Spirit Airlines Reports Second Quarter 2021 Results

MIRAMAR, Fla., July 28, 2021 /PRNewswire/ — Spirit Airlines, Inc. (NYSE: SAVE) today reported second quarter 2021 financial results. …

MIRAMAR, Fla., July 28, 2021 /PRNewswire/ — Spirit Airlines, Inc. (NYSE: SAVE) today reported second quarter 2021 financial results.

Ended the second quarter 2021 with $2.2 billion of unrestricted cash, cash equivalents, short-term investment securities and liquidity available under the Company’s revolving credit facility


As Reported


Second Quarter 2021    

Second Quarter 2020

Second Quarter 2019

Total Operating Revenues

$859.3 million

$138.5 million

$1,013.0 million

Pre-tax Income (Loss)

$(273.3) million

$(212.5) million

$148.6 Million

Net Income (Loss)

$(287.9) million

$(144.4) million

$114.5 million

Diluted Earnings (Loss) Per Share

$(2.73)

$(1.81)

$1.67







Adjusted1 Second



Second Quarter 2021

Quarter 2020

Second Quarter 2019

Adjusted EBITDA

$62.1 million

$(273.2) million

$220.4 million

Adjusted EBITDA Margin

7.2%

(197.2)%

21.8%

Adjusted Pre-tax Income (Loss)

$(44.7) million

$(364.4) million

$150.1 million

Adjusted Net Income (Loss)

$(36.3) million

$(285.8) million

$115.7 million

Adjusted Net Income (Loss) Per Share, Diluted

$(0.34)

$(3.59)

$1.69

«I thank our Team Members for their outstanding efforts as we work toward bringing our level of operations up to full utilization. In June 2021, we recorded our first month with adjusted net earnings since the onset of the COVID-19 pandemic. Due to our strategic execution and improving demand backdrop, our second quarter 2021 financial results were among the best in the industry,» said Ted Christie, Spirit’s President and Chief Executive Officer. «We remain very well-positioned to stimulate markets and capture the significant market opportunities in the domestic U.S. and near-field international marketplace.»

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 Quarterly Report on Form 10-Q for the period ending June 30, 2021 for additional disclosures regarding these measures.

The Company believes that providing analysis of financial and operational performance compared to second 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.

Capacity and Operations

Load factor for the second quarter 2021 was 84.4 percent, down 0.6 percentage points compared to the second quarter 2019. Capacity for the second quarter 2021 was down 5.1 percent compared to the second quarter 2019.

During the second quarter 2021, numerous weather systems impacted the Company’s network. Despite the adverse weather conditions, Spirit maintained its strong operational reliability and achieved a DOT on-time performance2 of 78.3 percent and a Completion Factor2 of 99.3 percent.

Revenue Performance

Total operating revenues for the second quarter 2021 were $859.3 million, a decrease of 15.2 percent versus second quarter 2019. Although load factors for the second quarter 2021 were in line with pre- pandemic levels, total operating yields were down 10.0 percent compared to the second quarter 2019. However, demand trends in Spirit’s domestic and international markets saw marked improvement as the second quarter 2021 progressed such that June 2021 operating yields were about flat compared to June 2019. Compared to the first quarter 2021, improvement in operating yields helped to drive an 86.3 percent sequential improvement in total revenues relative to only a 28 percent increase in capacity.

For the second quarter 2021, total revenue per passenger flight segment («Segment») decreased 9.4 percent compared to the same period in 2019 to $102.48. Fare revenue per Segment decreased 23.5 percent compared to the second quarter 2019 to $44.09. The Company continues to drive improvements in non-ticket revenue per Segment. Non-ticket revenue per Segment increased $2.85 compared to the second quarter 2019 to $58.393. Enhanced product offerings, improved merchandising and realized benefits from revenue management contributed to these results.

Cost Performance

For the second quarter 2021, total GAAP operating expenses decreased 9.8 percent compared to the second quarter 2019 to $766.1 million, primarily due to the grant component of the funding received through the payroll support program (further discussed below). Adjusted operating expenses for the second quarter 2021 increased 2.6 percent compared to the second quarter 2019 to $869.2 million4. Excluding fuel, adjusted operating expenses came in better than expected primarily due to a) strong operational performance resulting in better crew utilization and less passenger disruption expense; b) airport use fees increasing at a slightly slower rate than initially assumed as the industry returned capacity to the marketplace; and c) timing of events. Compared to the second quarter 2019, adjusted operating expenses excluding fuel increased 12.3 percent4, driven primarily by higher salaries, wages and benefits, higher depreciation and amortization, and higher landing fees and other rents. Compared to the second quarter 2019 the increase in salaries, wages and benefits was primarily driven by a 24 percent increase in the number of pilots, a 14 percent increase in the number of flight attendants, and inflationary rate pressures. Higher depreciation and amortization expense compared to the second quarter 2019 was driven by the purchase of additional aircraft and the amortization of heavy maintenance events. Additionally, the increase in landing fees and other rents was due to higher average rates, driven by inflationary pressures as well as increased market share at certain airports where other airlines have decreased flying due to the impact of COVID-19 on demand.

«I want to thank our team members for taking care of our Guests by running a great airline this quarter. As we have begun to ramp the airline for growth, our team has once again proven to be up to the challenge. With our strategic deployment of assets, an improving demand environment and our strong operational results, we were one of the few airlines to produce positive adjusted EBITDA in the second quarter. We continue to be emboldened by the value of the ultra-low-cost model, our valuable network, and our strong operational performance,» said Scott Haralson, Spirit’s Chief Financial Officer. «These pillars create a strong platform for us to continue to drive sustainable, long-term value for our shareholders.»

Fleet

Spirit took delivery of five new A320neo aircraft during the second quarter 2021, three of which were financed through direct operating leases, and two under sale lease back transactions. In addition, the Company purchased two A319ceo aircraft off lease. The Company ended the quarter with 164 aircraft in its fleet.

Liquidity and Capital Deployment

Spirit ended second quarter 2021 with unrestricted cash, cash equivalents, short-term investment securities and liquidity available under the Company’s revolving credit facility of $2.2 billion.

Total capital expenditures for the second quarter 2021 were approximately $168 million, primarily related to pre-delivery deposits associated with future aircraft deliveries and the purchase of two A319 aircraft off lease.

To improve its liquidity and financial position, during the second quarter 2021, the Company entered into a series of liability management transactions given the favorable market dynamics:

  • The Company completed a registered direct placement of 10,594,073 shares of its common stock to holders of its 4.75% Convertible Senior Notes due 2025 (the «2025 Convertible Notes») at a price of $35.05 per share for aggregate net proceeds of $370.8 million. Spirit used $368.7 million of the net proceeds from the offering to redeem $340.0 million aggregate principal amount of its $850.0 million of 8.00% Senior Secured Notes due 2025 («8.00% Senior Secured Notes»), at a premium of $27.2 million plus accrued and unpaid interest of $1.5 million. As a result, $510.0 million in 8.00% Senior Secured Notes remain outstanding. In connection with this debt extinguishment, the Company recorded $36.4 million within loss on extinguishment of debt on its condensed consolidated statement of operations in second quarter 2021. This amount includes the $27.2 million in premiums paid to early extinguish the debt, $6.1 million for the write-off of related deferred financing costs and $3.1 million for the write-off of the related original issuance discount.
  • The Company issued $500.0 million aggregate principal amount of 1.00% Convertible Senior Notes due 2026 (the «2026 Convertible Notes») for aggregate net proceeds of $486.8 million. Net proceeds from this transaction were used to repurchase $146.8 million aggregate principal amount of the 2025 Convertible Notes, for a premium of $290.7 million plus accrued and unpaid interest of $3.2 million. As a result, $28.2 million aggregate principal amount of the 2025 Convertible Notes remain outstanding. In connection with this debt extinguishment, the Company recorded $295.2 million within loss of extinguishment of debt on its condensed consolidated statement of operations in second quarter 2021. This amount includes the $290.7 million in premiums paid to early extinguish the debt and $4.5 million for the write-off of related deferred financing costs.
  • Additionally, the Company repaid all outstanding indebtedness under its Senior Secured Revolving Credit Facility (the «Revolver») due March 2024. As of June 30, 2021, the Company had no outstanding indebtedness under its Revolver which has a total of $240 million in available capacity.

As previously disclosed, as part of the extension of the payroll support program (the «PSP3») under Title VII, Subtitle C of The American Rescue Plan of 2021, on April 29, 2021, Spirit entered into a new payroll support program agreement with the United States Department of the Treasury («Treasury»), pursuant to which the Company received a total of $197.9 million to be used exclusively to pay for salaries, wages and benefits for the Company’s Team Members through September 30, 2021. Of that amount, $29.4 million is in the form of a low-interest 10-year loan. In connection with the Company’s participation in the PSP3, on June 3, 2021, the Company issued a warrant to the U.S. Treasury to purchase up to 80,539 shares of the Company’s common stock, (the «Warrant»), in a private placement exempt from the registration requirements of the Securities Act of 1933, as amended. The Warrant may be exercised at an exercise price of $36.45 at any time prior to the fifth anniversary of its issuance. The remaining amount of $167.0 million, net of related costs, is in the form of a grant of which $80.6 million was recognized in special credits in the Company’s condensed consolidated statement of operations and $86.4 million remains within deferred salaries, wages and benefits in the Company’s consolidated condensed balance sheet as of June 30, 2021. Total warrants issued in connection with the PSP, PSP2 and PSP3 represent less than 1.0 percent of the outstanding shares of the Company’s common stock as of June 30, 2021. In addition, on April 29, 2021, the Company received an additional $27.7 million pursuant to the PSP2 program.

Tax Rate

On a GAAP basis, the Company’s effective tax rate for the second quarter 2021 was (5.3) percent, materially lower than the Company’s historic average GAAP tax rate. This lower-than-usual GAAP tax rate was primarily driven by an unfavorable permanent tax adjustment related to the repurchase of a portion of the Company’s 2025 Convertible Notes during the quarter. This unfavorable permanent tax adjustment, along with other special items, were excluded in calculating the Company’s non-GAAP tax rate of 18.9 percent.

Forward Looking Guidance

The third quarter and full year 2021 guidance items provided below are based on the Company’s current estimates, and are not a guarantee of future performance. There could be significant risks and uncertainties that could cause actual results to differ materially, including the risk factors discussed in the Company’s reports on file with the Securities and Exchange Commission. Spirit undertakes no duty to update any forward-looking statements or estimates.


Third Quarter 2021

Adjusted Operating Expenses ($Millions)(1)

$1,000 to $1,010

Adjusted EBITDA Margin (%)(1)

10% to 15%

Fuel Cost per Gallon ($)(2)

$2.14

Effective Tax Rate(1)

25%


Full Year 2021

Total Capital Expenditures ($Millions)(3)


Pre-delivery deposits, net of refunds

$120

Aircraft and engine purchases

$70

Other capital expenditures

$100




1Q2021A

2Q2021A

3Q2021E

4Q2021E

FY2021E

Available Seat Miles % Change vs. 2019(4)

(18.9)%

(5.1)%

10.6%

23.0%

2.7%







Wtd. Average Shares, Basic (Millions)

97.8

105.3

108.4

108.4

105

Diluted Share Count:

For periods beyond second quarter 2021, if the Company is profitable and its average share price for the period is less than $49.07, the Company estimates its weighted average diluted shares outstanding will be 110.6 million, plus the dilutive impact, if any, from outstanding equity awards and warrants. The Treasury Stock Method will be used to determine the dilutive impact of any outstanding equity awards and warrants. The estimated 110.6 million includes the dilutive impact of approximately 2.2 million shares that may be issued in connection with the 2025 Convertible Notes outstanding.

If the Company is profitable and the average stock price for the period is greater than $49.07, the calculation to compute the dilutive impact, if any, from the 2026 Convertible Notes outstanding is as follows: ((average share price – strike price) x 10.2 million) divided by average share price. This amount would then be added to the estimated 110.6 million shares noted above plus the dilutive impact from any outstanding equity awards and warrants to determine the period’s average diluted share count.

(1)

Excludes special items which may include loss on disposal of assets, special charges and credits, and other items which are not estimable at this time.

(2)

Includes fuel taxes and into-plane fuel cost.

(3)

Total Capital Expenditures assumes all new aircraft deliveries are either delivered under direct leases or financed through Sale leaseback transactions. The estimate for aircraft and engine purchases includes the purchase of four aircraft off lease and the purchase of spare engines.

(4)

The Company expects that air travel demand will continue to gradually recover in 2021 and continues to closely monitor demand and will make adjustments to the flight schedule as appropriate. However, the situation continues to be fluid and actual capacity adjustments may be different than what the Company currently expects.

Second Quarter 2021 Highlights

  • In April 2021, Spirit began operating flights out of a second terminal at LaGuardia Airport and added new routes through LaGuardia Airport to San Juan, Nashville and Los Angeles
  • Spirit added four destinations served from Kansas City. The new destinations nearly double the airline’s list of cities served from Kansas City. Spirit also added international service at Los Angeles with the additions of Los Cabos & Puerto Vallarta
  • Spirit announced it is expanding its footprint in South Florida by adding Miami to its route map with service to 30 domestic and international destinations. This new service out of Miami International Airport will supplement Spirit’s existing service at Fort Lauderdale-Hollywood International Airport to support its rapid growth in response to the strong demand for travel to and from South Florida. In addition, the Company announced new service to Manchester, New Hampshire and launched operations in Louisville, Kentucky; Milwaukee, Wisconsin; Pensacola, Florida; and St. Louis, Missouri
  • The American Red Cross of Broward County presented Spirit with the Corporate Partner of the Year Award. The organization gives the award to one corporate partner each year and chose to recognize Spirit’s partnership and contributions for 2020
  • Spirit was recognized by Forbes as one of America’s best companies for diversity, equity and inclusion. Forbes’ fourth annual list of America’s Best Employers For Diversity ranks the 500 employers that boast the most diverse boards and executive ranks, as well as the most proactive diversity and inclusion initiatives
  • Spirit was a Gold Stevie winner from the Transportation category for its Self-Bag Drop and Biometric technology

Conference Call/Webcast Detail

Spirit will conduct a conference call to discuss these results tomorrow, July 29, 2021, at 10:00 a.m. Eastern US Time. A live audio webcast of the conference call will be available to the public on a listen- only basis at http://ir.spirit.com. An archive of the webcast will be available under «Events & Presentations» for 60 days.

About Spirit Airlines

Spirit Airlines (NYSE: SAVE) is committed to delivering the best value in the sky. We are the leader in providing customizable travel options starting with an unbundled fare. This allows our Guests to pay only for the options they choose — like bags, seat assignments and refreshments — something we call À La Smarte. We make it possible for our Guests to venture further and discover more than ever before. Our Fit Fleet® is one of the youngest and most fuel-efficient in the U.S. We serve destinations throughout the U.S., Latin America and the Caribbean and are dedicated to giving back and improving those communities. Come save with us at spirit.com. At Spirit Airlines, we go. We go for you. Investors are encouraged to read the Company’s periodic and current reports filed with or furnished to the Securities and Exchange Commission, including its Annual Report on Form 10-K, Quarterly Reports on Form 10-Q, and Current Reports on Form 8-K, for additional information regarding the Company.

End Notes

(1)

See «Reconciliation of Adjusted EBITDA to GAAP Net Income» and «Reconciliation of Adjusted Net Income, Adjusted Pre-tax Income, and Adjusted Operating Income to GAAP Net Income» tables below for more details.

(2)

Based on preliminary data using DOT methodology for on-time performance (A:14) and completion factor.

(3)

See «Calculation of Total Non-Ticket Revenue per Passenger Flight Segment» table below for more details.

(4)

See «Reconciliation of Adjusted Operating Expenses to GAAP Operating Expenses» table below for more details.

Forward Looking Statements

Forward-Looking Statements in this report and certain oral statements made from time to time by representatives of the Company contain various forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended (the Securities Act), and Section 21E of the Securities Exchange Act of 1934, as amended (the Exchange Act) which are subject to the «safe harbor» created by those sections. Forward-looking statements are based on our management’s beliefs and assumptions and on information currently available to our management. All statements other than statements of historical facts are «forward-looking statements» for purposes of these provisions. In some cases, you can identify forward-looking statements by terms such as «may,» «will,» «should,» «could,» «would,» «expect,» «plan,» «anticipate,» «believe,» «estimate,» «project,» «predict,» «potential,» and similar expressions intended to identify forward-looking statements. Forward-looking statements include, without limitation, guidance for 2021 and statements regarding the Company’s intentions and expectations regarding revenues, cash burn, capacity and passenger demand, additional financing, capital spending, operating costs and expenses, taxes, EBITDA, EBITDA margin, hiring, aircraft deliveries and stakeholders, vendors and government support. Such forward-looking statements are subject to risks, uncertainties and other important factors that could cause actual results and the timing of certain events to differ materially from future results expressed or implied by such forward-looking statements. Factors include, among others, the extent of the impact of the COVID-19 pandemic on the Company’s business, results of operations and financial condition, and the extent of the impact of the COVID-19 pandemic on overall demand for air travel, restrictions on the Company’s business by accepting financing under the CARES Act and other related legislation, the competitive environment in our industry, our ability to keep costs low and the impact of worldwide economic conditions, including the impact of economic cycles or downturns on customer travel behavior, and other factors, as described in the Company’s filings with the Securities and Exchange Commission, including the detailed factors discussed under the heading «Risk Factors» in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2020, as supplemented in the Company’s Quarterly Report on Form 10-Q for the fiscal quarters ended March, 31, 2021, and June, 30, 2021. Furthermore, such forward-looking statements speak only as of the date of this release. Except as required by law, we undertake no obligation to update any forward-looking statements to reflect events or circumstances after the date of such statements. Risks or uncertainties (i) that are not currently known to us, (ii) that we currently deem to be immaterial, or (iii) that could apply to any company, could also materially adversely affect our business, financial condition, or future results. Additional information concerning certain factors is contained in the Company’s Securities and Exchange Commission filings, including but not limited to the Company’s Annual Report on Form 10-K, Quarterly Reports on Form 10-Q, and Current Reports on Form 8-K.                                                                   


SPIRIT AIRLINES, INC.

Condensed Consolidated Statements of Operations

(unaudited, in thousands, except per-share amounts)



Three Months Ended

June 30,


Percent Change


2021

2020

2019


2021 vs. 2020 

2021 vs. 2019

Operating revenues:







Passenger

$ 846,507

$ 130,817

$ 994,430


547.1

(14.9)

Other

12,802

7,712

18,526


66.0

(30.9)

Total operating revenues

859,309

138,529

1,012,956


520.3

(15.2)








Operating expenses:







Salaries, wages and benefits

257,236

213,579

216,375


20.4

18.9

Aircraft fuel

214,825

19,910

265,006


979.0

(18.9)

Depreciation and amortization (1)

73,703

69,113

54,913


6.6

34.2

Landing fees and other rents

81,497

40,348

64,711


102.0

25.9

Aircraft rent (2)

64,641

49,256

46,522


31.2

38.9

Maintenance, materials and repairs

39,639

19,227

34,688


106.2

14.3

Distribution

35,263

11,352

40,602


210.6

(13.1)

Loss on disposal of assets

189

1,550


NM

NM

Special credits

(115,002)

(151,911)


NM

NM

Other operating (3)

114,107

58,039

124,651


96.6

(8.5)

Total operating expenses

766,098

328,913

849,018


132.9

(9.8)








Operating income (loss)

93,211

(190,384)

163,938


(149.0)

(43.1)








Other (income) expense:







Interest expense

39,662

27,792

25,266


42.7

57.0

Loss on extinguishment of debt

331,630


NM

NM

Capitalized interest

(4,631)

(3,757)

(2,975)


23.3

55.7

Interest income

(373)

(1,949)

(7,066)


(80.9)

(94.7)

Other (income) expense

233

66

144


NM

NM

Total other (income) expense

366,521

22,152

15,369


1,554.6

2284.8








Income (loss) before income taxes

(273,310)

(212,536)

148,569


28.6

(284.0)

Provision (benefit) for income taxes

14,553

(68,108)

34,068


(121.4)

(57.3)








Net income (loss)

$ (287,863)

$ (144,428)

$ 114,501


99.3

(351.4)

Basic earnings (loss) per share

$        (2.73)

$        (1.81)

$        1.67


50.8

(263.5)

Diluted earnings (loss) per share

$        (2.73)

$        (1.81)

$        1.67


50.8

(263.5)








Weighted-average shares, basic

105,258

79,601

68,439


32.2

53.8

Weighted-average shares, diluted

105,258

79,601

68,620


32.2

53.4

NM: «Not Meaningful»


(1)     Includes accelerated depreciation amounts. See Special Items table for more details.

(2)     Includes supplemental rent adjustments. See Special Items table for more details.

(3)     Includes Federal excise tax recovery amounts. See Special Items table for more details.

 


 

SPIRIT AIRLINES, INC.

Condensed Consolidated Statements of Operations

(unaudited, in thousands, except per-share amounts)






Six Months Ended

June 30,


Percent Change


2021

2020

2019


2021 vs. 2020

 2021 vs. 2019

Operating revenues:


Passenger

$1,296,842

$ 884,367

$1,832,495


46.6

(29.2)

Other

23,746

25,243

36,257


(5.9)

(34.5)

Total operating revenues

1,320,588

909,610

1,868,752


45.2

(29.3)








Operating expenses:







Salaries, wages and benefits

502,928

454,059

420,276


10.8

19.7

Aircraft fuel

357,755

233,118

494,642


53.5

(27.7)

Depreciation and amortization (1)

148,015

135,104

105,639


9.6

40.1

Landing fees and other rents

153,605

107,469

124,360


42.9

23.5

Aircraft rent (2)

119,423

94,402

92,304


26.5

29.4

Maintenance, materials and repairs

69,542

53,303

66,292


30.5

4.9

Distribution

58,905

45,095

76,321


30.6

(22.8)

Loss on disposal of assets

1,306

3,463


NM

NM

Special credits

(291,940)

(151,911)


NM

NM

Other operating (3)

210,368

187,347

233,713


12.3

(10.0)

Total operating expenses

1,329,907

1,157,986

1,617,010


14.8

(17.8)








Operating income (loss)

(9,319)

(248,376)

251,742


(96.2)

(103.7)








Other (income) expense:







Interest expense

84,468

51,670

50,237


63.5

68.1

Loss on extinguishment of debt

331,630


NM

NM

Capitalized interest

(9,363)

(7,421)

(5,532)


26.2

69.3

Interest income

(4,744)

(5,542)

(13,990)


(14.4)

(66.1)

Other (income) expense

181

47

377


NM

NM

Total other (income) expense

402,172

38,754

31,092


937.8

1193.5








Income (loss) before income taxes

(411,491)

(287,130)

220,650


43.3

(286.5)

Provision (benefit) for income taxes

(11,307)

(114,874)

50,073


(90.2)

(122.6)








Net income (loss)

$ (400,184)

$ (172,256)

$ 170,577


132.3

(334.6)

Basic earnings (loss) per share

$        (3.94)

$        (2.33)

$         2.49


69.1

(258.2)

Diluted earnings (loss) per share

$        (3.94)

$        (2.33)

$         2.49


69.1

(258.2)








Weighted-average shares, basic

101,537

74,061

68,410


37.1

48.4

Weighted-average shares, diluted

101,537

74,061

68,568


37.1

48.1


NM: «Not Meaningful»


(1) Includes accelerated depreciation amounts. See Special Items table for more details.

(2) Includes supplemental rent adjustments. See Special Items table for more details.

(3) Includes Federal excise tax recovery amounts. See Special Items table for more details.

 

SPIRIT AIRLINES, INC.

Selected Operating Statistics

(unaudited)






Three Months Ended June 30,  


Percent Change

Operating Statistics

2021

2020

2019


2021 vs. 2020

2021 vs. 2019

Available seat miles (ASMs) (thousands)

10,226,746

1,809,874

10,775,878


465.1

%

(5.1)

%

Revenue passenger miles (RPMs) (thousands)

8,635,827

894,900

9,157,488


865.0

%

(5.7)

%

Load factor (%)

84.4

49.4

85.0


35.0

pts

(0.6)

pts

Passenger flight segments (thousands)

8,385

900

8,953


831.7

%

(6.3)

%

Block hours

143,635

27,423

157,182


423.8

%

(8.6)

%

Departures

53,984

10,754

58,517


402.0

%

(7.7)

%

Total operating revenue per ASM (TRASM) (cents)

8.40

7.65

9.40


9.8

%

(10.6)

%

Average yield (cents)

9.95

15.48

11.06


(35.7)

%

(10.0)

%

Fare revenue per passenger flight segment ($)

44.09

70.82

57.60


(37.7)

%

(23.5)

%

Non-ticket revenue per passenger flight segment ($)

58.39

83.03

55.54


(29.7)

%

5.1

%

Total revenue per passenger flight segment ($)

102.48

153.85

113.14


(33.4)

%

(9.4)

%

CASM (cents)

7.49

18.17

7.88


(58.8)

%

(4.9)

%

Adjusted CASM (cents) (1)

8.50

26.57

7.86


(68.0)

%

8.1

%

Adjusted CASM ex-fuel (cents) (2)

6.40

25.47

5.41


(74.9)

%

18.3

%

Fuel gallons consumed (thousands)

110,202

18,997

122,447


480.1

%

(10.0)

%

Average fuel cost per gallon ($)

1.95

1.05

2.16


85.7

%

(9.7)

%

Aircraft at end of period

164

154

135


6.5

%

21.5

%

Average daily aircraft utilization (hours)

9.9

2.0

12.8


395.0

%

(22.7)

%

Average stage length (miles)

1,012

960

1,004


5.4

%

0.8

%



Six Months Ended June 30,   


Percent Change

Operating Statistics

2021

2020

2019


2021 vs. 2020

2021 vs. 2019

Available seat miles (ASMs) (thousands)

18,202,904

12,723,808

20,604,922


43.1

%

(11.7)

%

Revenue passenger miles (RPMs) (thousands)

14,383,382

8,843,863

17,290,518


62.6

%

(16.8)

%

Load factor (%)

79.0

69.5

83.9


9.5

pts

(4.9)

pts

Passenger flight segments (thousands)

13,858

8,554

16,773


62.0

%

(17.4)

%

Block hours

251,490

185,270

300,612


35.7

%

(16.3)

%

Departures

93,986

68,928

110,692


36.4

%

(15.1)

%

Total operating revenue per ASM (TRASM) (cents)

7.25

7.15

9.07


1.4

%

(20.1)

%

Average yield (cents)

9.18

10.29

10.81


(10.8)

%

(15.1)

%

Fare revenue per passenger flight segment ($)

39.25

45.04

55.57


(12.9)

%

(29.4)

%

Non-ticket revenue per passenger flight segment ($)

56.04

61.31

55.85


(8.6)

%

0.3

%

Total revenue per passenger flight segment ($)

95.29

106.35

111.42


(10.4)

%

(14.5)

%

CASM (cents)

7.31

9.10

7.85


(19.7)

%

(6.9)

%

Adjusted CASM (cents) (1)

8.80

10.29

7.83


(14.5)

%

12.4

%

Adjusted CASM ex-fuel (cents) (2)

6.84

8.46

5.43


(19.1)

%

26.0

%

Fuel gallons consumed (thousands)

190,748

136,942

232,275


39.3

%

(17.9)

%

Average fuel cost per gallon ($)

1.88

1.70

2.13


10.6

%

(11.7)

%

Average daily aircraft utilization (hours)

8.8

6.8

12.5


29.4

%

(29.6)

%

Average stage length (miles)

1,024

1,011

1,016


1.3

%

0.8

%


(1)     Excludes operating special items.

(2)     Excludes fuel expense and operating special items.

The Company is providing a reconciliation of GAAP financial information to non-GAAP financial information as it believes that non-GAAP financial measures provide management and investors the ability to measure the performance of the Company on a consistent basis. These non-GAAP financial measures have limitations as analytical tools. Because of these limitations, determinations of the Company’s operating performance excluding unrealized gains and losses or special items should not be considered in isolation or as a substitute for performance measures calculated in accordance with GAAP. These non-GAAP financial measures may be presented on a different basis than other companies using similarly titled non-GAAP financial measures.

 

Calculation of Total Non-Ticket Revenue per Passenger Flight Segment

(unaudited)



Three Months Ended

June 30,


Six Months Ended

June 30
,

(in thousands, except per-segment data)

2021

2020

2019


2021

2020

2019

Operating revenues








Fare

$ 369,691

$         63,769

$ 515,696


$ 543,978

$ 385,216

$ 932,041

Non-fare

476,816

67,048

478,734


752,864

499,151

900,454

Total passenger revenues

846,507

130,817

994,430


1,296,842

884,367

1,832,495

Other revenues

12,802

7,712

18,526


23,746

25,243

36,257

Total operating revenues

$ 859,309

$ 138,529

$ 1,012,956


$ 1,320,588

$ 909,610

$ 1,868,752









Non-ticket revenues (1)

$ 489,618

$         74,760

$ 497,260


$ 776,610

$ 524,394

$ 936,711









Passenger segments

8,385

900

8,953


13,858

8,554

16,773









Non-ticket revenue per passenger flight segment ($) (2)

$           58.39

$           83.03

$           55.54


$         56.04

$           61.31

$           55.85


(1) Non-ticket revenues equals the sum of non-fare passenger revenues and other revenues.

(2) Non-ticket revenue per passenger segment in the second quarter 2020 was unusually high due to an extremely low number of passenger segments and breakage, brand-related and other revenues (typically not driven by the number of passenger flight segments) comprising a larger than usual percentage of total revenue.

                                                                                 

Special Items

(unaudited)






Three Months Ended

June 30,


Six Months Ended

June 30
,

(in thousands)       

2021

2020

2019


2021

2020

2019

Operating special items include the following:








Supplemental rent adjustments (1)

$         12,192

$                 —

$                 —


$         16,513

$                 —

$                 —

Accelerated depreciation (2)

1,753


3,542

Federal excise tax recovery (3)

(2,197)


(2,197)

Loss on disposal of assets (4)

189

1,550


1,306

3,463

Operating special credits (5)

(115,002)

(151,911)


(291,940)

(151,911)

Total operating special items

$ (103,065)

$ (151,911)

$           1,550


$      (272,776)

$ (151,911)

$           3,463

Non-operating special items include the following:








Loss on extinguishment of debt (6)

331,630


331,630

$                 —

$                 —

Total non-operating special items

$ 331,630

$                 —

$                 —


$       331,630

$                 —

$                 —









Total special items    

$   228,565

$      (151,911)

$           1,550


$         58,854

$      (151,911)

$           3,463









(1)     Second quarter 2021 includes amounts related to supplemental rent adjustments in connection with the accrual of lease return costs for two aircraft purchased off lease. Year-to-date second quarter 2021 includes amounts related to supplemental rent adjustments in connection with the accrual of lease return costs for four aircraft purchased off lease, partially offset by the release of an accrual related to an engine lease modification.

(2)     Includes amounts related to the accelerated depreciation on current aircraft seats related to the retrofit of 36 aircraft with new Acro6 seats.

(3)     Includes amounts related to out-of-period interrupted trip expense credits recognized in connection with Federal Excise Tax recovery.

(4)     2021 includes amounts related to the loss on two aircraft sale-leaseback transaction completed during second quarter 2021, the sale of auxiliary power units and the disposal of excess and obsolete inventory. 2019 includes amounts primarily related to the disposal of excess and obsolete inventory.

(5)     2021 Includes amounts related to the grant component of the PSP2 and PSP3 agreements with the Treasury and to the CARES Act Employee Retention Credit; partially offset by amounts recorded in connection with the rehire of Team Members previously terminated under the Company’s involuntary employee separation program but which were rehired in compliance with the restrictions mandated by the Company’s participation in the PSP2 and PSP3 programs. Special credits for 2020 includes amounts related to the grant component of the PSP with the Treasury and to the CARES Act Employee Retention Credit.

(6)     Includes amounts primarily related to the premiums paid to early extinguish a portion of the Company’s 2025 Convertible Notes and the 8.00% Senior Secured Notes. In addition, it includes the write-off of related deferred financing costs and original issuance discount.

 


Reconciliation of Adjusted Operating Expenses to GAAP Operating Expenses

(unaudited)



Three Months Ended

June 30,


Six Months Ended

June 30
,

(in thousands, except CASM data in cents)

2021

2020

2019


2021

2020

2019

Total operating expenses, as reported

$ 766,098

$ 328,913

$ 849,018


$1,329,907

$1,157,986

$1,617,010

Less: operating special items expense (credit)

(103,065)

(151,911)

1,550


(272,776)

(151,911)

3,463

Adj. Operating expenses, non-GAAP (1)

869,163

480,824

847,468


1,602,683

1,309,897

1,613,547

Less: Aircraft fuel expense

214,825

19,910

265,006


357,755

233,118

494,642

Adj. Operating expenses excluding fuel, non-GAAP (2)

$ 654,338

$ 460,914

$ 582,462


$1,244,928

$1,076,779

$1,118,905









Available seat miles

10,226,746

1,809,874

10,775,878


18,202,904

12,723,808

20,604,922









CASM (cents)

7.49

18.17

7.88


7.31

9.10

7.85

Adj. CASM (cents) (1)

8.50

26.57

7.86


8.80

10.29

7.83

Adj. CASM ex-fuel (cents) (2)

6.40

25.47

5.41


6.84

8.46

5.43


(1)     Excludes operating special items.

(2)     Excludes operating special items and aircraft fuel expense.

 

Reconciliation of Adjusted EBITDA to GAAP Net Income

(unaudited)



Three Months Ended

June 30,


Six Months Ended

June 30,

(in thousands)

2021

2020

2019


2021

2020

2019

Net income (loss), as reported

$(287,863)

$(144,428)

$114,501


$(400,184)

$(172,256)

$170,577

Add: Provision (benefit) for income taxes

14,553

(68,108)

34,068


(11,307)

(114,874)

50,073

Add: Total other (income) expense

366,521

22,152

15,369


402,172

38,754

31,092

Add: Depreciation and amortization, as reported (1)

73,703

69,113

54,913


148,015

135,104

105,639

EBITDA

166,914

(121,271)

218,851


138,696

(113,272)

357,381

EBITDA margin

19.4 %

(87.5)%

21.6 %


10.5 %

(12.5)%

19.1 %

Add:








Supplemental rent adjustments (credits) (2)

12,192


16,513

Federal excise tax recovery (2)

(2,197)


(2,197)

Loss on disposal of assets (2)

189

1,550


1,306

3,463

Operating special credits (2)

(115,002)

(151,911)


(291,940)

(151,911)

Adj. EBITDA, non-GAAP (3)

$ 62,096

$(273,182)

$220,401


$(137,622)

$(265,183)

$360,844

Adj. EBITDA margin, non-GAAP (3)

7.2 %

(197.2)%

21.8 %


(10.4)%

(29.2)%

19.3 %









Total operating revenues

$859,309

$138,529

$1,012,956


$1,320,588

$909,610

$1,868,752


(1) Includes accelerated depreciation amounts. See Special Items table for more details.

(2) See «Special Items» for more details.

(3) Excludes operating special items.

 

Reconciliation of Adjusted Net Income, Adjusted Pre-Tax Income, and Adjusted Operating Income to GAAP

Net Income (unaudited)






Three Months Ended

June 30,


Six Months Ended

June 30,

(in thousands, except per-share data)

2021

2020

2019


2021

2020

2019

Net income (loss), as reported

$(287,863)

$(144,428)

$114,501


$(400,184)

$(172,256)

$170,577

Add: Provision (benefit) for income taxes

14,553

(68,108)

34,068


(11,307)

(114,874)

50,073

Income (loss) before income taxes, as reported

(273,310)

(212,536)

148,569


(411,491)

(287,130)

220,650

Pre-tax margin

(31.8)%

(153.4)%

14.7 %


(31.2)%

(31.6)%

11.8 %

Add: special items expense (credit) (1)

228,565

(151,911)

1,550


58,854

(151,911)

3,463

Adj. Income (loss) before income taxes, non-GAAP (2)

(44,745)

(364,447)

150,119


(352,637)

(439,041)

224,113

Adj. Pre-tax margin, non-GAAP (2)

(5.2)%

(263.1)%

14.8 %


(26.7)%

(48.3)%

12.0 %

Add: Adj. total other (income) expense (3)

34,891

22,152

15,369


70,542

38,754

31,092

Adj. Operating income (loss), non-GAAP (4)

(9,854)

(342,295)

165,488


(282,095)

(400,287)

255,205

Adj. Operating margin, non-GAAP (4)

(1.1)%

(247.1)%

16.3 %


(21.4)%

(44.0)%

13.7 %









Provision (benefit) for income taxes (5)

(8,467)

(78,634)

34,411


(73,844)

(94,304)

50,875

Adj. Net income (loss), non-GAAP (2)

$(36,278)

$(285,813)

$115,708


$(278,793)

$(344,737)

$173,238

















Weighted-average shares, diluted

105,258

79,601

68,620


101,537

74,061

68,568









Adj. Net income (loss) per share, diluted (2)

$    (0.34)

$    (3.59)

$     1.69


$    (2.75)

$    (4.65)

$     2.53









Total operating revenues

$859,309

$138,529

$1,012,956


$1,320,588

$909,610

$1,868,752


(1) See «Special Items» for more details.

(2) Excludes operating and non-operating special items.

(3) Excludes $331.6M of Loss on extinguishment of debt recorded in second quarter 2021.

(4) Excludes operating special items.

(5) 2021 amounts exclude the unfavorable permanent tax adjustment recorded in the second quarter 2021. 2020 amounts exclude the discrete tax benefits recorded in the first quarter and second quarter 2020.

 

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SOURCE Spirit Airlines, Inc.