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CST: 15/11/2019 02:41:09   

Spirit Airlines Reports Fourth Quarter and Full Year 2018 Results

282 Days ago

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 Performance
For 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.

Fleet
Spirit 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 Routes
Orlando - 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 Detail
Spirit 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 Statements
Statements 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 %
  1. Excludes operating special items.
  2. 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  
  1. Supplemental rent adjustment for liability accrued in prior years related to certain maintenance reserves and return conditions that are no longer probable.
  2. 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.
  3. 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  
  1. Excludes operating special items.
  2. 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  
  1. 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.
  2. See "Special Items" for more details.
  3. Excludes operating and non-operating special items.
  4. Excludes non-operating special items.
  5. Excludes operating special items.

Investor Relations Contact:
DeAnne Gabel
Investorrelations@spirit.com
(954) 447-7920

Media Contact:
Stephen Schuler
Stephen.schuler@spirit.com
(954) 364-0231

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