Spirit Airlines announces its adjusted first quarter net quarter increased 87.1% to $70.7 million

Spirit Airlines, Inc. (Fort Lauderdale/Hollywood) today reported first quarter 2015 financial results:

Adjusted net income for the first quarter 2015 increased 87.1 percent to $70.7 million ($0.96 per diluted share) compared to the first quarter 20141. GAAP net income for the first quarter 2015 increased 83.0 percent year over year to $69.0 million ($0.94 per diluted share).

Adjusted pre-tax margin for the first quarter 2015 was 22.7 percent, up 900 basis points year over year1. On a GAAP basis, pre-tax margin for the first quarter 2015 was 22.1 percent.

Spirit ended the first quarter 2015 with an unrestricted cash and cash equivalents balance of $741.6 million.

Spirit’s return on invested capital (before taxes and excluding special items) for the twelve months ended March 31, 2015 was 30.2 percent2.

“I want to thank our team members for delivering strong first quarter operational and financial performance while continuing to execute on our growth plan. We’ve announced 38 of the new routes to begin in 2015 and, over the last two fiscal quarters, we have added 12 new aircraft to our fleet all while improving our on-time performance and maintaining our high degree of reliability,” said Ben Baldanza, Spirit’s Chief Executive Officer. “Our consistent, reliable operational performance, solid track record in successfully launching new markets, and continued strong financial performance position us well for the year ahead.”

Revenue Performance

For the first quarter 2015, Spirit’s total operating revenue was $493.4 million, an increase of 12.6 percent compared to the first quarter 2014, driven by an increase in flight volume.

Total revenue per available seat mile (“RASM”) for the first quarter 2015 decreased 9.9 percent compared to the first quarter 2014 on a capacity increase of 25.0 percent. The RASM decrease was primarily driven by a 7.8 percent decrease in average yield due to the ramp up of our growth in new and mature markets, overall fare compression in many of our markets, and increased capacity from other carriers in the Dallas markets.

Total revenue per passenger flight segment (“PFS”) for the first quarter 2015 decreased 7.6 percent year over year to $123.96, primarily driven by a 11.7 percent decrease in ticket revenue per PFS and a 2.1 percent decrease in non-ticket revenue per PFS. The decrease in non-ticket revenue per PFS was primarily attributable to lower bag revenue per PFS and the outsourcing of the Company’s onboard catering to a third-party provider under a revenue share agreement.

Cost Performance

Total operating expenses for the first quarter 2015, excluding $2.7 million of special items, increased 0.9 percent to $381.4 million3. Including special items, total operating expenses increased 1.6 percent year over year to $384.1 million. Operating expenses benefited from economic fuel expense decreasing 25.4 percent, or $37.7 million, on a fuel volume increase of 21.5 percent.

Spirit reported first quarter 2015 cost per available seat mile (“ASM”) excluding special items and fuel (“Adjusted CASM ex-fuel”)3 of 5.72 cents, a decrease of 5.6 percent compared to the same period last year driven primarily by lower labor expense per ASM and lower aircraft rent per ASM. Labor expense per ASM in the first quarter 2015 was lower compared to the same period last year primarily due to scale benefits from overall growth and from larger gauge aircraft. The decrease in aircraft rent per ASM was driven by a change in the mix of leased (rent recorded under aircraft rent) and purchased (depreciation recorded under depreciation and amortization) aircraft.

“Once again our team executed well on improving our cost structure. Despite very disruptive winter weather which caused a number of cancelations, and nearly a one percent shorter stage length, our first quarter 2015 Adjusted CASM ex-fuel decreased 5.6 percent year-over-year. This performance sets us up nicely to meet our full year target of delivering Adjusted CASM ex-fuel down 6 to 8 percent year over year,” said Ted Christie, Spirit’s Chief Financial Officer.