Form 8-K REPUBLIC AIRWAYS HOLDING For: May 07
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 8-K
CURRENT REPORT
Pursuant to Section 13 OR 15(d) of The Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): May 7, 2015
Republic Airways Holdings Inc.
(Exact name of registrant as specified in its charter)
Delaware
(State or other jurisdiction of incorporation)
000-49697 06-1449146
(Commission File Number) (IRS Employer Identification No.)
8909 Purdue Road
Suite 300
Indianapolis, IN 46268
(Address of principal executive offices) (Zip Code)
Registrant’s telephone number, including area code (317) 484-6000
None.
(Former name or former address, if changed since last report.)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):
o Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
o Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
o Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
o Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
Item 2.02 Results of Operations and Financial Condition.
On May 7, 2015, the Company announced its results of operations for the quarter ended March 31, 2015. A copy of the Company's press release is furnished herewith as Exhibit 99.1 and is incorporated herein by reference.
The press release furnished as Exhibit 99.1 contains financial measures that are not calculated in accordance with accounting principles generally accepted in the United States (GAAP). The non-GAAP financial measures included in the press release for certain periods are EBITDA and EBITDA margin from continuing operations. Reconciliations of these non-GAAP financial measures to the most directly comparable GAAP financial measures are included in the press release.
The non-GAAP financial information should be considered supplemental to, and not as a substitute for, or superior to, financial measures calculated in accordance with GAAP. Management, however, believes that these non-GAAP financial measures, when used in conjunction with the results presented in accordance with GAAP, may provide a more complete understanding of the Company's results and may facilitate a fuller analysis of the Company's results, particularly in evaluating performance from one period to another. Management has chosen to provide this supplemental information to investors, analysts, and other interested parties to enable them to perform additional analysis of results and to illustrate the results giving effect to the non-GAAP adjustments shown in the reconciliations. Management strongly encourages investors to review the Company's consolidated financial statements and publicly filed reports in their entirety and cautions investors that the non-GAAP measures used by the Company may differ from similar measures used by other companies, even when similar terms are used to identify such measures.
Item 7.01 Regulation FD Disclosure.
On Thursday, May 7, 2015, the Company has published an investor update which includes revised 2015 guidance and other selected financial information. A copy of the Company’s presentation slides are furnished as Exhibit 99.2 and are incorporated herein by reference. The Company intends to use this presentation at other investor conferences.
The information in this Form 8-K is being furnished under Item 7.01 and shall not be deemed to be filed for the purposes of Section 18 of the Securities Exchange Act of 1934 (the “Exchange Act”), or otherwise subject to the liabilities of such section, nor shall such information be deemed incorporated by reference in any filing under the Securities Act of 1933 or the Exchange Act, except as shall be expressly set forth by specific reference in such a filing.
Forward Looking Information
Statements regarding the Company’s operational and financial success, business model, expectations about future success, competitive environment, improved operational performance and our ability to maintain or improve our low costs are forward-looking statements and are not historical facts. Instead, they are estimates or projections involving numerous risks or uncertainties, including but not limited to, consumer demand and acceptance of services offered by the Company, the Company’s ability to maintain current cost levels, regulatory matters and general economic conditions. Additional information concerning factors that could cause actual results to differ materially from those in the forward-looking statements is contained from time to time in the Company’s SEC filings, including but not limited to the Company’s annual report on Form 10-K for the year ended December 31, 2014, or as supplemented in the Company’s subsequently filed periodic reports. The Company disclaims any obligation or duty to update or correct any of its forward-looking statements.
Item 9.01 Financial Statements and Exhibits .
(d) Exhibits.
99.1 Press Release of Republic Airways Holdings Inc. issued on May 7, 2015, relating to its first quarter 2015 results.
99.2 Presentation provided by the Company for 2015 guidance and other selected financial information.
(All other items on this report are inapplicable.)
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
REPUBLIC AIRWAYS HOLDINGS INC.
By: /s/ Timothy P. Dooley
Name: Timothy P. Dooley
Title: | Executive Vice President and Chief Financial Officer |
Dated: May 8, 2015
EXHIBIT INDEX
Exhibit Number Description
99.1 | Press Release of Republic Airways Holdings Inc. issued on May 7, 2015, relating to its first quarter 2015 results. |
99.2 | Presentation provided by the Company for 2015 guidance and other selected financial information. |
For Immediate Release:
Investor Relations Contact: Joe Allman
Republic Airways Holdings
Tel. (317) 246-2612
Republic Airways Holdings reports first quarter 2015 financial results
Indianapolis, Indiana (May 7, 2015) - Republic Airways Holdings Inc. (NASDAQ/NM: RJET) today reported financial results for the first quarter of 2015.
Republic's pre-tax income for the first quarter of 2015 was $11.2 million, compared to $22.8 million for the prior year's first quarter. Republic's net income for the first quarter of 2015 was $6.4 million, or $0.13 per diluted share. The Company incurred approximately $8.0 million, or $0.09 per diluted share, for charges related to fleet transition expenses and employee severance costs, which are included in other operating expense.
The first quarter of 2015 results were also negatively impacted by a reduction in operational reliability. Republic's operating performance, as measured in block hours, departures, and available seat miles was approximately 4% lower than planned.
The Company reported the following key metrics for the three months ended March 31, 2015, and 2014:
Three Months ended March 31, | |||||||||||
(Unaudited) | 2015 | 2014 | % Increase / Decrease | ||||||||
(in millions, except as noted with *) | |||||||||||
Available seat miles (ASMs) | 3,490 | 3,366 | 3.7 | % | |||||||
Block hours (hours) | 177,568 | 185,613 | (4.3 | )% | |||||||
Departures* | 96,627 | 103,349 | (6.5 | )% | |||||||
Operating revenues | $ | 341.0 | $ | 337.5 | 1.0 | % | |||||
Pre-tax income | $ | 11.2 | $ | 22.8 | (50.9 | )% | |||||
Pre-tax Margin* | 3.3 | % | 6.8 | % | -3.5 pts | ||||||
Diluted earnings per share* | $ | 0.13 | $ | 0.26 | (50.0 | )% | |||||
EBITDA | $ | 87.2 | $ | 93.9 | (7.1 | )% | |||||
EBITDA margin* | 25.6 | % | 27.8 | % | -2.2 pts | ||||||
Operating Revenue Highlights
Operating revenues increased $3.5 million, or 1.0%, from the first quarter of 2014 to $341.0 million in the first quarter of 2015. Fixed-fee service revenue increased $7.1 million, or 2.2%, to $335.5 million. Since March 31, 2014, the Company added 23 E-Jet aircraft and removed 25 ERJ aircraft.
Operating Expense Highlights
Wages and benefits expenses increased 5.5%, or $4.9 million, which was primarily due to an increase in E-Jet operations and an increase in the cost of benefits we provide to our employees.
Maintenance and repair expenses increased 4.5%, or $2.9 million, primarily due to the increase in engine LLP events on our E-Jet aircraft.
Depreciation and amortization expense increased 11.4%, or $4.7 million, due primarily to the increase in the number of owned E-Jet aircraft.
Fleet Highlights
The Company took delivery of the final six E-Jet aircraft for its American Airlines E-Jet agreement which now totals 47 aircraft. The Company expects to take delivery of 15 additional new E-Jet aircraft in the second half of 2015, which it will operate under its United E-Jet agreement. As of March 31, 2015, the Company operated 41 aircraft with 44-50 seats and 201 aircraft with 69-99 seats under its fixed-fee code-share and charter agreements.
During the first quarter of 2015, Delta Air Lines exercised their right to extend 24 aircraft under the Shuttle America ERJ code-share agreement from May 2016 to May 2021. The Company currently operates 41 aircraft under the agreement with Delta, of which 17 can be removed by Delta with 90 days prior written notice.
Balance Sheet and Liquidity Highlights
The Company's unrestricted cash balance decreased $23.2 million, to $200.7 million, from December 31, 2014, due mainly to investments in new aircraft. A consolidated balance sheet and a condensed statement of cash flows have been included in the tables section of this release.
The Company's debt increased to $2.36 billion as of March 31, 2015, compared to $2.34 billion at December 31, 2014, primarily related to the financing of the last six new E-Jet aircraft purchased for our American Airlines fixed-fee agreement partially offset by the Company's debt repayments.
Corporate Information
Republic Airways Holdings Inc., based in Indianapolis, Indiana, is an airline holding company that owns Chautauqua Airlines, Republic Airlines and Shuttle America, collectively “the airlines.” As of March 31, 2015, the airlines operate a combined fleet of about 240 aircraft and offer scheduled passenger service on about 1,250 flights daily to about 100 cities in the U.S. and Canada through fixed-fee flights operated under our major airline partner brands, including American Eagle, Delta Connection, United Express, and US Airways Express. The Company currently employs about 6,500 aviation professionals. For more information about Republic Airways, please visit our website at www.rjet.com.
The Company has published an investor update, which includes revised 2015 guidance and other selected financial information on its website www.rjet.com/en/Investor_Relations/Shareholder_Presentations.aspx.
The Company will conduct a telephone briefing to discuss its first quarter 2015 results at 10 a.m. (Eastern time) Friday, May 8, 2015. This call is being webcast by Thomson/Reuters and can be accessed at the Republic Airways Holdings' website, www.rjet.com. Those wishing to participate can do so by calling (877) 703-6105. International callers can participate by calling +1 (857) 244-7304; the passcode is 31498138.
To listen to a telephone replay of the webcast, call (888) 286-8010 and use password 10594137. International telephone replay will be available by calling +1 (617) 801-6888 and using the same password. The replay will be available from 2 p.m. (Eastern time) May 8, 2015, to 11:59 p.m. (Eastern time) May 15, 2015.
Additional Information
In addition to historical information, this release contains forward-looking statements. Republic Airways Holdings Inc. may, from time to time, make written or oral forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Such statements encompass the Company's beliefs, expectations, hopes or intentions regarding future events. Words such as “expects,” “intends,” “believes,” “anticipates,” “may,” “will,” “should,” “plan,” “estimate,” “predict,” “potential,” “continue,” or “likely” and similar expressions as well as the negative of such expressions are used to identify forward-looking statements. All forward-looking statements included in this release are made as of the date hereof and are based on information available to the Company as of such date. The Company assumes no obligation to update any forward-looking statement. Actual results may vary, and could differ materially, from those anticipated, estimated, projected or expected in these forward-looking statements for a number of reasons, including, among others, the risk factors disclosed in the Company's most recent filing with the Securities and Exchange Commission.
REPUBLIC AIRWAYS HOLDINGS INC. AND SUBSIDIARIES CONSOLIDATED STATEMENT OF OPERATIONS (UNAUDITED) (In millions, except per share amounts) | ||||||||||
Three Months Ended March 31, | ||||||||||
2015 | 2014 | % Increase / (Decrease) | ||||||||
OPERATING REVENUES: | ||||||||||
Fixed-fee service | $ | 335.5 | $ | 328.4 | 2.2 | % | ||||
Other | 5.5 | 9.1 | (39.6 | )% | ||||||
Total operating revenues | 341.0 | 337.5 | 1.0 | % | ||||||
OPERATING EXPENSES: | ||||||||||
Wages and benefits | 94.1 | 89.2 | 5.5 | % | ||||||
Aircraft fuel | 3.7 | 7.3 | (49.3 | )% | ||||||
Landing fees and airport rents | 5.9 | 7.2 | (18.1 | )% | ||||||
Aircraft and engine rent | 31.2 | 31.1 | 0.3 | % | ||||||
Maintenance and repair | 67.2 | 64.3 | 4.5 | % | ||||||
Insurance and taxes | 4.9 | 6.5 | (24.6 | )% | ||||||
Depreciation and amortization | 46.0 | 41.3 | 11.4 | % | ||||||
Impairment and other charges | — | 19.9 | (100.0 | )% | ||||||
Other | 46.8 | 36.5 | 28.2 | % | ||||||
Total operating expenses | 299.8 | 303.3 | (1.2 | )% | ||||||
OPERATING INCOME | 41.2 | 34.2 | 20.5 | % | ||||||
OTHER INCOME (EXPENSE): | ||||||||||
Interest expense | (30.0 | ) | (29.8 | ) | 0.7 | % | ||||
Fair value gain - restructuring asset | — | 18.4 | (100.0 | )% | ||||||
Total other expense | (30.0 | ) | (11.4 | ) | 163.2 | % | ||||
INCOME BEFORE INCOME TAXES | 11.2 | 22.8 | (50.9 | )% | ||||||
INCOME TAX EXPENSE | 4.8 | 8.8 | (45.5 | )% | ||||||
NET INCOME | 6.4 | 14.0 | (54.3 | )% | ||||||
NET INCOME PER COMMON SHARE - BASIC | $ | 0.13 | $ | 0.28 | (53.6 | )% | ||||
NET INCOME PER COMMON SHARE - DILUTED | $ | 0.13 | $ | 0.26 | (50.0 | )% | ||||
Weighted average common shares: | ||||||||||
Basic | 50.2 | 49.6 | 1.2 | % | ||||||
Diluted | 50.7 | 54.9 | (7.7 | )% | ||||||
REPUBLIC AIRWAYS HOLDINGS INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (UNAUDITED) (In millions, except share and per share amounts) | |||||||
March 31, | December 31, | ||||||
2015 | 2014 | ||||||
ASSETS | |||||||
Current Assets: | |||||||
Cash and cash equivalents | $ | 200.7 | $ | 223.9 | |||
Restricted cash | 18.8 | 21.7 | |||||
Receivables - net of allowance for doubtful accounts of $2.5 and $2.6, respectively | 24.5 | 20.7 | |||||
Inventories | 62.1 | 60.9 | |||||
Prepaid expenses and other current assets | 19.3 | 15.6 | |||||
Deferred income taxes | 16.4 | 16.4 | |||||
Total current assets | 341.8 | 359.2 | |||||
Aircraft and other equipment, net | 2,924.0 | 2,860.9 | |||||
Maintenance deposits | 53.0 | 53.2 | |||||
Intangible and other assets, net | 227.3 | 220.7 | |||||
Total assets | $ | 3,546.1 | $ | 3,494.0 | |||
LIABILITIES AND STOCKHOLDERS' EQUITY | |||||||
Current Liabilities: | |||||||
Current portion of long-term debt | $ | 302.1 | $ | 309.0 | |||
Accounts payable | 24.8 | 19.3 | |||||
Accrued liabilities | 159.9 | 142.9 | |||||
Total current liabilities | 486.8 | 471.2 | |||||
Long-term debt - less current portion | 2,056.7 | 2,030.2 | |||||
Deferred credits and other non-current liabilities | 82.5 | 88.1 | |||||
Deferred income taxes | 288.9 | 284.0 | |||||
Total liabilities | 2,914.9 | 2,873.5 | |||||
Commitments and contingencies | |||||||
Stockholders' Equity: | |||||||
Preferred stock, $.001 par value; 5,000,000 shares authorized; no shares issued or outstanding | — | — | |||||
Common stock, $.001 par value; one vote per share;150,000,000 shares authorized; 60,430,955 and 59,821,243 shares issued and 50,828,304 and 50,024,780 shares outstanding, respectively | — | — | |||||
Additional paid-in capital | 431.7 | 427.4 | |||||
Treasury stock, 9,546,147 shares at cost | (183.9 | ) | (183.9 | ) | |||
Accumulated other comprehensive loss | (2.2 | ) | (2.2 | ) | |||
Accumulated earnings | 385.6 | 379.2 | |||||
Total stockholders' equity | 631.2 | 620.5 | |||||
Total liabilities and stockholders' equity | $ | 3,546.1 | $ | 3,494.0 | |||
REPUBLIC AIRWAYS HOLDINGS INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) (In millions) | |||||||
Three Months Ended March 31, | |||||||
2015 | 2014 | ||||||
NET CASH FROM OPERATING ACTIVITIES | $ | 57.2 | $ | 68.7 | |||
INVESTING ACTIVITIES: | |||||||
Purchase of aircraft and other equipment | (147.2 | ) | (130.6 | ) | |||
Proceeds from sale of aircraft and other assets | 47.9 | 7.0 | |||||
Aircraft deposits | (5.0 | ) | — | ||||
Change in restricted cash | 2.9 | (3.1 | ) | ||||
NET CASH USED IN INVESTING ACTIVITIES | (101.4 | ) | (126.7 | ) | |||
FINANCING ACTIVITIES: | |||||||
Payments on debt | (77.5 | ) | (58.1 | ) | |||
Proceeds from debt issuance and refinancing | 147.5 | 116.2 | |||||
Payments on early extinguishment of debt and refinancing | (50.5 | ) | — | ||||
Proceeds from exercise of stock options | 3.0 | 0.4 | |||||
Other, net | (1.5 | ) | (1.0 | ) | |||
NET CASH FROM FINANCING ACTIVITIES | 21.0 | 57.5 | |||||
NET CHANGES IN CASH AND CASH EQUIVALENTS | (23.2 | ) | (0.5 | ) | |||
CASH AND CASH EQUIVALENTS—Beginning of period | 223.9 | 276.7 | |||||
CASH AND CASH EQUIVALENTS—End of period | $ | 200.7 | $ | 276.2 | |||
REPUBLIC AIRWAYS HOLDINGS INC. AND SUBSIDIARIES UNAUDITED OPERATING HIGHLIGHTS | |||||||||
Operating Highlights | Three Months Ended March 31, | ||||||||
2015 | 2014 | Change | |||||||
Operating aircraft at period end: | |||||||||
44-50 seats7 | 41 | 68 | (39.7 | )% | |||||
69-99 seats8 | 201 | 179 | 12.3 | % | |||||
Block hours5 | 177,568 | 185,613 | (4.3 | )% | |||||
Departures | 96,627 | 103,349 | (6.5 | )% | |||||
Passengers carried | 5,018,862 | 5,138,720 | (2.3 | )% | |||||
Revenue passenger miles ("RPM") (millions)1 | 2,618 | 2,566 | 2.0 | % | |||||
Available seat miles ("ASM") (millions)2 | 3,490 | 3,366 | 3.7 | % | |||||
Passenger load factor3 | 75.0 | % | 76.2 | % | -1.2 pts | ||||
Cost per ASM, including interest expense (cents)4 | 9.45 | 9.35 | 1.1 | % | |||||
Cost per ASM, including interest expense and excluding fuel expense (cents) | 9.34 | 9.13 | 2.3 | % | |||||
Average daily utilization of each aircraft (hours)6 | 9.0 | 9.0 | — | % | |||||
Average length of aircraft flights (miles) | 511 | 485 | 5.4 | % | |||||
Average seat density | 71 | 67 | 6.0 | % | |||||
1. | Revenue passenger miles are the number of scheduled miles flown by revenue passengers. |
2. | Available seat miles are the number of seats available for passengers multiplied by the number of scheduled miles those seats are flown. |
3. | Passenger load factor is revenue passenger miles divided by available seat miles. |
4. | Costs (in all periods) exclude impairment, fair value gain and other non-operating income. Total operating and |
interest expenses excluding other impairment charges is not a calculation based on accounting principles generally
accepted in the United States of America and should not be considered as an alternative to total operating expenses.
Cost per available seat mile utilizing this measurement is included as it is a measurement recognized by the investing
public relative to the airline industry.
5. | Hours from takeoff to landing, including taxi time. |
6. | Average number of hours per day that an aircraft flown in revenue service is operated (from gate departure to gate arrival). |
7. | Excludes 11 owned and four leased E140 aircraft that were permanently parked, four owned and nine leased E145 aircraft |
that were temporarily parked, and one owned E135 aircraft and 11 owned E145 aircraft that are leased to other operators, as of March 31, 2015. Excludes two owned E140 aircraft that were abandoned and two E145 aircraft that serve as operational spares as of March 31, 2014.
8. | Excludes five leased Q400 aircraft that were temporarily parked that will transition to Flybe and three owned E170 aircraft that are leased to other operators, as of March 31, 2015. Excludes four E175 aircraft that are scheduled to enter service in the second quarter of 2014, four temporarily parked E190 aircraft, and three Q400 aircraft that serve as operational spares as of March 31, 2014. |
The Company is providing disclosure of the reconciliation of reported non-GAAP financial measures to its comparable GAAP basis financial measures. The Company believes that the non-GAAP financial measures provide investors meaningful measurements of the Company's financial performance.
EBITDA:
($ in millions) | Three months ended March 31, | |||||||
2015 | 2014 | |||||||
Net income | $ | 6.4 | $ | 14.0 | ||||
Plus: | ||||||||
Income tax expense | 4.8 | 8.8 | ||||||
Interest expense | 30.0 | 29.8 | ||||||
Depreciation and amortization | 46.0 | 41.3 | ||||||
EBITDA | $ | 87.2 | $ | 93.9 | ||||
EBITDA margin % | 25.6 | % | 27.8 | % | ||||
Investor Update May 7, 2015
2 Safe Harbor Disclosure DISCLAIMER Statements in this presentation, as well as oral statements that may be made by officers or directors of Republic Airways Holdings Inc., its advisors, affiliates or subsidiaries (collectively or separately the “Company”), that are not historical fact constitute “forward-looking statements”. Such forward-looking statements involve known and unknown risks, uncertainties and other factors that could cause the actual results of the Company to differ materially from historical results or from any results expressed or implied by the forward-looking statements. Such risks and uncertainties are outlined in the Company’s Annual Report on Form 10-K, most recent Quarterly Report and other documents filed with the SEC from time to time. The Company cautions users of this presentation not to place undue reliance on forward-looking statements, which may be based on assumptions and anticipated events that do not materialize.
3 Updated Operating Fleet Plan 2015 (End of Period) 31 23 23 22 38 38 38 44 58 58 58 58 41 47 47 47 30 30 30 30 41 41 41 41 20 53 58 47 30 41 244 YE 2014 5 249 0 4Q15 247 5 242 5 2Q15 3Q15 5 1Q15 242 UA Ejet (E170/175) Q400US Ejet (E170/175)DL Ejet (E170/175) DL ERJ (E145) AA Ejet (E175) E190
4 Expected Operating Statistics 540,650 596,388 736,000 137,621 104,735 117,000 23,000 0 2016 876,000 74,087 2015 5,372 761,569 55,0749,633 2014 761,991 +15.0% -0.1% Q400 ERJ E190 E-Jet 279,337 311,253 380,000 88,498 68,712 71,000 51,601 425,067 5,631 2016 467,000 16,000 0 2015 421,227 37,718 3,544 2014 -0.9% +10.9% 15,757 11,682 12,802 +16.3% 1,219 2015 1,332 162 14,975 2016 17,420 2014 14,628 792 01,119 220 331 1,607 +2.4% BLOCK HOURS DEPARTURES AVAILABLE SEAT MILES (millions)
5 Fleet Transition and Idled Aircraft Costs • We expect a continued level of elevated fleet transition expenses and idled aircraft costs through the remainder of 2015 • The table below outlines the Company’s current estimate of fleet transition expenses and idled aircraft costs. Actual results may differ from forecast as it relates to dollars incurred and timing of the expenses. • Idled aircraft costs assume no mitigation of idled ERJ costs Actual Actual/FCST 1Q15 2Q15 3Q15 4Q15 2015 Fleet Transition Costs 4.8$ 4.1$ 2.5$ 2.0$ 13.3$ Idled Aircraft Costs 5.1$ 4.4$ 4.9$ 5.4$ 19.8$ Total 9.9$ 8.4$ 7.4$ 7.4$ 33.2$ Forecast
6 2nd Quarter and Full Year 2015 Guidance ($ in millions, except per share amounts) Guidance Low High Low High Low High Operating revenues $345 $355 $1,400 $1,460 $1,375 $1,435 Pretax margin % * 5.0% 7.0% 7.0% 8.5% 5.0% 7.0% Diluted earnings per share * $0.20 $0.30 $1.20 $1.50 $0.85 $1.15 Block hours Departures -1% 0% Available seat miles (millions) 4% 6% 2% 3% * includes the fleet transition expenses and idled aircraft costs detailed on slide 5 of this presentation Note: the above guidance does not include any costs associated with a new pilot CBA or signing bonus ~ 105,000 not provided ~ 3,660 Flat vs. prior year Flat vs. prior year~ 189,000 Full Year 2015 Old New Full Year 20152Q15