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Spirit Airlines (SAVE) Offers Q2 Update; Sees Operating Margin Inline with Views, TRASM at Low-End of Initial Range

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July 18, 2016 4:22 PM EDT

Spirit Airlines (NASDAQ: SAVE) disclosed the following on MOnday:

This investor update provides Spirit's second quarter 2016 guidance. All data is based on preliminary estimates.
Second Quarter 2016
We estimate our second quarter 2016 operating margin will be approximately 22 percent, in line with our previous guidance. Total revenue per available seat mile (TRASM) came in at the low end of the range contemplated in our initial guidance for the quarter (down 14.3 percent year over year). Despite seeing more fare discounting than what is typical for a peak summer travel period, we did see a slight quarter-to-quarter sequential year-over-year improvement in domestic TRASM for the second quarter. As anticipated, we saw a modest quarter-to-quarter sequential decline in non-ticket revenue per PFS, ending the quarter with $51.32 in non-ticket revenue per PFS. Adjusted cost per available seat mile excluding fuel (CASM ex-fuel) for the second quarter 2016 is estimated to have decreased approximately 8 percent year over year compared to our initial guidance of a decrease of approximately 5 percent. This better-than-expected unit cost performance is primarily driven by the timing of maintenance events.
2Q16E
Capacity - Available Seat Miles (ASMs)
Year-over-Year % Change
23.1%
Adjusted Operating Margin(1)
Approx. 22%
Adjusted Operating Expense per ASM (CASM) (cents)
Adjusted CASM ex-fuel year-over-year % change(2)
Decrease of Approx. 8%
Average Stage Length (miles)
971
Fuel Expense ($)
Fuel gallons (millions)
77.0
Economic fuel cost per gallon(3)
$1.47
Selected Operating Expenses ($Millions)
Aircraft rent
$49.9
Depreciation and amortization
$25.0
Interest Expense, net of Capitalized Interest ($Millions)
Interest expense
$10.2
Capitalized interest
(2.8)
Interest expense, net of capitalized interest
$7.4
Effective Tax Rate
37%
Wtd. Average Share Count (Millions)
Diluted
70.9
1
Footnotes
(1)
Excludes special items which may include loss on disposal of assets and special charges.
(2)
Excludes all components of fuel expense, loss on disposal of assets, and special charges.
(3)
Includes fuel taxes and into-plane fuel cost.

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