Spirit Airlines Reports Fourth Quarter and Full Year 2018 Results
MIRAMAR, Fla., Feb. 05, 2019 (GLOBE NEWSWIRE) -- Spirit Airlines, Inc. (NYSE: SAVE) today reported fourth quarter and full year 2018 financial results.
- GAAP net income for the fourth quarter 2018 was $91.9 million ($1.34 per diluted share), or $94.7 million ($1.38 per diluted share)1 excluding special items.
- GAAP net income for the full year 2018 was $155.7 million ($2.28 per diluted share), or $300.9 million ($4.40 per diluted share)1 excluding special items.
- GAAP operating margin for the fourth quarter 2018 was 15.8 percent, or 16.2 percent excluding special items1. GAAP operating margin for the full year 2018 was 10.6 percent, or 13.5 percent excluding special items1.
- Spirit ended 2018 with unrestricted cash, cash equivalents, and short-term investments of $1.1 billion.
“Our robust fourth quarter profit closes out a very successful year for Spirit. Despite cost pressures from significantly higher fuel and pilot wage rates, Spirit produced strong earnings growth for 2018, made great strides in improving our customer satisfaction metrics and delivered excellent operational performance. As measured by the Department of Transportation, for the full year 2018, we achieved a record on-time performance of 81.1 percent and a completion factor of 99.1 percent. Based on preliminary estimates, these results earned us the rank of fourth among the reporting marketing carriers in both these categories. In 2018, our initiatives to drive both passenger and ancillary revenue produced healthy top-line revenue growth, and we expect them to drive additional benefit in 2019. Our revenue initiatives, together with our continued strong cost and operational performance position us well to succeed in the year ahead,” said Ted Christie, Spirit’s President and Chief Executive Officer.
Revenue Performance For the fourth quarter 2018, Spirit's total operating revenue was $862.8 million, an increase of 29.5 percent compared to the fourth quarter 2017. Total operating revenue per available seat mile ("TRASM") for the fourth quarter 2018 increased 11.4 percent compared to the same period last year. During the fourth quarter 2018, the Company's results continued to benefit from its improved yield management processes, non-ticket revenue initiatives, strategic network re-orientation, and a strong operating environment.
On a per passenger flight segment basis, total revenue for the fourth quarter 2018 increased 7.3 percent year over year to $117.15 with fare revenue per passenger flight segment increasing 9.3 percent to $60.45 and non-ticket revenue per passenger flight segment increasing 5.2 percent to $56.702.
Cost PerformanceFor the fourth quarter 2018, total GAAP operating expenses, increased 26.4 percent year over year to $726.7 million. Adjusted operating expenses for the fourth quarter 2018 increased 25.2 percent year over year to $723.4 million3. These changes were primarily driven by increases in salaries, wages and benefits, fuel rates, and depreciation and amortization.
Aircraft fuel expense increased in the fourth quarter 2018 by 31.1 percent year over year, due to a 14.7 percent increase in the cost of fuel per gallon and a 14.4 percent increase in fuel gallons consumed.
Spirit reported fourth quarter 2018 cost per available seat mile ("ASM"), excluding special items and fuel (“Adjusted CASM ex-fuel”), of 5.49 cents3, an increase of 5.6 percent compared to the same period last year, primarily due to higher salaries, wages and benefits per ASM largely driven by rate increases pilots received in connection with the new collective bargaining agreement that became effective March 1, 2018. This increase was partially offset by lower aircraft rent per ASM.
“I want to congratulate and thank our entire team for delivering industry-leading cost performance during 2018. Despite absorbing materially higher pilot rates in connection with our new pilot agreement ratified in the first quarter 2018, our adjusted CASM ex-fuel for the full year 2018 was down 3.8 percent year over year. We remain confident that over the next five years our relative cost performance versus our primary competitors will continue to increase, further strengthening our competitive position,” said Scott Haralson, Spirit's Chief Financial Officer.
FleetSpirit took delivery of seven new aircraft (five new A320ceo and two A320neo) during the fourth quarter 2018, ending the year with 128 aircraft in its fleet.
New RoutesOrlando - Aguadilla, Puerto Rico (10/04/2018)Orlando - Guatemala City, Guatemala (10/04/2018)Orlando - Panama City, Panama (10/04/2018)Orlando - Santo Domingo, Dominican Republic (10/04/2018)Orlando - San Jose, Costa Rica (10/05/2018)Orlando - San Pedro Sula, Honduras (10/05/2018)Orlando - San Salvador, El Salvador (10/06/2018)Fort Lauderdale - Kansas City (11/08/2018) *Newark - Santo Domingo (11/08/2018) *Orlando - Bogotá, Colombia (11/08/2018)Orlando - St. Thomas, USVI (11/08/2018)Orlando - Medellín, Colombia (11/09/2018)Orlando - Cartagena, Colombia (11/10/2018)Orlando - Myrtle Beach (11/10/2018)Philadelphia - Fort Myers (12/13/2018) *Philadelphia - Tampa (12/14/2018) *Cali, Colombia - Fort Lauderdale (12/20/2018)Jacksonville - Detroit (12/20/2018)Jacksonville - Chicago (12/20/2018)Detroit - Montego Bay (12/20/2018)Detroit - West Palm Beach (12/21/2018) *
* Indicates seasonal service
Full Year 2018 Highlights
- As measured by the Department of Transportation, achieved a record high on-time performance ranking fourth in on-time arrivals among the reportable carriers based on preliminary results.
- Named "Value Airline of the Year" by Air Transport World, named the " Most Improved Airline of the Year" by the Airline Passenger Experience Association, and ranked as the country's most on-time Low-Cost airline by FlightGlobal.
- Launched a major International expansion from Orlando International Airport to 12 destinations in Latin America and the Caribbean.
- Launched service to the following new destinations: Columbus; Richmond; Guayaquil, Ecuador; Cap-Haïtien, Haiti; St. Croix, U.S. Virgin Islands; Greensboro; Asheville; Cali, Colombia; and Jacksonville.
- Ratified a new five-year agreement with its pilots, represented by the Air Line Pilots Association.
- Ratified a new five-year agreement with its dispatchers, represented by the Professional Airline Flight Control Association.
Conference Call/Webcast DetailSpirit will conduct a conference call to discuss these results tomorrow, February 6, 2018, at 9:30 a.m. ET. 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 Webcasts & Presentations for 60 days.
About Spirit Airlines:Spirit Airlines (NYSE: SAVE) is committed to delivering the best value in the sky while providing an exceptional Guest experience. We are the leader in providing customizable travel options starting with an unbundled fare. This allows every Guest to pay only for the options they choose - like bags, seat assignments, and refreshments - something we call Á La Smarte. We make it possible for our Guests to venture further, travel more often, and discover more than ever before. Our Fit Fleet® is one of the youngest and most fuel-efficient in the U.S. We operate more than 600 daily flights to 72 destinations in the U.S., Latin America, and the Caribbean, and are dedicated to giving back and improving the communities we serve. Come save with us at www.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 Net Income, Adjusted Pre-tax Income, and Adjusted Operating Income to GAAP Net Income" table below for more details.(2) See "Calculation of Total Non-ticket Revenue per Passenger Segment" table below for more details.(3) See "Reconciliation of Adjusted Operating Expense to GAAP Operating Expense" table below for more details.
Forward-Looking StatementsStatements in this release 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. 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. 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. References in this report to “Spirit,” “we,” “us,” “our,” or the “Company” shall mean Spirit Airlines, Inc., unless the context indicates otherwise. 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 Statement of Operations(unaudited, in thousands, except per-share data) | |||||||||||||||||||||
| Three Months Ended | Year Ended | ||||||||||||||||||||
| December 31, | Percent | December 31, | Percent | ||||||||||||||||||
| 2018 | 2017 | Change | 2018 | 2017 | Change | ||||||||||||||||
| Operating revenues: | |||||||||||||||||||||
| Passenger | $ | 846,568 | $ | 650,647 | 30.1 | $ | 3,260,015 | $ | 2,572,887 | 26.7 | |||||||||||
| Other | 16,227 | 15,535 | 4.5 | 63,019 | 70,665 | (10.8 | ) | ||||||||||||||
| Total operating revenues | 862,795 | 666,182 | 29.5 | 3,323,034 | 2,643,552 | 25.7 | |||||||||||||||
| Operating expenses: | |||||||||||||||||||||
| Aircraft fuel | 229,680 | 175,205 | 31.1 | 939,324 | 615,581 | 52.6 | |||||||||||||||
| Salaries, wages and benefits | 191,740 | 136,815 | 40.1 | 719,635 | 527,959 | 36.3 | |||||||||||||||
| Landing fees and other rents | 51,903 | 46,117 | 12.5 | 214,677 | 180,655 | 18.8 | |||||||||||||||
| Aircraft rent | 43,023 | 42,820 | 0.5 | 177,641 | 205,852 | (13.7 | ) | ||||||||||||||
| Depreciation and amortization | 47,963 | 36,472 | 31.5 | 176,727 | 140,152 | 26.1 | |||||||||||||||
| Distribution | 33,505 | 28,170 | 18.9 | 137,001 | 113,472 | 20.7 | |||||||||||||||
| Maintenance, materials and repairs | 29,937 | 28,966 | 3.4 | 129,078 | 110,439 | 16.9 | |||||||||||||||
| Special charges | 265 | — | nm | 88,921 | 12,629 | nm | |||||||||||||||
| Loss on disposal of assets | 3,019 | 1,054 | nm | 9,580 | 4,168 | nm | |||||||||||||||
| Other operating | 95,695 | 79,267 | 20.7 | 379,536 | 347,820 | 9.1 | |||||||||||||||
| Total operating expenses | 726,730 | 574,886 | 26.4 | 2,972,120 | 2,258,727 | 31.6 | |||||||||||||||
| Operating income | 136,065 | 91,296 | 49.0 | 350,914 | 384,825 | (8.8 | ) | ||||||||||||||
| Other (income) expense: | |||||||||||||||||||||
| Interest expense | 23,505 | 16,065 | 46.3 | 83,777 | 57,302 | 46.2 | |||||||||||||||
| Capitalized interest | (2,636 | ) | (3,668 | ) | (28.1 | ) | (9,841 | ) | (13,793 | ) | (28.7 | ) | |||||||||
| Interest income | (5,835 | ) | (2,990 | ) | 95.2 | (19,107 | ) | (8,736 | ) | 118.7 | |||||||||||
| Other expense | 129 | 145 | nm | 752 | 366 | nm | |||||||||||||||
| Special charges, non-operating | — | — | nm | 90,357 | — | nm | |||||||||||||||
| Total other (income) expense | 15,163 | 9,552 | 58.7 | 145,938 | 35,139 | 315.3 | |||||||||||||||
| Income before income taxes | 120,902 | 81,744 | 47.9 | 204,976 | 349,686 | (41.4 | ) | ||||||||||||||
| Provision (benefit) for income taxes | 28,965 | (165,231 | ) | (117.5 | ) | 49,227 | (65,836 | ) | (174.8 | ) | |||||||||||
| Net income | $ | 91,937 | $ | 246,975 | (62.8 | ) | $ | 155,749 | $ | 415,522 | (62.5 | ) | |||||||||
| Basic earnings per share | $ | 1.35 | $ | 3.59 | (62.4 | ) | $ | 2.28 | $ | 6.00 | (62.0 | ) | |||||||||
| Diluted earnings per share | $ | 1.34 | $ | 3.58 | (62.6 | ) | $ | 2.28 | $ | 5.99 | (61.9 | ) | |||||||||
| Weighted average shares, basic | 68,267 | 68,799 | (0.8 | ) | 68,249 | 69,221 | (1.4 | ) | |||||||||||||
| Weighted average shares, diluted | 68,687 | 68,901 | (0.3 | ) | 68,431 | 69,377 | (1.4 | ) | |||||||||||||
Prior period amounts have been reclassified to reflect the adoption of ASU No. 2014-09, " Revenue from Contracts with Customers," completed in the first quarter of 2018.
| SPIRIT AIRLINES, INC.Condensed Statements of Comprehensive Income (Loss)(unaudited, in thousands) | |||||||||||||||
| Three Months Ended | Year Ended | ||||||||||||||
| December 31, | December 31, | ||||||||||||||
| 2018 | 2017 | 2018 | 2017 | ||||||||||||
| Net income | $ | 91,937 | $ | 246,975 | $ | 155,749 | $ | 415,522 | |||||||
| Unrealized gain (loss) on short-term investment securities, net of deferred taxes of $22, ($34), $44 and ($41) | (40 | ) | (71 | ) | 30 | (82 | ) | ||||||||
| Interest rate derivative loss reclassified into earnings, net of taxes of $9, $279, $75 and $372 | 68 | (196 | ) | 241 | (37 | ) | |||||||||
| Other comprehensive income (loss) | $ | 28 | $ | (267 | ) | $ | 271 | $ | (119 | ) | |||||
| Comprehensive income | $ | 91,965 | $ | 246,708 | $ | 156,020 | $ | 415,403 | |||||||
Prior period amounts have been reclassified to reflect the adoption of ASU No. 2014-09, " Revenue from Contracts with Customers," completed in the first quarter of 2018.
| SPIRIT AIRLINES, INC.Condensed Balance Sheets (unaudited, in thousands) | |||||||
| December 31, | December 31, | ||||||
| 2018 | 2017 | ||||||
| Assets | |||||||
| Current assets: | |||||||
| Cash and cash equivalents | $ | 1,004,733 | $ | 800,849 | |||
| Short-term investment securities | 102,789 | 100,937 | |||||
| Accounts receivable, net | 47,660 | 49,323 | |||||
| Aircraft maintenance deposits, net | 106,901 | 175,615 | |||||
| Income tax receivable | — | 69,844 | |||||
| Prepaid expenses and other current assets | 83,383 | 85,542 | |||||
| Total current assets | 1,345,466 | 1,282,110 | |||||
| Property and equipment: | |||||||
| Flight equipment | 3,257,215 | 2,291,110 | |||||
| Ground property and equipment | 191,661 | 155,166 | |||||
| Less accumulated depreciation | (332,864 | ) | (207,808 | ) | |||
| 3,116,012 | 2,238,468 | ||||||
| Pre-delivery deposits on flight equipment | 236,775 | 253,687 | |||||
| Long-term aircraft maintenance deposits | 138,738 | 150,617 | |||||
| Deferred heavy maintenance, net | 249,010 | 99,915 | |||||
| Other long-term assets | 79,456 | 121,003 | |||||
| Total assets | $ | 5,165,457 | $ | 4,145,800 | |||
| Liabilities and shareholders’ equity | |||||||
| Current liabilities: | |||||||
| Accounts payable | $ | 39,320 | $ | 22,822 | |||
| Air traffic liability | 291,981 | 263,711 | |||||
| Current maturities of long-term debt and capital leases | 163,557 | 115,430 | |||||
| Other current liabilities | 339,677 | 262,370 | |||||
| Total current liabilities | 834,535 | 664,333 | |||||
| Long-term debt and capital leases, less current maturities | 2,024,774 | 1,387,498 | |||||
| Deferred income taxes | 355,141 | 308,814 | |||||
| Deferred gains and other long-term liabilities | 22,503 | 22,581 | |||||
| Shareholders’ equity: | |||||||
| Common stock | 7 | 7 | |||||
| Additional paid-in-capital | 371,225 | 360,153 | |||||
| Treasury stock, at cost | (67,016 | ) | (65,854 | ) | |||
| Retained earnings | 1,625,481 | 1,469,732 | |||||
| Accumulated other comprehensive income (loss) | (1,193 | ) | (1,464 | ) | |||
| Total shareholders’ equity | 1,928,504 | 1,762,574 | |||||
| Total liabilities and shareholders’ equity | $ | 5,165,457 | $ | 4,145,800 | |||
Prior period amounts have been reclassified to reflect the adoption of ASU No. 2014-09, " Revenue from Contracts with Customers," completed in the first quarter of 2018.
| SPIRIT AIRLINES, INC.Condensed Statement of Cash Flows (unaudited, in thousands) | |||||||
| Year Ended December 31, | |||||||
| 2018 | 2017 | ||||||
| Operating activities: | |||||||
| Net income | $ | 155,749 | $ | 415,522 | |||
| Adjustments to reconcile net income to net cash provided by operations: | |||||||
| Losses reclassified from other comprehensive income | 315 | 335 | |||||
| Stock-based compensation | 11,021 | 8,522 | |||||
| Allowance for doubtful accounts (recoveries) | (11 | ) | (53 | ) | |||
| Amortization of deferred gains and losses and debt issuance costs | 8,819 | 7,944 | |||||
| Depreciation and amortization | 176,727 | 140,152 | |||||
| Deferred income tax expense (benefit) | 46,303 | (492 | ) | ||||
| Loss on disposal of assets | 9,580 | 4,168 | |||||
| Lease termination costs | — | 12,629 | |||||
| Special charges, non-operating | 90,357 | — | |||||
| Changes in operating assets and liabilities: | |||||||
| Accounts receivable | 1,674 | (8,134 | ) | ||||
| Aircraft maintenance deposits, net | 14,019 | (37,930 | ) | ||||
| Long-term deposits and other assets | (4,803 | ) | (50,951 | ) | |||
| Deferred heavy maintenance, net | (190,381 | ) | (78,237 | ) | |||
| Income tax receivable | 69,844 | (69,844 | ) | ||||
| Accounts payable | 15,317 | 6,030 | |||||
| Air traffic liability | 28,270 | 43,527 | |||||
| Other liabilities | 74,038 | 31,672 | |||||
| Other | (375 | ) | 380 | ||||
| Net cash provided by operating activities | 506,463 | 425,240 | |||||
| Investing activities: | |||||||
| Purchase of available-for-sale investment securities | (124,430 | ) | (107,246 | ) | |||
| Proceeds from the maturity of available-for-sale investment securities | 122,947 | 105,906 | |||||
| Proceeds from sale of property and equipment | 11,400 | — | |||||
| Pre-delivery deposits on flight equipment, net of refunds | (177,424 | ) | (149,477 | ) | |||
| Capitalized interest | (8,729 | ) | (12,305 | ) | |||
| Assets constructed for others | (501 | ) | — | ||||
| Purchase of property and equipment | (606,971 | ) | (628,881 | ) | |||
| Net cash used in investing activities | (783,708 | ) | (792,003 | ) | |||
| Financing activities: | |||||||
| Proceeds from issuance of long-term debt | 832,099 | 629,725 | |||||
| Proceeds from stock options exercised | 51 | 45 | |||||
| Payments on debt obligations | (137,275 | ) | (102,313 | ) | |||
| Payments on capital lease obligations | (205,720 | ) | (425 | ) | |||
| Reimbursement for assets under construction for others | 501 | — | |||||
| Repurchase of common stock | (1,162 | ) | (46,580 | ) | |||
| Debt issuance costs | (7,365 | ) | (13,740 | ) | |||
| Net cash provided by financing activities | 481,129 | 466,712 | |||||
| Net (decrease) increase in cash and cash equivalents | 203,884 | 99,949 | |||||
| Cash and cash equivalents at beginning of period | 800,849 | 700,900 | |||||
| Cash and cash equivalents at end of period | $ | 1,004,733 | $ | 800,849 | |||
| Supplemental disclosures | |||||||
| Cash payments for: | |||||||
| Interest, net of capitalized interest | $ | 65,123 | $ | 37,902 | |||
| Income taxes paid, net of refunds | $ | (73,489 | ) | $ | 5,826 | ||
| Non-cash transactions: | |||||||
| Capital expenditures funded by capital lease borrowings | $ | (987 | ) | $ | (1,370 | ) | |
Prior period amounts have been reclassified to reflect the adoption of ASU No. 2014-09, " Revenue from Contracts with Customers," completed in the first quarter of 2018.
| SPIRIT AIRLINES, INC.Selected Operating Statistics (unaudited) | ||||||||
| Three Months Ended December 31, | ||||||||
| Operating Statistics | 2018 | 2017 | Change | |||||
| Available seat miles (ASMs) (thousands) | 8,998,928 | 7,741,030 | 16.2 | % | ||||
| Revenue passenger miles (RPMs) (thousands) | 7,606,962 | 6,319,924 | 20.4 | % | ||||
| Load factor (%) | 84.5 | 81.6 | 2.9 | pts | ||||
| Passenger flight segments (thousands) | 7,365 | 6,100 | 20.7 | % | ||||
| Block hours | 130,309 | 112,695 | 15.6 | % | ||||
| Departures | 48,073 | 41,957 | 14.6 | % | ||||
| Total operating revenue per ASM (TRASM) (cents) | 9.59 | 8.61 | 11.4 | % | ||||
| Average yield (cents) | 11.34 | 10.54 | 7.6 | % | ||||
| Fare revenue per passenger flight segment ($) | 60.45 | 55.30 | 9.3 | % | ||||
| Non-ticket revenue per passenger flight segment ($) | 56.70 | 53.91 | 5.2 | % | ||||
| Total revenue per passenger flight segment ($) | 117.15 | 109.21 | 7.3 | % | ||||
| CASM (cents) | 8.08 | 7.43 | 8.7 | % | ||||
| Adjusted CASM (cents) (1) | 8.04 | 7.47 | 7.6 | % | ||||
| Adjusted CASM ex-fuel (cents) (2) | 5.49 | 5.20 | 5.6 | % | ||||
| Fuel gallons consumed (thousands) | 101,595 | 88,838 | 14.4 | % | ||||
| Average economic fuel cost per gallon ($) | 2.26 | 1.97 | 14.7 | % | ||||
| Aircraft at end of period | 128 | 112 | 14.3 | % | ||||
| Average daily aircraft utilization (hours) | 11.5 | 11.3 | 1.8 | % | ||||
| Average stage length (miles) | 1,019 | 1,023 | (0.4 | )% | ||||
| Year Ended December 31, | ||||||||
| Operating Statistics | 2018 | 2017 | Change | |||||
| Available seat miles (ASMs) (thousands) | 36,502,982 | 29,592,819 | 23.4 | % | ||||
| Revenue passenger miles (RPMs) (thousands) | 30,623,379 | 24,605,512 | 24.5 | % | ||||
| Load factor (%) | 83.9 | 83.1 | 0.8 | pts | ||||
| Passenger flight segments (thousands) | 29,312 | 24,183 | 21.2 | % | ||||
| Block hours | 526,343 | 438,728 | 20.0 | % | ||||
| Departures | 192,845 | 165,449 | 16.6 | % | ||||
| Total operating revenue per ASM (TRASM) (cents) | 9.10 | 8.93 | 1.9 | % | ||||
| Average yield (cents) | 10.85 | 10.74 | 1.0 | % | ||||
| Fare revenue per passenger flight segment ($) | 58.14 | 56.38 | 3.1 | % | ||||
| Non-ticket revenue per passenger flight segment ($) | 55.23 | 52.94 | 4.3 | % | ||||
| Total revenue per passenger flight segment ($) | 113.37 | 109.32 | 3.7 | % | ||||
| CASM (cents) | 8.14 | 7.63 | 6.7 | % | ||||
| Adjusted CASM (cents) (1) | 7.87 | 7.59 | 3.7 | % | ||||
| Adjusted CASM ex-fuel (cents) (2) | 5.30 | 5.51 | (3.8 | )% | ||||
| Fuel gallons consumed (thousands) | 412,256 | 343,709 | 19.9 | % | ||||
| Average economic fuel cost per gallon ($) | 2.28 | 1.79 | 27.4 | % | ||||
| Average daily aircraft utilization (hours) | 12.1 | 11.6 | 4.3 | % | ||||
| Average stage length (miles) | 1,032 | 999 | 3.3 | % | ||||
- Excludes operating special items.
- Excludes economic 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.
Calculation of Total Non-Ticket Revenue per Passenger Segment(unaudited)
| Three Months Ended December 31, | Year Ended December 31, | ||||||||||||||
| (in thousands, except per segment data) | 2018 | 2017 | 2018 | 2017 | |||||||||||
| Operating revenues | |||||||||||||||
| Fare | $ | 445,203 | $ | 337,324 | $ | 1,704,107 | $ | 1,363,395 | |||||||
| Non-fare | 401,365 | 313,323 | 1,555,908 | 1,209,492 | |||||||||||
| Total passenger revenues | 846,568 | 650,647 | 3,260,015 | 2,572,887 | |||||||||||
| Other revenues | 16,227 | 15,535 | 63,019 | 70,665 | |||||||||||
| Total operating revenues | $ | 862,795 | $ | 666,182 | $ | 3,323,034 | $ | 2,643,552 | |||||||
| Non-ticket revenues (1) | $ | 417,592 | $ | 328,858 | $ | 1,618,927 | $ | 1,280,157 | |||||||
| Passenger segments | 7,365 | 6,100 | 29,312 | 24,183 | |||||||||||
| Non-ticket revenue per passenger segment ($) | $ | 56.70 | $ | 53.91 | $ | 55.23 | $ | 52.94 | |||||||
(1) Non-ticket revenues equals the sum of non-fare passenger revenues and other revenues.
Special Items(unaudited)
| Three Months Ended | Year Ended | ||||||||||||||
| December 31, | December 31, | ||||||||||||||
| (in thousands) | 2018 | 2017 | 2018 | 2017 | |||||||||||
| Operating special items include the following: | |||||||||||||||
| Supplemental rent credit (1) | — | (4,086 | ) | — | (4,086 | ) | |||||||||
| Loss on disposal of assets | 3,019 | 1,054 | 9,580 | 4,168 | |||||||||||
| Operating special charges (2) | 265 | — | 88,921 | 12,629 | |||||||||||
| Total operating special items | $ | 3,284 | $ | (3,032 | ) | $ | 98,501 | $ | 12,711 | ||||||
| Non-operating special items include the following: | |||||||||||||||
| Non-operating special charges (3) | — | — | 90,357 | $ | — | ||||||||||
| Total non-operating special items | $ | — | $ | — | $ | 90,357 | $ | — | |||||||
| Total special items | $ | 3,284 | $ | (3,032 | ) | $ | 188,858 | $ | 12,711 | ||||||
- Supplemental rent adjustment for liability accrued in prior years related to certain maintenance reserves and return conditions that are no longer probable.
- Operating special charges for the full year 2018 include amounts primarily related to a one-time ratification incentive recognized in connection with a new pilot agreement approved in the first quarter 2018. Operating special charges for 2017 are related to engine and aircraft lease termination costs.
- Non-operating special charges in 2018 are related to the purchase of 14 A319 aircraft, previously operated by the Company under operating leases. Upon execution of the purchase agreement, the lease agreements associated with these aircraft were classified as capital leases on the balance sheet at lower of cost or fair value. The difference between the resulting capital lease obligation and the purchase price was accreted as interest expense in special charges, non-operating in the statement of operations, through the closing of each individual purchase. All of the transactions were completed prior to June 30, 2018.
Reconciliation of Adjusted Operating Expense to GAAP Operating Expense(unaudited)
| Three Months Ended | Year Ended | ||||||||||||||
| December 31, | December 31, | ||||||||||||||
| (in thousands, except CASM data in cents) | 2018 | 2017 | 2018 | 2017 | |||||||||||
| Total operating expenses, as reported | $ | 726,730 | $ | 574,886 | $ | 2,972,120 | $ | 2,258,727 | |||||||
| Less operating special items | 3,284 | (3,032 | ) | 98,501 | 12,711 | ||||||||||
| Adjusted operating expenses, non-GAAP (1) | 723,446 | 577,918 | 2,873,619 | 2,246,016 | |||||||||||
| Less: Economic fuel expense | 229,680 | 175,205 | 939,324 | 615,581 | |||||||||||
| Adjusted operating expenses excluding fuel, non-GAAP (2) | $ | 493,766 | $ | 402,713 | $ | 1,934,295 | $ | 1,630,435 | |||||||
| Available seat miles | 8,998,928 | 7,741,030 | 36,502,982 | 29,592,819 | |||||||||||
| CASM (cents) | 8.08 | 7.43 | 8.14 | 7.63 | |||||||||||
| Adjusted CASM (cents) (1) | 8.04 | 7.47 | 7.87 | 7.59 | |||||||||||
| Adjusted CASM ex-fuel (cents) (2) | 5.49 | 5.20 | 5.30 | 5.51 | |||||||||||
- Excludes operating special items.
- Excludes operating special items and economic fuel expense.
Reconciliation of Adjusted Net Income, Adjusted Pre-Tax Income, and Adjusted Operating Income to GAAP Net Income(unaudited)
| Three Months Ended | Year Ended | ||||||||||||||||||
| December 31, | December 31, | ||||||||||||||||||
| (in thousands, except per share data) | 2018 | 2017 | 2018 | 2017 | |||||||||||||||
| Net income, as reported | $ | 91,937 | $ | 246,975 | $ | 155,749 | $ | 415,522 | |||||||||||
| Add: Provision (benefit) for income taxes (1) | 28,965 | (165,231 | ) | 49,227 | (65,836 | ) | |||||||||||||
| Income (loss) before income taxes, as reported | 120,902 | 81,744 | 204,976 | 349,686 | |||||||||||||||
| Pre-tax margin | 14.0 | % | 12.3 | % | 6.2 | % | 13.2 | % | |||||||||||
| Add special items (2) | $ | 3,284 | $ | (3,032 | ) | $ | 188,858 | $ | 12,711 | ||||||||||
| Adjusted income before income taxes, non-GAAP (3) | 124,186 | 78,712 | 393,834 | 362,397 | |||||||||||||||
| Adjusted pre-tax margin, non-GAAP (3) | 14.4 | % | 11.8 | % | 11.9 | % | 13.7 | % | |||||||||||
| Add: Total other (income) expense (4) | 15,163 | 9,552 | 55,581 | 35,139 | |||||||||||||||
| Adjusted operating income, non-GAAP (5) | 139,349 | 88,264 | 449,415 | 397,536 | |||||||||||||||
| Adjusted operating margin, non-GAAP (5) | 16.2 | % | 13.2 | % | 13.5 | % | 15.0 | % | |||||||||||
| Provision for income taxes | 29,494 | 29,123 | 92,920 | 134,379 | |||||||||||||||
| Adjusted net income, non-GAAP (3) | $ | 94,692 | $ | 49,589 | $ | 300,914 | $ | 228,018 | |||||||||||
| Weighted average shares, diluted | 68,687 | 68,901 | 68,431 | 69,377 | |||||||||||||||
| Adjusted net income per share, diluted (3) | $ | 1.38 | $ | 0.72 | $ | 4.40 | $ | 3.29 | |||||||||||
| Total operating revenues | $ | 862,795 | $ | 666,182 | $ | 3,323,034 | $ | 2,643,552 | |||||||||||
- During the fourth quarter of 2017, the Company recorded a non-recurring income tax benefit of $196.7 million due to the enactment of the Tax Cuts and Jobs Act of 2017.
- See "Special Items" for more details.
- Excludes operating and non-operating special items.
- Excludes non-operating special items.
- Excludes operating special items.
Investor Relations Contact:DeAnne Gabel[email protected](954) 447-7920
Media Contact:Stephen Schuler[email protected](954) 364-0231
