MIRAMAR — Spirit Airlines, Inc. today reported third quarter 2016 financial results.
- GAAP net income for the third quarter 2016 was $81.4 million ($1.17 per diluted share), or $86.3 million ($1.24 per diluted share) excluding special items.
- GAAP operating margin for the third quarter 2016 was 21.8 percent, or 23.0 percent excluding special items.
- Spirit ended the third quarter 2016 with unrestricted cash, cash equivalents, and short-term investments of $926.0 million.
- Spirit’s return on invested capital (before taxes and excluding special items) for the twelve months ending September 30, 2016 was 25.3 percent.
“During the third quarter 2016, we saw sequential improvement in total revenue directly related to our own revenue initiatives as well as a modest improvement in the industry pricing environment, and are encouraged by the constructive trends we are seeing,” said Bob Fornaro, Spirit’s President and Chief Executive Officer. “On the operations front, we made good strides toward improving our operational performance and for the months of July, August, and September, we set new company records for on-time performance. I applaud our team for the progress made to date towards achieving consistent reliability.”
For the third quarter 2016, Spirit’s total operating revenue was $621.3 million, an increase of 8.1 percent compared to the third quarter 2015, driven by a 12.6 percent increase in flight volume and 0.8 point increase in load factor, partially offset by a decrease in operating yields.
Total revenue per available seat mile (TRASM) for the third quarter 2016 decreased 7.0 percent compared to the same period last year, primarily driven by a decrease in passenger yield as a result of industry competitive pricing pressures. Although yields decreased year over year, throughout the third quarter 2016, the Company saw sequential improvement in the rate of decline.
On a per passenger flight segment (“PFS”) basis, total revenue per PFS for the third quarter 2016 decreased 9.0 percent, or $10.84, year over year to $109.51, primarily driven by a 12.9 percent, or $8.62, decrease in ticket revenue per PFS related to industry competitive pricing pressures. Non-ticket revenue declined 4.2 percent, or $2.22, year over year on a per PFS basis to $51.17, primarily driven by a modest decline in bag revenue per PFS.
Total GAAP operating expenses, including special items of $7.8 million primarily related to lease termination charges, increased 16.4 percent, or $68.5 million, year over year to $486.1 million driven by an increase in flight volume. Adjusted operating expense for the third quarter 2016 increased 14.6 percent, or $61.0 million, to $478.3 million on a capacity increase of 16.2 percent year over year.
Aircraft fuel expense increased in the third quarter 2016 by 5.1 percent, or $5.9 million, compared to the same period last year, due to a 15.7 percent increase in fuel gallons consumed, partially offset by an 8.8 percent decrease in the average economic fuel cost per gallon.
Spirit reported third quarter 2016 cost per available seat mile (“ASM”) excluding special items and fuel (“Adjusted CASM ex-fuel”) of 5.48 cents, an increase of 1.7 percent compared to the same period last year, primarily driven by higher salaries, wages, and benefits, and higher maintenance expense partially offset by lower aircraft rent per ASM.
“Our team continues to do a good job holding the line on core cost inflation. In addition, operational reliability improvements during the quarter produced more cost savings than we anticipated, provided a better product for our customers, and a better environment for our team members: a true “win-win-win” scenario,” said Ted Christie, Spirit’s Chief Financial Officer.
Spirit and its pilots, represented by the Airline Pilots Association, remain in open contract negotiations under the supervision of the National Mediation Board.
During the third quarter 2016, Spirit took delivery of 2 new A321ceo aircraft, ending the quarter with 89 aircraft in its fleet. Also, during the quarter, Spirit purchased three A319 aircraft off lease and extended the leases for two other A319 aircraft.
During the third quarter 2016, Spirit returned $38 million to shareholders by repurchasing approximately 0.9 million shares. Year to date Spirit has returned $100 million to shareholders by repurchasing approximately 2.3 million shares.
Recent New Service Announcements
Boston – Orlando (10/7/16)
Philadelphia – Orlando (10/7/16)
Newark – Fort Lauderdale (10/30/16)
Newark – Orlando (10/30/16)
Kansas City – Orlando (11/10/16)
Akron-Canton – Fort Lauderdale (11/10/16)
Akron-Canton – Orlando (11/10/16)
Akron-Canton – Tampa (11/10/16)*
Akron-Canton – Fort Myers (11/11/16)*
Niagara Falls – Orlando (11/17/16)
Plattsburgh – Orlando (11/17/16
Baltimore – Fort Myers (11/10/16)
Baltimore – Tampa (11/10/16)
Fort Lauderdale – Havana, Cuba (12/1/16)**
Newark – Myrtle Beach (3/9/17)
Akron-Canton – Myrtle Beach (4/27/17)*
Akron-Canton – Las Vegas (4/27/17)
**subject to foreign government approval