity;
  • Suspended hiring across the Company except to fill essential roles;
  • Engaged in discussions with the Company’s significant stakeholders and vendors regarding financial support or contract adjustments, including extensions of payment terms, during this transition period;
  • Worked with our unionized and non-unionized Team Members to create voluntary leave programs;
  • Entered into a Payroll Support Program Agreement (“PSP”) with the U.S. Department of the Treasury pursuant to which the Company expects to receive a total of approximately $335 million in 2020 over the course of the second and third quarters.  The PSP funds will be used exclusively to pay for salaries and benefits for the Company’s Team Members, and the receipt of the funds will subject us to certain ongoing restrictions;
  • Applied for a loan from the Treasury under the CARES Act (“Loan Program”).  Spirit’s maximum potential availability under the Loan Program is approximately $741 million.  However, it is dependent on the amount and types of collateral accepted, which may result in an actual loan less than $741 million, if the Company accepts the loan.  Over the next several months, the Company will be evaluating whether to take advantage of this government assistance.  The Company also expects to realize significant liquidity benefits associated with the income and federal excise tax relief provisions in the CARES Act up to approximately $180 million during the current year.  In addition, the CARES Act provides for deferred payment of the employer portion of social security taxes through the end of 2020, with 50 percent of the deferred amount due December 31, 2021 and the remaining 50 percent due December 31, 2022. This is expected to provide the Company with approximately $24 million of additional liquidity during the current year; and
  • In connection with its participation in the PSP, the Company also will be obligated to issue to Treasury warrants to purchase up to 500,150 shares of common stock of the Company, par value $0.0001 per share (“Common Stock”), at a strike price of $14.08 per share (the closing price for the shares of Common Stock on April 9, 2020).  The Company also would be required to issue to Treasury a number of warrants equal to 10% of the final loan principal amount divided by the same strike price as noted above ($14.08), representing a potential conversion of up to 5.3 million of underlying shares of Common Stock.

Additionally, Ted Christie, the Company’s President and Chief Executive Officer, has temporarily reduced his base salary by 30 percent.  All Senior and Executive Vice Presidents and members of the Board of Directors have temporarily reduced their compensation as well.

The Company anticipates it may implement further discretionary changes and other cost reduction and liquidity preservation measures as needed, in order to address the volatility and rapidly-changing dynamics of passenger demand and the impact of revenue changes, regulatory and public health directives, and prevailing government policy and financial market conditions.  There is no guarantee that we receive all or any of the benefits we expect to receive under the CARES Act.

Caring for Guests and Team Members

Safety is always the Company’s top priority.  Since the COVID-19 outbreak, the Company’s Operations and Task Force teams remain in constant contact with authorities, continuing to evolve its response to ensure the safety of Guests and Team Members.  In addition to existing procedures including utilization of hospital-grade disinfectants and state-of-the art High-Efficiency Particulate Air (“HEPA”) filters that capture 99.97 percent of airborne particles, the Company has taken other protective measures including:

  • Secured and distributed additional supplies of gloves and sanitizer across the network and augmented the contents of onboard supply kits;
  • Expanded cleaning protocols at airports and other facilities, including the use of electrostatic sprayers at select locations;
  • Expanded aircraft turn and overnight cleaning protocols focusing on high frequency touch points as well as enhanced cockpit cleaning;
  • Launched a new aircraft fogging program to provide additional disinfecting;
  • Offering complimentary re-seating to provide additional distancing between Guests;
  • Offering future flight credits with extended expiration dates to Guests with impacted travel plans;
  • Leveraging its technology-driven solutions like automated self-bag drop and self-bag tagging to allow for contactless check-in; and
  • Announced a new policy requiring all Guests and Guest-facing Team Members to wear a face covering when traveling through the airport and while onboard the aircraft.

Supporting Communities

As bans on travel were implemented with little notice, many travelers became stranded abroad.  Spirit has operated specially approved flights for stranded travelers in Aruba, Colombia, Dominican Republic, Haiti, Panama, and the U.S.  Thus far, Spirit has provided transportation to more than three thousand stranded travelers, and preparations are ongoing to transport hundreds more home in the coming days.

Spirit has also made efforts to address the growing needs of its communities through The Spirit Airlines Charitable Foundation (the “Foundation”).  As part of its focus on supporting families, the Foundation partnered with other non-profit organizations including the YMCA and Jack and Jill Children’s Center to provide food to seniors and families struggling during this time and supported organizations with the fabrication of face masks for healthcare workers.

First Quarter 2020

Revenue Performance
For the first quarter 2020, Spirit’s total operating revenue was $771.1 million, a decrease of 9.9 percent compared to the first quarter 2019.

Total operating revenue per available seat mile (“TRASM”) for the first quarter 2020 decreased 18.8 percent compared to the same period last year.

The year-over-year decrease in total operating revenue and TRASM for the first quarter 2020 was driven by the significant drop in load factor and yields as a result of COVID-19.

Cost Performance
For the first quarter 2020, total GAAP operating expenses increased 8.0 percent year over year to $829.1 million.  Adjusted operating expenses for the first quarter 2020 increased 8.2 percent year over year to $829.1 million2.  An increase in flight volume of 11.5 percent and higher depreciation and amortization were the primary drivers of these additional expenses.

Aircraft fuel expense in the first quarter 2020 decreased by 7.2 percent year over year, on a 7.4 percent increase in fuel gallons consumed, due to a 13.4 percent drop in average fuel cost per gallon.

Spirit reported first quarter 2020 cost per available seat mile (“ASM”), excluding operating special items and fuel (“Adjusted CASM ex-fuel”), of 5.64 cents2, an increase of 3.3 percent compared to the same period last year, which was modestly better than expected on lower-than-planned capacity growth. On a per ASM basis, the largest driver of the year-over-year increase was salaries, wages and benefits as the Company had commitments to pay its unionized Team Members at a guaranteed volume greater that what it actually operated as a result of COVID-19.  Higher depreciation and amortization and other operating expense per ASM also contributed to the increase.

Liquidity and Capital Deployment
Spirit ended the first quarter 2020 with unrestricted cash, cash equivalents, and short-term investments of $894.4 million and an undrawn $110.0 million revolver.  On April 20, 2020, the revolver commitment was increased to $135 million, which was fully drawn during the month of April 2020.  In May, we received a commitment to increase the RCF by $30 million to $165 million effective May 18, 2020, subject to the satisfaction of certain conditions precedent.

Also on April 20, 2020, the Company entered into a PSP with the U.S. Department of the Treasury pursuant to which the Company expects to receive a total of approximately $335 million.  In April, the Company received $167 million of the PSP funds and expects to receive the balance of funds by July 2020. The PSP funds will be used exclusively to pay for salaries and benefits for the Company’s Team Members, and subject us to certain ongoing restrictions.  We expect to meet our cash needs for the next twelve months with cash and cash equivalents, financing arrangements, government assistance under the CARES Act, and cash flows from operations.

Operating activities in the three months ended March 31, 2020 provided $35 million in cash.  Capital expenditures during the first quarter 2020 were $195.4 million, partially offset by proceeds from issuance of long-term debt of $169.0 million related to aircraft purchases. The company took delivery of a total of six aircraft during the quarter; four of these were debt-financed and two were secured with direct operating leases.  The Company also purchased two aircraft off-lease resulting in payments of finance lease obligations of $24.8 million.  Debt payments during the first quarter 2020 were $62.9 million (principal, interest and fees).  Also during the first quarter 2020, the Company made pre-delivery payments of $123 million, and $2.9 million of capitalized interest for future deliveries of aircraft and spare engines.

“The rapid change in the economic environment and the substantial reduction in passenger demand led us to take quick and decisive actions to cut costs, preserve capital, and raise additional liquidity.  This is an unprecedented turn of events for Spirit and the entire airline industry, and I want to thank our Spirit team and let them know I appreciate their hard work and dedication to help preserve Spirit’s future.  We entered the crisis with a strong liquidity position and healthy balance sheet which will benefit us as we manage through low travel demand period,” said Scott Haralson, Spirit’s Chief Financial Officer.  “We estimate our current average daily cash burn rate3 is about $4 million and we are evaluating initiatives to further reduce that amount should demand not begin to rebound in the coming months. While we still have a lot of work ahead of us, I am confident that together we will leverage our resources and tools to reinforce our balance sheet and put us in the best position to navigate the economic downturn and prepare for the recovery period.”

As of March 31, 2020, we had approximately $900 million of unencumbered assets. As of April 30, 2020, approximately $250 million of these assets were pledged under the 2022 Revolving Credit Facility, leaving approximately $650 million of assets unencumbered, primarily consisting of aircraft.

In response to the impact from COVID-19, the Company has reduced planned discretionary capital spend in 2020 by approximately $50 million. The Company also is in discussions with Airbus to defer some 2020 and 2021 aircraft deliveries and related pre-delivery payments.  For comparison purposes, on February 5, 2020, the Company filed an 8-K in which it estimated purchase of property and equipment and net pre-delivery deposits (aircraft-related capital expenditures) would be approximately $710 million for 2020 and other capital expenditures would be approximately $110 million for 2020.

In addition to reducing its planned capital expenditures, the Company has deferred approximately $20 million of heavy maintenance events from 2020 to 2021.

Fleet
Spirit took delivery of six new Airbus A320neo aircraft during the first quarter 2020, ending the quarter with 151 aircraft in its fleet.

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 “Reconciliation of Adjusted Operating Expense to GAAP Operating Expense” table below for more details.
(3)  Estimated average daily cash burn rate is calculated as the sum of operating cash outflows, debt service, fleet capex net of financing and pre-delivery deposit payments which estimate has been based upon historical data for the months of March, April and May 2020.  It does not include the impact of any financings, capital raises, or the funds from PSP.

Spirit Airlines aircraft photo gallery:

Spirit Airlines expands efforts to bring Americans home with more humanitarian flights from Caribbean and Latin America

Spirit Airlines has made this announcement:

More than 1,300 people who were struggling to return to the United States from Colombia, Panama, Haiti, Aruba, the Dominican Republic, and Honduras are finally coming home, Spirit Airlines announced Wednesday. Over the past 13 days, the airline has organized flights to all six countries to pick up U.S. citizens, residents and family members who have been in limbo since flight restrictions went into effect in mid-March.

The announcement comes after weeks of careful coordination with U.S. embassies and local governments to obtain an exemption to those restrictions on international flights. Based in South Florida, Spirit is proud serve its Guests as a gateway to Latin America and the Caribbean, and the airline has already flown a total of eight flights bringing people back to the United States. The airline plans to operate additional flights based on embassy requests.

Flight Details
Route: Date:
Bogota (BOG) – Fort Lauderdale (FLL) Thur. April 2
Bogota (BOG) – Fort Lauderdale (FLL) Mon. April 6
Medellin (MDE) – Cartagena (CTG) – Fort Lauderdale (FLL) Mon. April 6
Cali (CLO) – Bogota (BOG) – Fort Lauderdale (FLL) Thur. April 9
Panama City (PTY) – Fort Lauderdale (FLL) Sat. April 11
Port-au-Prince (PAP) – Fort Lauderdale (FLL) Sat. April 11
Aruba (AUA) – Cartagena (CTG) – Fort Lauderdale (FLL) Wed. April 15
Bogota (BOG) – Fort Lauderdale (FLL) Wed. April 15
Cali (CLO) – Medellin (MDE) – Fort Lauderdale (FLL) Thur. April 16
Santo Domingo (SDQ) – Fort Lauderdale (FLL) Thur. April 16
Fort Lauderdale (FLL) – San Pedro Sula (SAP) – Fort Lauderdale (FLL) Sat. April 18
Medellin (MDE) – Fort Lauderdale (FLL) Tue. April 21
Bogota (BOG) – Fort Lauderdale (FLL) Wed. April 22
Cali (CLO) – Cartagena (CTG) – Fort Lauderdale (FLL) Thur. April 23

Guests make these trips on board one of Spirit’s signature bright yellow planes with every middle seat blocked off to improve social distancing. As these humanitarian flights continue, Spirit will be following health and safety guidelines from the Centers for Disease Control and Prevention (CDC) while remaining in close contact with authorities to ensure the safety of its Guests and Team Members.

Spirit’s repatriation efforts have been made possible by U.S. embassies in Colombia, Panama, Haiti, Aruba, the Dominican Republic, and Honduras. Guests needing to return home from an international destination should contact their country’s embassy in that location.

Spirit Airlines aircraft photo gallery:

Spirit Airlines to add international routes from New Orleans

Spirit Airlines has made this announcement:

Spirit Airlines is broadening The Crescent City’s international reach with two new destinations.

The nation’s fastest-growing airline will fly from Louis Armstrong New Orleans International Airport (MSY) to Cancun, Mexico (CUN) starting on June 10*. The next day, Spirit will inaugurate service to San Pedro Sula, Honduras (SAP)*.

The airline will also increase frequency to Orlando International Airport (MCO), with one additional daily flight, starting on April 22.

New Orleans is home to one of the largest Honduran populations in the United States. Spirit’s flights to San Pedro Sula’s Ramón Villeda Morales Airport will make it easier for people to visit their friends and family, along with making the city more accessible to tourists. Flights to San Pedro Sula will operate on Tuesday, Thursday and Sunday, with connecting options on other days of the week.

Spirit brought its low fares and bright-yellow planes to MSY in January 2013 with flights to Dallas/Fort Worth (DFW). Seven years later, the airline provides nonstop service from MSY to a total of 22 domestic and international destinations. Spirit’s investment in New Orleans turned it into the third-largest carrier in the city (measured by available seat miles). The airline served approximately 1.7 million Guests at MSY in 2019—a 20 percent increase year-over-year—with plans to keep growing in 2020.

New Orleans is the sixth city this year to gain flights to Cancun on Spirit Airlines. Flights are scheduled four times per week: Monday, Wednesday, Friday, and Saturday, with connecting options available on the other days of the week.

Routes & Frequencies
New Orleans (MSY) to/from: Effective: Frequency:
Orlando (MCO) April 22, 2020 2x Daily
Cancun (CUN) June 10, 2020 4x Weekly
San Pedro Sula (SAP) June 11, 2020 3x Weekly
Atlanta (ATL) Now 1x Daily
Austin (AUS) Now 1x Daily
Nashville (BNA) Now 1x Daily
Boston (BOS) Now 1x Daily
Baltimore (BWI) Now 1x Daily
Cleveland (CLE) Now 3x Weekly
Columbus (CMH) Now 3x Weekly
Dallas/Fort Worth (DFW) Now 1x Daily
Detroit (DTW) Now 1 – 2x Daily
Newark (EWR) Now 1x Daily
Fort Lauderdale (FLL) Now 2 – 3x Daily
Houston (IAH) Now 1x Daily
Las Vegas (LAS) Now 1x Daily
Los Angeles (LAX) Now 1x Daily
Minneapolis (MSP) Now 4x Weekly
Chicago O’Hare (ORD) Now 1 – 2x Daily
Philadelphia (PHL) Now 4x Weekly
Raleigh-Durham (RDU) Now 1x Daily
Tampa (TPA) Now 1x Daily

 

*Subject to government approval

Spirit Airlines aircraft photo gallery:

Spirit Airlines to move its Operational Control Center from Miramar, FL to the Nashville area

Delivered on February 2, 2019

Spirit Airlines has made this announcement:

America’s fastest-growing airline is expanding behind the scenes to support its growing operation and set the stage for future expansion. Spirit Airlines will bolster network resiliency and reduce hurricane and tropical storm risk by bringing more than 240 Team Members from its Operational Control Center (OCC) in Miramar, Fla., to a nearly 49,000-square-foot facility in Williamson County, Tennessee. The transition is scheduled to be completed by early 2021, and Spirit also plans to add nearly 100 more positions at the OCC over the next five years.

The OCC controls round-the-clock flight operations for more than 650 flights each day across the U.S., Latin America and the Caribbean. Team Members are responsible for flight dispatch, crew scheduling, maintenance control, aircraft routing, air traffic control coordination, Guest solutions and more. Spirit’s operations team is instrumental in the airline’s commitment to invest in the Guest experience and deliver the Best Value in the Sky. Spirit secured industry acclaim as the country’s most on-time Low Cost Airline by Flight Global, as well as international recognition as the Low Cost Airline of the Year at the CAPA World Aviation Summit and Air Transport World’sValue Airline of the Year. Spirit’s OCC team efforts have helped the airline achieve among the best on-time performance for the past two years.

The Music City came out on top in a nationwide search due to its geographic location, business climate and growing aviation sector. Spirit started Nashville service in October 2019 with new nonstop flights to Baltimore/Washington (BWI), Fort Lauderdale (FLL), Las Vegas (LAS), New Orleans (MSY), Orlando (MCO) and Tampa (TPA). Soon, Nashville gets even More Go with the upcoming launch of nonstop flights to Austin (AUS), Newark (EWR), Los Angeles (LAX) and Cancun (CUN).

More than 700 of Spirit’s Miramar-based Team Members will move into the airline’s new corporate headquarters (below) scheduled to open near the Fort Lauderdale-Hollywood International Airport in 2022. The airline also plans to add an additional 225 positions at the new HQ to support Spirit’s expanding domestic and international operations.

 

The OCC move coincides with Spirit’s plan to double its all-Airbus fleet to about 300 aircraft over the next five years. The airline recently finalized an order for the delivery of 100 new Airbus A320neo Family Aircraft through 2027.

Top Copyright Photo: Spirit Airlines Airbus A320-271N WL N907NK (msn 8275) FLL (Andy Cripps). Image: 949114.

Spirit Airlines aircraft slide show:

 

Spirit Airlines becomes Fort Lauderdale’s largest international airline

Spirit Airlines has made this announcement:

Spirit Airlines is scheduling additional flights every day from some of Central and South Florida’s most popular destinations.

In all, Florida’s Hometown Airline plans to inaugurate or upgrade the frequency of flights on 16 routes from Fort Lauderdale-Hollywood International Airport (FLL) and Orlando International Airport (MCO). The changes will begin April 1, 2020 and continue rolling out through July.

New Service
Fort Lauderdale (FLL) to/from: Effective: Frequency:
Oakland (OAK) April 1, 2020 Daily
Extensions & Additional Frequencies
Fort Lauderdale (FLL) to/from: Effective: Frequency:
Guatemala City (GUA) April 22, 2020 Up to 2 Daily*
Myrtle Beach (MYR) April 22, 2020 2x Daily
New Orleans (MSY) April 22, 2020 2x Daily**
Philadelphia (PHL) April 22, 2020 4x Daily
San Salvador (SAL) April 23, 2020 Up to 2 Daily*
St. Croix (STX) June 10, 2020 Daily
Atlantic City (ACY) July 9, 2020 3x Daily
Detroit (DTW) July 9, 2020 3x Daily
Orlando (MCO) to/from: Effective: Frequency:
Medellín (MDE) April 22, 2020 3x Weekly
New York LaGuardia (LGA) April 22, 2020 1x Daily***
Raleigh-Durham (RDU) April 22, 2020 2x Daily
Atlantic City (ACY) July 9, 2020 Up to 3 Daily
Guatemala City (GUA) July 9, 2020 Daily*
Kansas City (MCI) July 9, 2020 Up to 2 Daily
Pittsburgh (PIT) July 9, 2020 2x Daily

Fort Lauderdale’s growth includes additional flights to Guatemala City (GUA), San Salvador (SAL) and St. Croix (STX), which will cement Spirit’s lead as the airport’s largest carrier to the Caribbean and Latin America. The airline surpassed JetBlue in terms of available seats to the region in January 2020, with nonstop service to 28 destinations.

*Requires government approval
**3x daily spring seasonal
***Upgraded from seasonal

Spirit Airlines aircraft photo gallery:

Routes from FLL:

Spirit Airlines reports fourth quarter and full year 2019 results

Spirit Airlines, Inc. has reported fourth quarter and full year 2019 financial results.

Fourth Quarter 2019 Fourth Quarter 2018
As Reported Adjusted As Reported Adjusted
(GAAP) (non-GAAP)1 (GAAP) (non-GAAP)1
Revenue $969.8 million $969.8 million $862.8 million $862.8 million
Operating Income $124.6 million $129.6 million $136.1 million $139.3 million
Operating Margin 12.9% 13.4% 15.8% 16.2%
Net Income $81.2 million $85.0 million $91.9 million $94.7 million
Diluted EPS $1.18 $1.24 $1.34 $1.38

“2019 was a year of many accomplishments for Spirit.  Our improving operational reliability, and the investments we’re making to provide our Guests the best value in the sky are being noticed by our Guests and earning us international acclaim.  We once again achieved a fourth-place ranking for on-time performance among reporting U.S. carriers2.  Spirit also recently received several global recognitions:  Low-Cost Airline of the Year at the CAPA World Aviation Summit; Value Airline of the Year by Air Transport World; and, most on-time Low Cost Airline by Flight Global.  Our team also delivered strong financial results for 2019.  For the full year 2019, our GAAP pre-tax earnings increased 112.9 percent year over year.  Excluding special items, our Adjusted pre-tax earnings increased 15.3 percent year over year1,” said Ted Christie, Spirit’s President and Chief Executive Officer.  “I am very proud of the Spirit team for these accomplishments.  Looking ahead to 2020, we are focused on running a safe and reliable airline, leveraging technology and automation to drive further efficiencies, and executing on our revenue initiatives to deliver strong returns for our shareholders.”

 

Revenue Performance
For the fourth quarter 2019, Spirit’s total operating revenue was $969.8 million, an increase of 12.4 percent compared to the fourth quarter 2018, driven by an 18.6 percent increase in flight volume.  Fourth quarter 2019 revenue includes approximately $7.2 million of out-of-period revenue related to the reclamation of over-remitted Federal Excise Tax.

Total operating revenue per available seat mile (“TRASM”) for the fourth quarter 2019 decreased 3.6 percent compared to the same period last year.  Without the out-of-period revenue, the Company estimates its fourth quarter 2019 TRASM would have been down about 4.3 percent year-over-year.  The decrease in TRASM was driven by lower operating yields, as load factor for the period was up slightly.

On a per passenger flight segment (“PFS”) basis, for the fourth quarter 2019 total revenue per PFS decreased 5.5 percent year over year, to $110.71, non-ticket revenue per PFS increased 2.3 percent to $58.033, and fare revenue per PFS decreased 12.9 percent to $52.68.

Cost Performance
For the fourth quarter 2019, total GAAP operating expenses increased 16.3 percent year over year to $845.2 million.  Adjusted operating expenses for the fourth quarter 2019 increased 16.1 percent year over year to $840.2 million4. Primary drivers of the increase in adjusted operating expense compared to the fourth quarter last year include increased flight volume and higher ground handling rates.

Aircraft fuel expense increased in the fourth quarter 2019 by 6.7 percent year over year, due to a 14.8 percent increase in fuel gallons consumed, partially offset by a 7.1 percent decrease in fuel rates.

Spirit reported fourth quarter 2019 cost per available seat mile (“ASM”), excluding operating special items and fuel (“Adjusted CASM ex-fuel”), of 5.67 cents4, up 3.3 percent compared to the same period last year.  Primary drivers of the increase on a per ASM basis compared to the same period last year included heavy maintenance amortization, maintenance, material and repairs and other operating expenses.

“Our team did a great job recovering from the operational issues we faced in the summer and finished the year 2019 with strong operational results.  Strong operational performance is key to our continued good cost management and we believe we are well-positioned as we enter 2020.  As we’ve noted previously, we have several inflationary pressures we are facing such that we expect our 2020 CASM ex-fuel to increase 1 to 2 percent year over year.  From a timing perspective, we face the toughest hurdle in the first quarter, but we anticipate the headwinds will ease as we progress through the year.  And, while we already have one of the most fuel-efficient fleets in the U.S., with our growing fleet of A320neo aircraft we should see even greater fuel efficiency this year, helping us offset some Adjusted CASM ex-fuel pressure,” said Scott Haralson, Spirit’s Chief Financial Officer.

Liquidity
Spirit ended the year with unrestricted cash, cash equivalents, and short-term investments of $1.1 billion.  For the twelve months ended December 31, 2019, Spirit generated $409.2 million of operating cash flow.  After investing $294.5 million for aircraft purchases and pre-delivery deposits, and receiving $225.9 million of proceeds from issuance of long-term debt, Adjusted free cash flow for the twelve months ended December 31, 2019 was $340.6 million5.  For the twelve months ended December 31, 2019, net cash used in financing activities was $120.2 million.

Fleet
Spirit took delivery of nine new aircraft (seven A320neo and two A320ceo) during the fourth quarter 2019, ending the year with 145 aircraft in its fleet.

Full Year 2019 Highlights

  • Launched service to the following new destinations: Austin, Burbank, Charlotte-Douglas, Indianapolis, Nashville, Raleigh-Durham and Sacramento.
  • Received global recognition as the Low-Cost Airline of the Year at the CAPA (Centre for Aviation) World Aviation Summit. CAPA, part of the Aviation Week Network, is one of the world’s most trusted sources of market intelligence for the aviation and travel industry.
  • Continued its commitment to invest in the Guest experience with an industry-leading technology to connect with its Guests via the messaging application WhatsApp.
  • Unveiled new, ergonomic and more comfortable seats that provide additional usable legroom as well as added comfort to its Big Front Seats, making the best value in the sky even better.
  • Announced a new $250 million global headquarters investment at a new campus in Dania Beach, Florida.
  • Announced an order for 100 Airbus A320neo Family Aircraft, with an option to purchase up to 50 more, to support the airline’s growth and sustain one of the youngest, most fuel-efficient fleets in the U.S.  These aircraft are planned for delivery through 2027.

Spirit Airlines aircraft photo gallery:

Route Map:

Spirit Airlines to launch Oakland – Fort Lauderdale/Hollywood flights

Spirit Airlines is adding Oakland (OAK) nonstop service to and from Fort Lauderdale/Hollywood (FLL) on April 1, making Spirit the only airline flying OAK to FLL nonstop.

Spirit started Oakland service in 2011 with a single flight to Las Vegas (LAS) and grew to third place among Oakland’s largest carriers. The new Fort Lauderdale flight joins existing service to Chicago (ORD), Detroit (DTW), Houston (IAH) and Los Angeles (LAX), along with what’s become four daily flights to Las Vegas.

Oakland (OAK) to/from: Effective: Frequency:
Fort Lauderdale (FLL) April 1, 2020 Daily, seasonal
Chicago (ORD) Now Daily, seasonal
Detroit (DTW) Now Daily, seasonal
Houston (IAH) Now Daily, seasonal
Las Vegas (LAS) Now 4x daily
Los Angeles (LAX) Now 2x daily

Spirit Airlines aircraft photo gallery: