UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
 _______________________________________________________________________
Form 10-Q

(Mark One)
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 20222023
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from              to             
Commission File Number: 001-35186

SPIRIT AIRLINES, INC.
(Exact name of registrant as specified in its charter)

Delaware38-1747023
(State or other jurisdiction of
incorporation or organization)
(I.R.S. Employer
Identification No.)
2800 Executive WayMiramarFlorida33025
(Address of principal executive offices)(Zip Code)

(954) 447-7920
(Registrant’s telephone number, including area code) 

Securities registered pursuant to Section 12(b) of the Act:
Title of each className of exchange on which registeredTrading Symbol
Common Stock, $0.0001 par valueNew York Stock ExchangeSAVE

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes    No  

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).    Yes      No  

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and "emerging growth company" in Rule 12b-2 of the Exchange Act. (Check one):
Large accelerated filerAccelerated filer
Non-accelerated filerSmaller reporting company
(Do not check if a smaller reporting company)Emerging growth company
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act..Act.     
Indicate by check mark whether the registrant is a shell company (as defined by Rule 12b-2 of the Exchange Act).    Yes      No  
Indicate the number of shares outstanding of each of the registrant’s classes of common stock as of the close of business on August 2, 2022:July 27, 2023:
Class Number of Shares
Common Stock, $0.0001 par value 108,851,093109,160,967

1


Table of Contents
INDEX
 
 Page No.

2


PART I. Financial Information
ITEM 1.UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
Spirit Airlines, Inc.
Condensed Consolidated Statements of Operations
(unaudited, in thousands, except per share amounts)

 
Three Months Ended June 30,Six Months Ended June 30, Three Months Ended June 30,Six Months Ended June 30,
20222021202220212023202220232022
Operating revenues:Operating revenues:Operating revenues:
PassengerPassenger$1,347,871 $846,507 $2,297,615 $1,296,842 Passenger$1,410,061 $1,347,871 $2,737,534 $2,297,615 
OtherOther18,772 12,802 36,343 23,746 Other22,411 18,772 44,712 36,343 
Total operating revenuesTotal operating revenues1,366,643 859,309 2,333,958 1,320,588 Total operating revenues1,432,472 1,366,643 2,782,246 2,333,958 
Operating expenses:Operating expenses:Operating expenses:
Aircraft fuelAircraft fuel391,032 558,633 878,743 927,218 
Salaries, wages and benefits
Salaries, wages and benefits
308,634 257,236 614,524 502,928 Salaries, wages and benefits
407,705 308,634 796,890 614,524 
Aircraft fuel558,633 214,825 927,218 357,755 
Landing fees and other rentsLanding fees and other rents92,021 81,497 174,957 153,605 Landing fees and other rents106,487 92,021 203,832 174,957 
Depreciation and amortizationDepreciation and amortization76,469 73,703 152,660 148,015 Depreciation and amortization80,542 76,469 158,533 152,660 
Aircraft rentAircraft rent68,632 64,641 134,676 119,423 Aircraft rent92,101 68,632 177,368 134,676 
Maintenance, materials and repairsMaintenance, materials and repairs45,407 39,639 90,922 69,542 Maintenance, materials and repairs56,825 45,407 111,239 90,922 
DistributionDistribution48,724 35,263 84,075 58,905 Distribution50,701 48,724 98,718 84,075 
Special chargesSpecial charges19,972 18,004 33,955 33,567 
Loss on disposal of assetsLoss on disposal of assets10,636 189 22,188 1,306 Loss on disposal of assets802 10,636 7,902 22,188 
Special charges (credits)18,004 (115,002)33,567 (291,940)
Other operatingOther operating184,813 114,107 355,969 210,368 Other operating206,094 184,813 407,250 355,969 
Total operating expensesTotal operating expenses1,411,973 766,098 2,590,756 1,329,907 Total operating expenses1,412,261 1,411,973 2,874,430 2,590,756 
Operating income (loss)Operating income (loss)(45,330)93,211 (256,798)(9,319)Operating income (loss)20,211 (45,330)(92,184)(256,798)
Other (income) expense:Other (income) expense:Other (income) expense:
Interest expenseInterest expense30,124 39,662 68,004 84,468 Interest expense28,880 30,124 80,673 68,004 
Loss on extinguishment of debt— 331,630 — 331,630 
Capitalized interestCapitalized interest(5,677)(4,631)(10,939)(9,363)Capitalized interest(8,445)(5,677)(16,093)(10,939)
Interest incomeInterest income(2,561)(373)(3,028)(4,744)Interest income(15,962)(2,561)(31,396)(3,028)
Other (income) expenseOther (income) expense296 233 713 181 Other (income) expense766 296 1,308 713 
Total other (income) expenseTotal other (income) expense22,182 366,521 54,750 402,172 Total other (income) expense5,239 22,182 34,492 54,750 
Income (loss) before income taxesIncome (loss) before income taxes(67,512)(273,310)(311,548)(411,491)Income (loss) before income taxes14,972 (67,512)(126,676)(311,548)
Provision (benefit) for income taxesProvision (benefit) for income taxes(15,106)14,553 (64,439)(11,307)Provision (benefit) for income taxes17,321 (15,106)(20,416)(64,439)
Net loss$(52,406)$(287,863)$(247,109)$(400,184)
Basic loss per share$(0.48)$(2.73)$(2.27)$(3.94)
Diluted loss per share$(0.48)$(2.73)$(2.27)$(3.94)
Net income (loss)Net income (loss)$(2,349)$(52,406)$(106,260)$(247,109)
Basic earnings (loss) per shareBasic earnings (loss) per share$(0.02)$(0.48)$(0.97)$(2.27)
Diluted earnings (loss) per shareDiluted earnings (loss) per share$(0.02)$(0.48)$(0.97)$(2.27)
The accompanying Notes are an integral part of these Condensed Consolidated Financial Statements.
1



Spirit Airlines, Inc.
Condensed Consolidated Statements of Comprehensive Income (Loss)
(unaudited, in thousands)
Three Months Ended June 30,Six Months Ended June 30,
2022202120222021
Net loss$(52,406)$(287,863)$(247,109)$(400,184)
Unrealized gain (loss) on short-term investment securities and cash and cash equivalents, net of deferred taxes of $(50), $(5), $(128) and $(3)(171)(19)(438)(12)
Interest rate derivative loss reclassified into earnings, net of taxes of $12, $13, $26 and $2739 44 76 89 
Other comprehensive income (loss)$(132)$25 $(362)$77 
Comprehensive loss$(52,538)$(287,838)$(247,471)$(400,107)

Three Months Ended June 30,Six Months Ended June 30,
2023202220232022
Net income (loss)$(2,349)$(52,406)$(106,260)$(247,109)
Unrealized gain (loss) on short-term investment securities and cash and cash equivalents, net of deferred taxes of $(102), $(50), $(51) and $(128)43 (171)216 (438)
Interest rate derivative loss reclassified into earnings, net of taxes of $(10), $12, $2 and $2653 39 86 76 
Other comprehensive income (loss)$96 $(132)$302 $(362)
Comprehensive income (loss)$(2,253)$(52,538)$(105,958)$(247,471)

The accompanying Notes are an integral part of these Condensed Consolidated Financial Statements.


2


Spirit Airlines, Inc.
Condensed Consolidated Balance Sheets
(unaudited, in thousands)
June 30, 2022December 31, 2021June 30, 2023December 31, 2022
AssetsAssetsAssets
Current assets:Current assets:Current assets:
Cash and cash equivalentsCash and cash equivalents$1,197,065 $1,333,507 Cash and cash equivalents$1,110,688 $1,346,350 
Restricted cashRestricted cash95,400 95,400 Restricted cash119,400 119,392 
Short-term investment securitiesShort-term investment securities105,920 106,313 Short-term investment securities109,494 107,115 
Accounts receivable, netAccounts receivable, net150,149 128,828 Accounts receivable, net186,739 197,276 
Aircraft maintenance deposits, net12,228 10,726 
Income tax receivableIncome tax receivable37,890 37,890 Income tax receivable36,261 36,261 
Prepaid expenses and other current assetsPrepaid expenses and other current assets163,202 129,827 Prepaid expenses and other current assets210,252 187,589 
Total current assetsTotal current assets1,761,854 1,842,491 Total current assets1,772,834 1,993,983 
Property and equipment:Property and equipment:Property and equipment:
Flight equipmentFlight equipment4,424,409 4,356,523 Flight equipment4,219,907 4,326,515 
Ground property and equipmentGround property and equipment423,821 384,928 Ground property and equipment629,928 521,802 
Less accumulated depreciationLess accumulated depreciation(989,812)(884,858)Less accumulated depreciation(1,109,335)(1,098,819)
3,858,418 3,856,593 3,740,500 3,749,498 
Operating lease right-of-use assetsOperating lease right-of-use assets2,198,791 1,950,520 Operating lease right-of-use assets3,058,137 2,699,574 
Pre-delivery deposits on flight equipmentPre-delivery deposits on flight equipment488,323 484,821 Pre-delivery deposits on flight equipment508,957 487,553 
Long-term aircraft maintenance deposits27,795 38,166 
Deferred heavy maintenance, netDeferred heavy maintenance, net342,335 330,062 Deferred heavy maintenance, net252,682 190,349 
Other long-term assetsOther long-term assets37,507 37,372 Other long-term assets39,017 63,817 
Total assetsTotal assets$8,715,023 $8,540,025 Total assets$9,372,127 $9,184,774 
Liabilities and shareholders’ equityLiabilities and shareholders’ equityLiabilities and shareholders’ equity
Current liabilities:Current liabilities:Current liabilities:
Accounts payableAccounts payable$76,048 $44,952 Accounts payable$76,158 $75,449 
Air traffic liabilityAir traffic liability561,705 382,317 Air traffic liability479,677 429,618 
Current maturities of long-term debt, net and finance leases351,521 208,948 
Current maturities of long-term debt, net, and finance leasesCurrent maturities of long-term debt, net, and finance leases235,579 346,888 
Current maturities of operating leasesCurrent maturities of operating leases169,195 158,631 Current maturities of operating leases201,337 188,296 
Other current liabilitiesOther current liabilities578,663 480,754 Other current liabilities693,211 556,330 
Total current liabilitiesTotal current liabilities1,737,132 1,275,602 Total current liabilities1,685,962 1,596,581 
Long-term debt, net and finance leases, less current maturitiesLong-term debt, net and finance leases, less current maturities2,696,201 2,975,823 Long-term debt, net and finance leases, less current maturities3,081,192 3,200,376 
Operating leases, less current maturitiesOperating leases, less current maturities1,981,467 1,751,351 Operating leases, less current maturities2,793,437 2,455,619 
Deferred income taxesDeferred income taxes310,351 375,472 Deferred income taxes205,796 226,843 
Deferred gains and other long-term liabilitiesDeferred gains and other long-term liabilities116,657 47,742 Deferred gains and other long-term liabilities134,668 133,704 
Shareholders’ equity:Shareholders’ equity:Shareholders’ equity:
Common stockCommon stock11 11 Common stock11 11 
Additional paid-in-capitalAdditional paid-in-capital1,140,254 1,131,826 Additional paid-in-capital1,153,068 1,146,015 
Treasury stock, at costTreasury stock, at cost(77,416)(75,639)Treasury stock, at cost(79,672)(77,998)
Retained earningsRetained earnings811,260 1,058,369 Retained earnings397,959 504,219 
Accumulated other comprehensive lossAccumulated other comprehensive loss(894)(532)Accumulated other comprehensive loss(294)(596)
Total shareholders’ equityTotal shareholders’ equity1,873,215 2,114,035 Total shareholders’ equity1,471,072 1,571,651 
Total liabilities and shareholders’ equityTotal liabilities and shareholders’ equity$8,715,023 $8,540,025 Total liabilities and shareholders’ equity$9,372,127 $9,184,774 
The accompanying Notes are an integral part of these Condensed Consolidated Financial Statements.
3


Spirit Airlines, Inc.
Condensed Consolidated Statements of Cash Flows
(unaudited, in thousands)

Six Months Ended June 30, Six Months Ended June 30,
2022202120232022
Operating activities:Operating activities:Operating activities:
Net loss$(247,109)$(400,184)
Adjustments to reconcile net income (loss) to net cash provided by operations:
Net income (loss)Net income (loss)$(106,260)$(247,109)
Adjustments to reconcile net loss to net cash provided (used) by operations:Adjustments to reconcile net loss to net cash provided (used) by operations:
Losses reclassified from other comprehensive incomeLosses reclassified from other comprehensive income102 116 Losses reclassified from other comprehensive income88 102 
Share-based compensationShare-based compensation5,723 6,740 Share-based compensation6,753 5,723 
Allowance for doubtful accounts (recoveries)Allowance for doubtful accounts (recoveries)(108)170 Allowance for doubtful accounts (recoveries)(108)
Amortization of debt issuance costsAmortization of debt issuance costs6,695 6,412 Amortization of debt issuance costs7,829 6,695 
Depreciation and amortizationDepreciation and amortization152,660 148,015 Depreciation and amortization158,533 152,660 
Accretion of 8.00% senior secured notesAccretion of 8.00% senior secured notes521 753 Accretion of 8.00% senior secured notes2,105 521 
Amortization of debt discountAmortization of debt discount6,346 — Amortization of debt discount2,378 6,346 
Deferred income tax expense (benefit)(65,019)(12,353)
Deferred income tax benefitDeferred income tax benefit(20,998)(65,019)
Loss on disposal of assetsLoss on disposal of assets22,188 1,306 Loss on disposal of assets7,902 22,188 
Loss on extinguishment of debt— 331,630 
Changes in operating assets and liabilities:Changes in operating assets and liabilities:Changes in operating assets and liabilities:
Accounts receivable, netAccounts receivable, net(21,213)(98,484)Accounts receivable, net10,531 (21,213)
Aircraft maintenance deposits, net8,869 5,616 
Long-term deposits and other assets(30,717)(5,770)
Prepaid income taxes— (52)
Deferred heavy maintenance, net(58,226)(21,657)
Income tax receivable— 109,746 
Deposits and other assetsDeposits and other assets(7,339)(21,848)
Deferred heavy maintenanceDeferred heavy maintenance(98,656)(58,226)
Accounts payableAccounts payable22,798 24,024 Accounts payable(500)22,798 
Air traffic liabilityAir traffic liability179,388 206,170 Air traffic liability50,059 179,388 
Deferred salaries, wages and benefits, net— 86,360 
Other liabilitiesOther liabilities103,591 95,193 Other liabilities119,309 103,591 
OtherOther278 365 Other(1,028)278 
Net cash provided by operating activities86,767 484,116 
Net cash provided (used) by operating activitiesNet cash provided (used) by operating activities130,712 86,767 
4


Investing activities:Investing activities:Investing activities:
Purchase of available-for-sale investment securitiesPurchase of available-for-sale investment securities(38,970)(55,936)Purchase of available-for-sale investment securities(55,610)(38,970)
Proceeds from the maturity and sale of available-for-sale investment securitiesProceeds from the maturity and sale of available-for-sale investment securities38,500 55,500 Proceeds from the maturity and sale of available-for-sale investment securities54,410 38,500 
Proceeds from sale of property and equipmentProceeds from sale of property and equipment36,151 — 
Pre-delivery deposits on flight equipment, net of refundsPre-delivery deposits on flight equipment, net of refunds(7,367)(81,208)Pre-delivery deposits on flight equipment, net of refunds(15,134)(7,367)
Capitalized interestCapitalized interest(8,948)(9,055)Capitalized interest(10,863)(8,948)
Assets under construction for othersAssets under construction for others(2)(1,170)Assets under construction for others— (2)
Purchase of property and equipmentPurchase of property and equipment(106,271)(87,154)Purchase of property and equipment(130,979)(106,271)
Net cash used in investing activities(123,058)(179,023)
Net cash provided (used) in investing activitiesNet cash provided (used) in investing activities(122,025)(123,058)
Financing activities:Financing activities:Financing activities:
Proceeds from issuance of long-term debt— 562,996 
Proceeds from issuance of warrants— 375,662 
Payments on debt obligationsPayments on debt obligations(96,755)(857,552)Payments on debt obligations(241,819)(96,755)
Payments for the early extinguishment of debt— (317,905)
Payments on finance lease obligationsPayments on finance lease obligations(421)(397)Payments on finance lease obligations(293)(421)
Reimbursement for assets under construction for othersReimbursement for assets under construction for others959 Reimbursement for assets under construction for others— 
Repurchase of common stockRepurchase of common stock(1,777)(1,324)Repurchase of common stock(1,674)(1,777)
Debt issuance costsDebt issuance costs(1,200)(2,746)Debt issuance costs(555)(1,200)
Net cash used by financing activities(100,151)(240,307)
Net cash provided (used) by financing activitiesNet cash provided (used) by financing activities(244,341)(100,151)
Net increase (decrease) in cash, cash equivalents, and restricted cashNet increase (decrease) in cash, cash equivalents, and restricted cash(136,442)64,786 Net increase (decrease) in cash, cash equivalents, and restricted cash(235,654)(136,442)
Cash, cash equivalents, and restricted cash at beginning of period (1)Cash, cash equivalents, and restricted cash at beginning of period (1)1,428,907 1,861,124 Cash, cash equivalents, and restricted cash at beginning of period (1)1,465,742 1,428,907 
Cash, cash equivalents, and restricted cash at end of period (1)Cash, cash equivalents, and restricted cash at end of period (1)$1,292,465 $1,925,910 Cash, cash equivalents, and restricted cash at end of period (1)$1,230,088 $1,292,465 
Supplemental disclosuresSupplemental disclosuresSupplemental disclosures
Cash payments for:Cash payments for:Cash payments for:
Interest, net of capitalized interestInterest, net of capitalized interest$54,481 $79,689 Interest, net of capitalized interest$69,466 $54,481 
Income taxes paid (received), netIncome taxes paid (received), net$882 $(108,648)Income taxes paid (received), net$1,197 $882 
Cash paid for amounts included in the measurement of lease liabilities:Cash paid for amounts included in the measurement of lease liabilities:Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows for operating leasesOperating cash flows for operating leases$137,408 $132,323 Operating cash flows for operating leases$186,225 $137,408 
Financing cash flows for finance leasesFinancing cash flows for finance leases$34 $48 Financing cash flows for finance leases$18 $34 
Non-cash transactions:Non-cash transactions:Non-cash transactions:
Capital expenditures funded by finance lease borrowingsCapital expenditures funded by finance lease borrowings$— $538 Capital expenditures funded by finance lease borrowings$145 $— 
Capital expenditures funded by operating lease borrowingsCapital expenditures funded by operating lease borrowings$319,554 $268,169 Capital expenditures funded by operating lease borrowings$445,969 $319,554 
(1) The sum of cash and cash equivalents and restricted cash on the Company's condensed consolidated balance sheets equals cash, cash equivalents, and restricted cash in our statement of cash flows.
(1) The sum of cash and cash equivalents and restricted cash on the Company's condensed consolidated balance sheets equals cash, cash equivalents, and restricted cash in the Company's condensed consolidated statement of cash flows.(1) The sum of cash and cash equivalents and restricted cash on the Company's condensed consolidated balance sheets equals cash, cash equivalents, and restricted cash in the Company's condensed consolidated statement of cash flows.
The accompanying Notes are an integral part of these Condensed Consolidated Financial Statements.
5


Spirit Airlines, Inc.
Condensed Consolidated Statements of Shareholders’ Equity
(unaudited, in thousands)
Six Months Ended June 30, 2021
Common StockAdditional Paid-In-CapitalTreasury StockRetained EarningsAccumulated Other Comprehensive Income (Loss)Total
Balance at December 31, 2020$10 $799,549 $(74,124)$1,524,878 $(618)$2,249,695 
Effect of ASU No. 2020-06 implementation
— (55,590)— 6,060 — (49,530)
Share-based compensation— 4,254 — — — 4,254 
Repurchase of common stock— — (1,307)— — (1,307)
Changes in comprehensive income— — — — 52 52 
Issuance of warrants— 2,146 — — — 2,146 
Net loss— — — (112,321)— (112,321)
Balance at March 31, 2021$10 $750,359 $(75,431)$1,418,617 $(566)$2,092,989 
Issuance of common stock and warrants, net373,186 — — — 373,187 
Share-based compensation— 2,486 — — — 2,486 
Repurchase of common stock— — (17)— — (17)
Changes in comprehensive income— — — — 25 25 
Net loss— — — (287,863)— (287,863)
Balance at June 30, 2021$11 $1,126,031 $(75,448)$1,130,754 $(541)$2,180,807 
Six Months Ended June 30, 2022
Common StockAdditional Paid-In-CapitalTreasury StockRetained EarningsAccumulated Other Comprehensive Income (Loss)Total
Balance at December 31, 2021$11 $1,131,826 $(75,639)$1,058,369 $(532)$2,114,035 
Share-based compensation— 4,046 — — — 4,046 
Repurchase of common stock— — (1,772)— — (1,772)
Changes in comprehensive income— — — — (230)(230)
Net income (loss)— — — (194,703)— (194,703)
Balance at March 31, 2022$11 $1,135,872 $(77,411)$863,666 $(762)$1,921,376 
Convertible debt conversion— 2,705 — — — 2,705 
Share-based compensation— 1,677 — — — 1,677 
Repurchase of common stock— — (5)— — (5)
Changes in comprehensive income— — — — (132)(132)
Net income (loss)— — — (52,406)— (52,406)
Balance at June 30, 2022$11 $1,140,254 $(77,416)$811,260 $(894)$1,873,215 


Six Months Ended June 30, 2022Six Months Ended June 30, 2023
Common StockAdditional Paid-In-CapitalTreasury StockRetained EarningsAccumulated Other Comprehensive Income (Loss)TotalCommon StockAdditional Paid-In-CapitalTreasury StockRetained EarningsAccumulated Other Comprehensive Income (Loss)Total
Balance at December 31, 2021$11 $1,131,826 $(75,639)$1,058,369 $(532)$2,114,035 
Balance at December 31, 2022Balance at December 31, 2022$11 $1,146,015 $(77,998)$504,219 $(596)$1,571,651 
Convertible debt conversionsConvertible debt conversions— 300 — — — 300 
Share-based compensationShare-based compensation— 3,273 — — — 3,273 
Repurchase of common stockRepurchase of common stock— — (1,673)— — (1,673)
Changes in comprehensive incomeChanges in comprehensive income— — — — 206 206 
Net income (loss)Net income (loss)— — — (103,911)— (103,911)
Balance at March 31, 2023Balance at March 31, 2023$11 $1,149,588 $(79,671)$400,308 $(390)$1,469,846 
Share-based compensationShare-based compensation— 4,046 — — — 4,046 Share-based compensation— 3,480 — — — 3,480 
Repurchase of common stockRepurchase of common stock— — (1,772)— — (1,772)Repurchase of common stock— — (1)— — (1)
Changes in comprehensive incomeChanges in comprehensive income— — — — (230)(230)Changes in comprehensive income— — — — 96 96 
Net loss— — — (194,703)— (194,703)
Balance at March 31, 2022$11 $1,135,872 $(77,411)$863,666 $(762)$1,921,376 
Convertible debt conversions— 2,705 — — — 2,705 
Share-based compensation— 1,677 — — — 1,677 
Repurchase of common stock— — (5)— — (5)
Changes in comprehensive income— — — — (132)(132)
Net loss— — — (52,406)— (52,406)
Balance at June 30, 2022$11$1,140,254$(77,416)$811,260$(894)$1,873,215
Net income (loss)Net income (loss)— — — (2,349)— (2,349)
Balance at June 30, 2023Balance at June 30, 2023$11$1,153,068$(79,672)$397,959$(294)$1,471,072
The accompanying Notes are an integral part of these Condensed Consolidated Financial Statements.
6


Notes to Condensed Consolidated Financial Statements
(unaudited)
1. Basis of Presentation

The accompanying unaudited condensed consolidated financial statements include the accounts of Spirit Airlines, Inc. (“Spirit”) and its consolidated subsidiaries (the(together with Spirit, the "Company").

These unaudited condensed consolidated financial statements reflect all normal recurring adjustments which management believes are necessary to fairly present the financial position, results of operations and cash flows of the Company for the respective periods presented. Certain information and footnote disclosures normally included in the audited annual financial statements prepared in accordance with U.S. generally accepted accounting principles ("GAAP") have been condensed or omitted pursuant to the rules and regulations of the Securities and Exchange Commission for Form 10-Q. These unaudited interim condensed consolidated financial statements should be read in conjunction with the audited financial statements of the Company and notes thereto included in the Company's Annual Report on Form 10-K for the year ended December 31, 20212022 filed with the Securities and Exchange Commission on February 8, 2022.6, 2023.

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect both the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results may differ from these estimates.

The interim results reflected in the unaudited condensed consolidated financial statements are not necessarily indicative of the results that may be expected for other interim periods or for the full year. The air transportation business is subject to significant seasonal fluctuations as demand is generally greater in the second and third quarters of each year. However, beginning in early 2020, as a result of the COVID-19 pandemic, demand has not always been in line with such trends. The air transportation business is volatile and highly affected by economic cycles and trends.


2. Merger

Termination of Frontier Merger

On July 27, 2022, Spirit, Frontier Group Holdings, Inc., a Delaware corporation (“Frontier”), and Top Gun Acquisition Corp., a Delaware corporation and a direct, wholly owned subsidiary of Frontier (“Frontier Merger Sub”), entered into a Termination Agreement (the “Termination Agreement”), pursuant to which the parties agreed to terminate the Agreement and Plan of Merger, dated as of February 5, 2022 (as amended on June 2, 2022 and June 24, 2022, the “Frontier Merger Agreement”), among Spirit, Frontier and Frontier Merger Sub, effective immediately. Under the terms of the Termination Agreement, Spirit paid $25.0 million in cash to Frontier for Frontier’s reasonable and documented out-of-pocket costs and expenses (the “Frontier Expenses”).

Announcement of JetBlue Merger

On July 28, 2022, Spirit entered into an Agreement and Plan of Merger (the “Merger Agreement”) with JetBlue Airways Corporation, a Delaware corporation (“JetBlue”), and Sundown Acquisition Corp., a Delaware corporation and a direct, wholly owned subsidiary of JetBlue (“Merger Sub”), pursuant to which and subject to the terms and conditions therein, Merger Sub will merge with and into Spirit, with Spirit continuing as the surviving entity (the “Merger”). As a result of the Merger, each existingoutstanding share of Spirit's common stock (except for dissenting shares, treasury stock, and shares of Spirit's common stock owned by JetBlue, Merger Sub or any of their respective wholly owned subsidiaries), will be converted into the right to receive an amount in cash per share, without interest, equal to (such amount, the “Merger Consideration”) (i) $33.50 minus (ii) (A) $2.50 (the “Approval Prepayment Amount”), to the extent paid (the “Approval Prepayment”) uponon October 26, 2022 following the adoption by Spirit stockholders of the Merger Agreement (or, in the event that the closing of the Merger (the “Closing”) occurs after the record date for the prepayment of, but before the payment date of, such Approval Prepayment Amount, to the extent payable after the Closing),on October 19, 2022 and (B) an additional monthly per share prepayment amount calculated as the product of $0.10 and the number of additional prepayments paid (or, in the event the Closing occurs after the record date of, but before the payment date of any such additional prepayment, to the extent payable after the Closing), not to exceed $1.15 per share of Spirit common stock, by JetBlue to Spirit stockholders in accordance with the Merger Agreement after December 31, 2022 (each such payment is referred to as an “Additional Prepayment” and such $0.10 amount is referred to as the “Additional Prepayment Amount”). If an aggregate of $1.15 of Additional Prepayment Amounts has been paid out before consummation or termination of the Merger, Spirit stockholders will thereafter continue to receive monthly Additional Prepayments, at the same $0.10 per month rate until the transaction closes or the Merger Agreement is terminated. The Merger Agreement becomes unilaterally terminable by either JetBlue or Spirit after July 24, 2024.

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In accordance with the terms of the Merger Agreement, JetBlue willis required to pay or cause to be paid the Approval Prepayment Amount to Spirit stockholders as of the record date established by Spirit for the special meeting to approve the Merger Agreement within five business days following such Spirit stockholder approval. Thereafter, on or prior to the last business day of each month beginning after December 31, 2022 until the earlier of the Closing or termination of the Merger Agreement, JetBlue will also pay or cause to be paid the Additional Prepayment Amount to Spirit stockholders as of a record date not more than 5five business days prior to the last business day of such month. The Company expects paymentsPayments made from JetBlue to Spirit stockholders willdo not impact the Company's results of operations or cash flows. Under

On October 19, 2022, Spirit’s stockholders approved the Merger Agreement at a special meeting of stockholders. The record date for both the Company’s special meeting and the Approval Prepayment was September 12, 2022. In accordance with
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the terms of the Merger Agreement, on October 26, 2022, JetBlue reimbursedpaid the Spirit stockholders the Approval Prepayment Amount of $2.50 per share. Additionally, on January 31, 2023, February 28, 2023, March 31, 2023, April 28, 2023, May 31, 2023 and June 30, 2023, JetBlue paid the Additional Prepayments of $0.10 per share of common stock to all Spirit stockholders of record as of January 25, 2023, February 22, 2023, March 27, 2023, April 24, 2023, May 24, 2023 and June 26, 2023, respectively.

Due to the payment of the Approval Prepayment and each of the Additional Prepayment Amounts, in accordance with the terms of the respective debt indentures and warrant agreements, the Company forannounced related adjustments to the $25.0 million Frontier Expenses discussed above.conversion rates of its convertible notes due 2025 and its convertible notes due 2026 as well as adjustments to the exercise prices and warrant shares of the PSP1, PSP2 and PSP3 warrants outstanding. As of June 30, 2023, the conversion rate of the convertible notes due 2025 and 2026 were 91.4187 and 23.7536 shares of voting common stock per $1,000 principal amount of convertible notes, respectively. In addition, as of June 30, 2023, the exercise price of the PSP1, PSP2 and PSP3 warrants were $12.137, $21.051 and $31.421, respectively and the number of warrant shares issuable upon the exercise of the PSP1, PSP2 and PSP3 warrants were adjusted to 604,170.87, 159,798.98 and 93,429.46, respectively.

Completion of the Merger is subject to the satisfaction or waiver of certain closing conditions, including, among other things: (1) approval of the transactions by Spirit’s stockholders;stockholders, which was received on October 19, 2022; (2) receipt of applicable regulatory approvals, including approvals from the U.S. Federal Communications Commission, the U.S. Federal Aviation Administration and the U.S. Department of Transportation ("DOT") and the expiration or early termination of the statutory waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, and other competition laws, and other required regulatory approvals; (3) the absence of any law or order prohibiting the consummation of the transactions; and (4) the absence of any material adverse effect (as defined in the Merger Agreement) on Spirit.

Spirit, JetBlueOn March 7, 2023, the U.S. Justice Department filed suit to block the Merger. The trial date for the lawsuit has been set for October 16, 2023 and Merger Sub each make certain customary representations, warranties and covenants, as applicable,will be held at the United States District Court of Massachusetts in the Merger Agreement.Boston.

In addition, Spirit has agreed, among other things, that neither it nor any of its directors, officers, employees and representatives will (1) solicit alternative transactions, (2) participate in any discussions or negotiations relating to alternative transactions, (3) furnish any non-public information in connection with alternative transactions or (4) enter into any agreement relating to alternative transactions, except under limited circumstances described in the Merger Agreement. However, in certain circumstances, Spirit may terminate the Merger Agreement to enter into a definitive agreement for a Superior Proposal (as defined in the Merger Agreement). In addition, Spirit, JetBlue and Merger Sub each make certain customary representations, warranties and covenants, as applicable, in the Merger Agreement.

The Merger Agreement contains certain customary termination rights for Spirit and JetBlue, including, without limitation, a right for either party to terminate if the Merger is not consummated on or before July 28, 2023 (the "Outside Date"), subject to certain automatic extensions up to July 24, 2024 if needed to obtain regulatory approvals. Since all regulatory approvals required to consummate the Merger were not obtained as of July 28, 2023, the current Outside Date has been automatically extended to January 28, 2024. Upon the termination of the Merger Agreement under specified circumstances, Spirit will be required to pay JetBlue a breakuptermination fee of $94.2 million. Upon the termination of the Merger Agreement by JetBlue because of a material, uncured breach by Spirit of the Merger Agreement, Spirit will be required to pay JetBlue an amount equal to the sum of all amounts paid by JetBlue to the Spirit stockholders. Upon the termination of the Merger Agreement for failure to obtain antitrust regulatory clearance, JetBlue will be required to pay (i) to Spirit, $70.0 million, and (ii) to the Spirit stockholders, the excess of (A) $400.0 million minus (B) the sum of the Approval Prepayment Amount and all Additional Prepayment Amounts previously paid by JetBlue to the Spirit stockholders.

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3. Revenue
    
Operating revenues are comprised of passenger revenues, which includes fare and non-fare revenues, and other revenues. The following table shows disaggregated operating revenues for the three and six months ended June 30, 20222023 and 2021.2022.
Three Months Ended June 30,Six Months Ended June 30,Three Months Ended June 30,Six Months Ended June 30,
20222021202220212023202220232022
(in thousands)(in thousands)
Operating revenues:Operating revenues:Operating revenues:
FareFare$703,778 $369,691 $1,122,196 $543,978 Fare$647,344 $703,778 $1,256,205 $1,122,196 
Non-fareNon-fare644,093 476,816 1,175,419 752,864 Non-fare762,717 644,093 1,481,329 1,175,419 
Total passenger revenuesTotal passenger revenues1,347,871 846,507 2,297,615 1,296,842 Total passenger revenues1,410,061 1,347,871 2,737,534 2,297,615 
OtherOther18,772 12,802 36,343 23,746 Other22,411 18,772 44,712 36,343 
Total operating revenuesTotal operating revenues$1,366,643 $859,309 $2,333,958 $1,320,588 Total operating revenues$1,432,472 $1,366,643 $2,782,246 $2,333,958 

The Company is managed as a single business unit that provides air transportation for passengers. Operating revenues by geographic region as defined by the DOT are summarized below:
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Three Months Ended June 30,Six Months Ended June 30,Three Months Ended June 30,Six Months Ended June 30,
20222021202220212023202220232022
(in thousands)(in thousands)
DOT—DomesticDOT—Domestic$1,165,746 $770,800 $1,993,200 $1,177,964 DOT—Domestic$1,244,818 $1,165,746 $2,420,554 $1,993,200 
DOT—Latin AmericaDOT—Latin America200,897 88,509 340,758 142,624 DOT—Latin America187,654 200,897 361,692 340,758 
TotalTotal$1,366,643 $859,309 $2,333,958 $1,320,588 Total$1,432,472 $1,366,643 $2,782,246 $2,333,958 
The Company defers the amount for award travel obligations as part of loyalty deferred revenue within air traffic liability ("ATL") on the Company's condensed consolidated balance sheets and recognizes loyalty travel awards in passenger revenues as points are used for travel or expire unused.

As of June 30, 20222023 and December 31, 2021,2022, the Company had ATL balances of $561.7$479.7 million and $382.3$429.6 million, respectively. Substantially all of the Company's ATL is expected to be recognized within 12 months of the respective balance sheet date.

Loyalty Programs

The Company operates the Spirit Saver$ Club®, which is a subscription-based loyalty program that allows members access to unpublished, extra-low fares as well as discounted prices on bags and seats, shortcut boarding and security, "Flight Flex" flight modification product, and exclusive offers on hotels, rental cars and other travel necessities. The Company also operates the Free Spirit loyalty program, which attracts members and partners and builds customer loyalty for the Company by offering a variety of awards, benefits and services. Free Spirit loyalty program members earn and accrue points for dollars spent on Spirit for flights and other non-fare services as well as services from non-air partners such as retail merchants, hotels or car rental companies orcompanies. Customers may also earn points based on their spending with the Company's co-branded credit card company with which the Company has an agreement to sell points. The Company's co-branded credit card agreement provides for joint marketing pursuant to which cardholders earn points by making purchases with credit cards issued by partner banks and financial services providers.using co-branded cards. Points earned and accrued by Free Spirit loyalty program members can be redeemed for travel awards such as free (other than taxes and government-imposed fees), discounted or upgraded travel. On June 28, 2023, the Company extended its agreement with the administrator of the Free Spirit affinity credit card program to extend through December 31, 2028.

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4. Loss on Disposal

During the three and six months ended June 30, 2023, the Company recorded $0.8 million and $7.9 million, respectively, in loss on disposal of assets in the condensed consolidated statements of operations. Loss on disposal of assets for the three months ended June 30, 2023 included a $1.2 million gain related to three aircraft sale leaseback transactions completed during the second quarter 2023. Loss on disposal of assets for the six months ended June 30, 2023 included a $6.6 million loss related to five aircraft sale leaseback transactions completed during the first and second quarters 2023.

In addition, during the fourth quarter 2022, the Company made the decision to accelerate the retirement of 29 of its A319 aircraft and, in January 2023, the Company executed a sale agreement to sell these aircraft over the next two years. During the three months ended June 30, 2023, the Company completed the sale of three A319 airframes and four A319 engines and recorded a related net gain of $0.3 million. During the six months ended June 30, 2023, the Company completed the sale of 7 A319 airframes and 11 A319 engines and recorded a related net gain of $1.5 million. The remaining A319 aircraft subject to the sale agreement remain in service and will continue to operate until immediately before the sale of the aircraft.

In addition, the Company recorded $2.3 million and $2.8 million in losses recorded during the three and six months ended June 30, 2023, respectively, related to the write-off of obsolete assets and other adjustments.

During the three and six months ended June 30, 2022, the Company recorded $10.6 million and $22.2 million, respectively, in loss on disposal of assets in the condensed consolidated statements of operations. Loss on disposal of assets for the three months ended June 30, 2022 primarily consisted of $10.2 million related to the loss on 4four aircraft sale leaseback transactions completed during the second quarter of 2022. Loss on disposal of assets for the six months ended June 30, 2022 primarily consisted of $14.5 million related to the loss on 7seven aircraft sale leaseback transactions completed during the first and second quarters of 2022 and $6.6 million related to the impairment of 1 spare engine during the first quarter of 2022 of one spare engine which was damaged beyond economic repair.


Duri5.ng Special Charges

During the three and six months ended June 30, 2021,2023, the Company recorded $0.2$13.1 million and $1.3$20.4 million, respectively, in losswithin special charges on disposal of assets in the Company's condensed consolidated statements of operations. Loss on disposal of assets for the three months ended June 30, 2021 primarily consisted of $0.2 millionoperations, in legal, advisory and other fees related to the lossMerger Agreement with JetBlue entered into on 2 aircraft sale leaseback transactions completedJuly 28, 2022. In addition, as part of the Merger Agreement with JetBlue, the Company implemented an employee retention award program during the secondthird quarter of 2021. Loss on disposal2022. The target retention award will be paid to the Company's employees upon the successful close of assets for the Merger. In the event the Merger fails or is abandoned, 50% of the target retention award will be paid to the Company's employees. This amount will be paid to the Company's employees in two installments payable in July 2023 and July 2024 or upon termination or abandonment of the Merger, whichever comes first. During the three and six months ended June 30, 2021 primarily consisted2023, the Company recorded $6.9 million and $13.6 million, respectively, within special charges on the Company's condensed consolidated statements of $1.1 millionoperations, related to the sale of auxiliary power units ("APUs"), $0.2 million related to the loss on 2 aircraft sale leaseback transactions completed during the second quarter of 2021 and disposal of excess and obsolete inventory.


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5. Special Charges (Credits)Company's retention award program.

During the three and six months ended June 30, 2022, the Company recorded $10.4 million and $21.5 million, respectively, within special charges (credits) on the Company's condensed consolidated statements of operations, in legal, advisory and other fees related to the former merger agreement with Frontier (the "Former Frontier Merger AgreementAgreement") executed during the first quarter of 2022 and JetBlue's unsolicited proposal (the "Merger Agreement with JetBlue"), received in AprilMarch 2022, to acquire all of the Company's outstanding shares in an all-cash transaction. In addition, as part of the Former Frontier Merger Agreement, the Company implemented an employee retention bonus program. On July 27, 2022, the Frontier Merger Agreement was mutually terminated, therefore, 50% of the target retention bonus will be paid to the Company's employees during the third quarter of 2022.award program (the "Frontier Retention Award Program"). During the three and six months ended June 30, 2022, the Company recorded $7.6 million and $12.1 million, respectively, within special charges (credits) on the Company's condensed consolidated statements of operations, related to the Company's retention bonus program.Frontier Retention Award Program.
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During the three and six months ended June 30, 2021, the Company recorded $99.3 million and $255.8 million, respectively, net of related costs, within special credits on the Company’s condensed consolidated statements of operations related to the grant component of the agreements with the United States Department of the Treasury (the "Treasury") pursuant to the Consolidated Appropriations Act, which extended the Payroll Support Program (“PSP”) portion of the CARES Act through March 31, 2021 (“PSP2”) and the American Rescue Plan Act of 2021, which also authorized the Treasury to provide additional assistance to passenger air carriers that received financial assistance under PSP2 (“PSP3”).

In addition, during the three and six months ended June 30, 2021, the Company recorded $16.3 million and $37.5 million, respectively, related to the CARES Act Employee Retention credit within special credits on the Company’s condensed consolidated statements of operation. These special credits were partially offset by $0.6 million and $1.4 million in special charges recorded during the three and six months ended June 30, 2021, respectively. The $0.6 million and $1.4 million were related to salaries, wages and benefits paid to rehired employees, previously terminated with the Company's involuntary employee separation program, in compliance with the restrictions of PSP2.


6. LossEarnings (Loss) per Share

The following table sets forth the computation of basic and diluted lossearnings (loss) per common share:

 
Three Months Ended June 30,Six Months Ended June 30, Three Months Ended June 30,Six Months Ended June 30,
2022202120222021 2023202220232022
(in thousands, except per-share amounts)(in thousands, except per-share amounts)
NumeratorNumeratorNumerator
Net loss$(52,406)$(287,863)$(247,109)$(400,184)
Net income (loss)Net income (loss)$(2,349)$(52,406)$(106,260)$(247,109)
DenominatorDenominatorDenominator
Weighted-average shares outstanding, basicWeighted-average shares outstanding, basic108,697 105,258 108,639 101,537 Weighted-average shares outstanding, basic109,161 108,697 109,136 108,639 
Effect of dilutive sharesEffect of dilutive shares— — — — Effect of dilutive shares— — — — 
Adjusted weighted-average shares outstanding, dilutedAdjusted weighted-average shares outstanding, diluted108,697 105,258 108,639 101,537 Adjusted weighted-average shares outstanding, diluted109,161 108,697 109,136 108,639 
Loss per share
Basic loss per common share$(0.48)$(2.73)$(2.27)$(3.94)
Diluted loss per common share$(0.48)$(2.73)$(2.27)$(3.94)
Earnings (loss) per shareEarnings (loss) per share
Basic earnings (loss) per common shareBasic earnings (loss) per common share$(0.02)$(0.48)$(0.97)$(2.27)
Diluted earnings (loss) per common shareDiluted earnings (loss) per common share$(0.02)$(0.48)$(0.97)$(2.27)
Anti-dilutive common stock equivalents excluded from the diluted loss per share calculation for any of the periods presented are not material.


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7. Short-term Investment Securities

The Company's short-term investment securities are classified as available-for-sale and generally consist of U.S. Treasury and U.S. government agency securities with contractual maturities of 12 months or less. These securities are stated at fair value within current assets on the Company's condensed consolidated balance sheets. Realized gains and losses on sales of investments, if any, are reflected in non-operating other (income) expense in the condensed consolidated statements of operations.

As of June 30, 20222023 and December 31, 2021,2022, the Company had $105.9$109.5 million and $106.3$107.1 million, respectively, in short-term available-for-sale investment securities, respectively.securities. During the six months ended June 30, 2023 and 2022, these investments earned interest income at a weighted-average fixed rate of approximately 4.1% and 0.3%., respectively. For the three and six months ended June 30, 2022,2023, an unrealized lossgain of $173$36 thousand and $435$221 thousand, respectively, net of deferred taxes, of $51 thousand and $127 thousand, respectively, was recorded within accumulated other comprehensive income ("AOCI") related to these investment securities. For the three and six months ended June 30, 2021,2022, an unrealized loss of $13$173 thousand and $6$435 thousand, respectively, net of deferred taxes, of $4 thousand and $2 thousand, respectively, was recorded within AOCI related to these investment securities. For the three and six months ended June 30, 20222023 and June 30, 2021,2022, the Company had no realized gains or losses as the Company did not sell any of these securities during these periods. AsAs of June 30, 20222023 and December 31, 2021, $4782022, $46 thousand and$43 $267 thousand, net of tax, respectively, remained in AOCI, related to these instruments.


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8. Accrued Liabilities

Other current liabilities as of June 30, 20222023 and December 31, 2021 consist2022 consisted of the following:

June 30, 2022December 31, 2021June 30, 2023December 31, 2022
(in thousands)(in thousands)
Salaries, wages and benefitsSalaries, wages and benefits$156,025 $142,893 Salaries, wages and benefits$187,761 $154,881 
Federal excise and other passenger taxes and fees payableFederal excise and other passenger taxes and fees payable122,040 77,409 Federal excise and other passenger taxes and fees payable128,868 96,424 
Fuel94,151 55,103 
Airport obligationsAirport obligations83,149 85,772 Airport obligations107,836 84,928 
Aircraft maintenanceAircraft maintenance39,193 39,178 Aircraft maintenance60,859 59,243 
FuelFuel57,044 76,979 
Interest payableInterest payable23,719 24,526 Interest payable29,471 32,613 
Aircraft and facility lease obligationsAircraft and facility lease obligations22,049 23,049 Aircraft and facility lease obligations22,099 22,068 
OtherOther38,337 32,824 Other99,273 29,194 
Other current liabilitiesOther current liabilities$578,663 $480,754 Other current liabilities$693,211 $556,330 


9.Leases

The Company leases aircraft, engines, airport terminals, maintenance and training facilities, aircraft hangars, commercial real estate, and office and computer equipment, among other items. Certain of these leases include provisions for variable lease payments which are based on several factors, including, but not limited to, relative leased square footage, enplaned passengers, and airports’ annual operating budgets. Due to the variable nature of the rates, these leases are not recorded on the Company's condensed consolidated balance sheets as a right-of-use asset and lease liability. Lease terms are generally 8 years to 18 years for aircraft and up to 99 years for other leased equipment and property.
During the six months ended June 30, 2022,2023, the Company took delivery of 7six aircraft under direct operating leases, five aircraft under sale leaseback transactions and 2three spare engines purchased with cash. As of June 30, 2022,2023, the Company had a fleet consisting of 180198 A320 family aircraft. As of June 30, 2022,2023, the Company had 7499 aircraft financed under operating leases with lease term expirations between 2024 and 2040.2041. In addition, the Company owned 10598 aircraft of which 332 were purchased off lease and were unencumberedpledged as of June 30, 2022.collateral under the Company's revolving credit facility maturing in 2024. The Company also had 1one aircraft recorded as a failed sale leaseback. The related finance obligation is recorded within long-term debt in the Company's condensed consolidated balance sheets. Refer to Note 12, Debt and Other Obligations for additional information. The related asset is recorded within flight equipment in the Company's condensed consolidated balance sheets. As of June 30, 2022,2023, the Company also had 126 spare engines financed under operating leases with lease term expiration dates ranging from 20222024 to 2033 and owned 2227 spare engines, of which, as of June 30, 2022, 1 was2023, 3 were unencumbered and 2124 were pledged as collateral under the Company's revolving credit facility maturing in 2024.
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As of June 30, 2022, 1 of the Company’s aircraft and engine master lease agreements provides that the Company pays maintenance reserves to aircraft lessors to be held as collateral in advance of the Company’s required performance of major maintenance activities. A majority of these maintenance reserve payments are calculated based on a utilization measure, such as flight hours or cycles, while some maintenance reserve payments are fixed, time-based contractual amounts. Maintenance reserve payments that are probable of being recovered when the Company performs qualifying maintenance are recorded in aircraft maintenance deposits on the Company's condensed consolidated balance sheets. Fixed maintenance reserve payments that are not probable of being recovered are considered lease payments and are included in the right-of-use asset and lease liability. Maintenance reserve payments that are based on a utilization measure and are not probable of being recovered are considered variable lease payments that are recognized when they are probable of being incurred and are not included in the right-of-use asset and lease liability.
Some of the master lease agreements do not require that the Company pay maintenance reserves so long as the Company's cash balance does not fall below a certain level. As of June 30, 2022, the Company was in full compliance with those requirements and does not anticipate having to pay reserves related to these master leases in the future.
Aircraft rent expense consists of monthly lease rents for aircraft and spare engines under the terms of the Company's aircraft and spare engine lease agreements recognized on a straight-line basis. AircraftSupplemental rent, recorded within aircraft rent expense, also includesis primarily made up of probable and estimable return condition obligations, lease return cost adjustments related to lease modifications and aircraft and engines purchased off lease, and maintenance reserves paid to aircraft lessors in advance of the performance of major maintenance activities that are not probable of being reimbursed and probable lease return condition obligations.reimbursed.

Under the terms of the lease agreements, the Company will continue to operate and maintain the aircraft. Payments under the majority of the lease agreements are fixed for the term of the lease. The lease agreements contain standard termination events, including termination upon a breach of the Company's obligations to make rental payments and upon any other material breach of the Company's obligations under the leases, and standard maintenance and return condition provisions. These return provisions are evaluated at inception of the lease and throughout the lease terms and are accounted for as either fixed or variable lease payments (depending on the nature of the lease return condition) when it is probable that such amounts will be incurred. When determining probability and estimated cost of lease return obligations, there are various other factors that need to be considered such as the contractual terms of the lease, the ability to swap engines or other aircraft components, current condition of the aircraft, the age of the aircraft at lease expiration, utilization of engines and other components, the extent of repairs needed at return, return locations, current configuration of the aircraft and cost of repairs and materials at the time of return. Management assesses the factors listed above and the need to accrue lease return costs throughout the lease as facts and circumstances warrant an assessment. The Company expects lease return costs and unrecoverable maintenance deposits will increase as individual aircraft lease agreements approach their respective termination dates and the Company begins to accrue the estimated cost of return
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conditions for the corresponding aircraft. Upon a termination of the lease due to a breach by the Company, the Company would be liable for standard contractual damages, possibly including damages suffered by the lessor in connection with remarketing the aircraft or while the aircraft is not leased to another party.

In connection with the Company's assessment of lease return costs, the Company also evaluates the recoverability of maintenance reserves paid to certain lessors that are held as collateral in advance of the Company’s required performance of major maintenance activities. The requirement to pay maintenance reserves has been eliminated from the Company's lease agreements for the last several years and any outstanding maintenance reserves will continue to decline as the Company is reimbursed for qualifying maintenance events. As of June 30, 2023 and December 31, 2022, the Company had $36.6 million and $38.8 million of aircraft maintenance deposits, respectively, recorded within prepaid expenses and other current assets and other long-term assets in the Company's condensed consolidated balance sheets.

As of June 30, 2023, the Company's finance lease obligations primarily relaterelated to the lease of computer equipment used by the Company's flight crewcrews and office equipment. Payments under these finance lease agreements are fixed for terms ranging from 4four to 5five years. Finance lease assets are recorded within property and equipment and the related liabilities are recorded within long-term debt and finance leases in the Company's condensed consolidated balance sheets.
During the fourth quarter of 2019, the Company purchased an 8.5-acre parcel of land for $41.0 million and entered into a 99-year lease agreement for the lease of a 2.6-acre parcel of land, in Dania Beach, Florida, where the Company is building its new headquarters campus and a 200-unit residential building. During the first quarter of 2022, the Company began building its new headquarters campus and its 200-unit residential building with the project having an expected completion during the fourthfirst quarter 2023.2024. The 8.5-acre parcel of land is capitalized within ground property and equipment on the Company's condensed consolidated balance sheets. The 99-year lease was determined to be an operating lease and is recorded within operating lease right-of-use asset and operating lease liability on the Company's condensed consolidated balance sheets. Operating lease commitments related to this lease are included in the table below within property facility leases.
The following table provides details of the Company's future minimum lease payments under finance lease liabilities and operating lease liabilities recorded on the Company's condensed consolidated balance sheets as of June 30, 2022.2023. The table does not include commitments that are contingent on events or other factors that are currently uncertain or unknown.
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Finance LeasesOperating LeasesFinance LeasesOperating Leases
Aircraft and Spare Engine LeasesProperty Facility LeasesOtherTotal
Operating and Finance Lease Obligations
Aircraft and Spare Engine LeasesProperty Facility LeasesOtherTotal
Operating and Finance Lease Obligations
(in thousands)(in thousands)
Remainder of 2022$421 $141,250 $2,882 $79 $144,632 
2023465 279,258 5,763 13 285,499 
Remainder of 2023Remainder of 2023$203 $191,146 $3,588 $353 $195,290 
20242024215 267,172 3,885 — 271,272 2024251 370,793 6,205 177 377,426 
20252025117 252,230 1,212 — 253,559 2025154 355,905 4,085 — 360,144 
2026202638 225,970 964 — 226,972 202676 329,591 3,934 — 333,601 
2027 and thereafter— 1,904,800 142,174 — 2,046,974 
2027202727 313,882 3,104 — 317,013 
2028 and thereafter2028 and thereafter— 3,048,636 141,298 — 3,189,934 
Total minimum lease paymentsTotal minimum lease payments$1,256 $3,070,680 $156,880 $92 $3,228,908 Total minimum lease payments$711 $4,609,953 $162,214 $530 $4,773,408 
Less amount representing interestLess amount representing interest56 944,235 132,754 1,077,046 Less amount representing interest41 1,644,731 133,179 13 1,777,964 
Present value of minimum lease paymentsPresent value of minimum lease payments$1,200 $2,126,445 $24,126 $91 $2,151,862 Present value of minimum lease payments$670 $2,965,222 $29,035 $517 $2,995,444 
Less current portionLess current portion665 164,532 4,572 91 169,860 Less current portion331 195,680 5,140 517 201,668 
Long-term portionLong-term portion$535 $1,961,913 $19,554 $ $1,982,002 Long-term portion$339 $2,769,542 $23,895 $ $2,793,776 
Commitments related to the Company's noncancellable short-term operating leases not recorded on the Company's condensed consolidated balance sheets are expected to be $3.2$3.7 million for the remainder of 20222023 and none for 20232024 and beyond.
The table below presents information for lease costs related to the Company's finance and operating leases:
Three Months Ended June 30,Six Months Ended June 30,
2022202120222021
(in thousands)
Finance lease cost
Amortization of leased assets$188 $176 $375 $345 
Interest of lease liabilities16 24 34 48 
Operating lease cost
Operating lease cost (1)
65,430 52,632 128,681 104,774 
Short-term lease cost (1)
9,551 7,076 19,808 14,091 
Variable lease cost (1)
50,128 50,511 98,723 88,661 
Total lease cost$125,313 $110,419 $247,621 $207,919 
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Three Months Ended June 30,Six Months Ended June 30,
2023202220232022
(in thousands)
Finance lease cost
Amortization of leased assets$102 $188 $261 $375 
Interest of lease liabilities16 18 34 
Operating lease cost
Operating lease cost (1)
91,146 65,430 175,361 128,681 
Short-term lease cost (1)
11,464 9,551 22,369 19,808 
Variable lease cost (1)
54,246 50,128 106,901 98,723 
Total lease cost$156,966 $125,313 $304,910 $247,621 
(1) Expenses are classified within aircraft rent and landing fees and other rents on the Company's condensed consolidated statements of operations.
The table below presents lease terms and discount rates related to the Company's finance and operating leases:
June 30, 2022June 30, 2021June 30, 2023June 30, 2022
Weighted-average remaining lease termWeighted-average remaining lease termWeighted-average remaining lease term
Operating leasesOperating leases14.1 years13.7 yearsOperating leases15.0 years14.1 years
Finance leasesFinance leases2.2 years2.9 yearsFinance leases2.5 years2.2 years
Weighted-average discount rateWeighted-average discount rateWeighted-average discount rate
Operating leasesOperating leases5.80 %5.92 %Operating leases6.50 %5.80 %
Finance leasesFinance leases4.60 %4.91 %Finance leases4.38 %4.60 %


10. Commitments and Contingencies

Aircraft-Related Commitments and Financing Arrangements
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The Company’s contractual purchase commitments consist primarily of aircraft and engine acquisitions through manufacturers and aircraft leasing companies. As of June 30, 2022,2023, the Company's total firm aircraft orders consisted of 113104 A320 family aircraft with Airbus, including A319neos, A320neos and A321neos, with deliveries expected through 2027. Out of these 113104 aircraft, the Company has 106 aircraft scheduled for delivery in the remainder of 20222023 and 1718 aircraft scheduled for delivery in 2023.2024. As of June 30, 2023, the number of aircraft expected for delivery in 2024 was higher than expected due to delivery delays from Airbus over the last 18 months resulting in aircraft originally scheduled for delivery in 2022 through 2024 being delayed primarily into 2023 through 2025. In late July 2023, the Company signed an amendment to the A320NEO Family Purchase Agreement to stagger the delivery of ordered aircraft over the next six years more evenly. With this amendment, the Company postponed a number of aircraft deliveries into 2025 through 2029, converted all 31 A319neo aircraft originally ordered into A321neo aircraft, and changed the timing of the Company's option aircraft delivery dates (2026 through 2028) by one year (2027 through 2029). However, the quantity of firm aircraft remains unchanged. As of June 30, 2023, the Company had secured financing for the 1013 aircraft scheduled for delivery from Airbus through the remainder of 2022,2024, which will be financed through sale leaseback transactions. As of June 30, 2022,2023, the Company did not have financing commitments in place for the remaining 10391 Airbus aircraft on firm order through 2027. However, the Company has a financing letter of agreement with Airbus which provides backstop financing for a majority of the aircraft included in the A320 NEO Family Purchase Agreement signed in the fourth quarter of 2019. The agreement provides a standby credit facility in the form of senior secured mortgage debt financing. The contractual purchase amounts for all aircraft orders from Airbus are included within the purchase commitments below. In addition, rent commitments related to aircraft that will be financed through sale leaseback transactions are included within the aircraft rent commitments below.

During the third quarter of 2021, the Company entered into an Engine Purchase Support Agreement which requires the Company to purchase a certain number of spare engines in order to maintain a contractual ratio of spare engines to aircraft in the fleet. As of June 30, 2022,2023, the Company is committed to purchase 1416 PW1100G-JM spare engines, with deliveries through 2027.

As of June 30, 2022,2023, purchase commitments for the Company's aircraft and engine orders, including estimated amounts for contractual price escalations and pre-delivery payments, arewere expected to be $507.3$357.7 million for the remainder of 2022, $906.9 million in 2023, $999.8
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$1,202.3 million in 2024, $1,060.7$1,432.8 million in 2025, $1,349.9$1,424.4 million in 2026, and $872.8$884.1 million in 2027, and none in 2028 and beyond.

During the third quarter of 2019, the United States announced its decision to levy tariffs on certain imports from the European Union, including commercial aircraft and related parts. These tariffs include aircraft and other parts that the Company is already contractually obligated to purchase including those reflected above. In June 2021, the United States Trade Representative announced that the United States and European Union had agreed to suspend reciprocal tariffs on large civilian aircraft for five years, pending discussions to resolve their trade dispute.

In addition to the aircraft purchase agreement, as of June 30, 2022,2023, the Company hashad agreements in place for 40 A320neos and29 A321neos to be financed through direct leases with third-party lessors with deliveries scheduled from the remainder of 20222023 through 2024.2025. As of June 30, 2022,2023, aircraft rent commitments for future aircraft deliveries to be financed under direct leases from third-party lessors and sale leaseback transactions arewere expected to be approximately $18.0$19.5 million for the remainder of 2022, $110.8 million in 2023, $188.9$133.8 million in 2024, $217.9$186.5 million in 2025, $217.9$189.0 million in 2026, and $1,861.5$189.0 million in 2027, and $1,549.7 million in 2028 and beyond.
Interest commitments related to the secured debt financing of 73 delivered aircraft as of June��June 30, 2022 are $46.22023 were $29.6 million for the remainder of 2022, $64.6 million in 2023, $53.3 million in 2024, $45.8 million in 2025, $38.3 million in 2026, and $90.3$30.1 million in 2027, and $60.2 million in 2028 and beyond. As of June 30, 2022,2023, interest commitments related to the Company's 8.00% senior secured notes, convertible debt financing, unsecured term loans and revolving credit facility are $24.5were $48.2 million for the remainder of 2022, $48.4 million in 2023, $48.4$96.4 million in 2024, $45.4$89.4 million in 2025, $5.9 million in 2026, and $14.0$3.4 million in 2027, and $10.5 million in 2028 and beyond. For principal commitments related to the Company's debt financing, refer to Note 12, Debt and Other Obligations.
The Company is contractually obligated to pay the following minimum guaranteed payments for its reservation system, construction commitments related to its new headquarters campus and residential building and other miscellaneous subscriptions and services as of June 30, 2022: $34.32023: $53.1 million for the remainder of 2022, $21.7 million in 2023, $18.1$21.5 million in 2024, $18.1$19.7 million in 2025, $17.5$16.9 million in 2026, and $19.2$16.9 million in 2027, and $1.5 million in 2028 and thereafter. During the first quarter of 2018, the Company entered into a contract renewal with its reservation system provider which expires in 2028.
 
Litigation and Assessments
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The Company is subject to commercial litigation claims and to administrative and regulatory proceedings and reviews that may be asserted or maintained from time to time. The Company believes the ultimate outcome of such lawsuits, proceedings and reviews will not, individually or in the aggregate, have a material adverse effect on its financial position, liquidity or results of operations. In making a determination regarding accruals, using available information, the Company evaluates the likelihood of an unfavorable outcome in legal or regulatory proceedings and assessments to which the Company is a party and records a loss contingency when it is probable a liability has been incurred and the amount of the loss can be reasonably estimated. These subjective determinations are based on the status of such legal or regulatory proceedings, the merits of the Company's defenses, and consultation with legal counsel. Actual outcomes of these legal and regulatory proceedings may materially differ from the Company's current estimates. It is possible that resolution of one or more of the legal matters currently pending or threatened could result in losses material to the Company's condensed consolidated results of operations, liquidity, or financial condition.
In 2017, the Company was sued in the Eastern District of New York in a purported class action, Cox, et al. v. Spirit Airlines, Inc., alleging state-law claims of breach of contract, unjust enrichment and fraud relating to the Company's practice of charging fees for ancillary products and services. The original action was dismissed by the District Court; however, following the plaintiff's appeal to the Second Circuit, the case was remanded to the District Court for further review on the breach of contract claim. A hearing on the Company's Motion for Summary Judgment and plaintiff's Motion for Class Certification was held on December 10, 2021. The Court granted the plaintiff's class certification motion and denied Spirit’s summary judgment motion on March 29, 2022. The Company subsequently filed a motion for reconsideration on April 26, 2022, and an oral argument was held on May 19, 2022. The Court denied Spirit’s motion for reconsideration on February 14, 2023. On April 3, 2023, Spirit moved to compel arbitration of and/or dismiss certain class members’ claims for lack of personal jurisdiction. Trial was set to begin on January 16, 2024. In June 2023, the Company reached a tentative settlement in mediation for a maximum amount of $8.3 million. The total amount paid will depend on a number of factors, including participation of class members and any conditions on the settlement approved by the Court. Currently, the Company's best estimate of the probable loss associated with the settlement is $6.0 million, and the Company has recorded this amount in other operating expenses within its condensed consolidated statements of operations.
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Following an audit by the Internal Revenue Service ("IRS") related to the collection of federal excise taxes on optional passenger seat selection charges covering the period of the second quarter 2018 through the fourth quarter 2020, on March 31, 2022, the Company was assessed $34.9 million. On July 19, 2022, the assessment was reduced to $27.5 million. The Company believes the assessment is without merit and intends to challenge the assessment; therefore, the Company believes a loss in this matter is not probable and has not recognized a loss contingency.
Credit Card Processing Arrangements
The Company has agreements with organizations that process credit card transactions arising from the purchase of air travel, baggage charges, and other ancillary services by customers. As is standard in the airline industry, the Company's contractual arrangements with credit card processors permit them, under certain circumstances, to retain a holdback or other collateral, which the Company records as restricted cash, when future air travel and other future services are purchased via credit card transactions. The required holdback is the percentage of the Company's overall credit card sales that its credit card processors hold to cover refunds to customers if the Company fails to fulfill its flight obligations.
The Company's credit card processors do not require the Company to maintain cash collateral provided that the Company satisfies certain liquidity and other financial covenants. Failure to meet these covenants would provide the processors the right to place a holdback resulting in a commensurate reduction of unrestricted cash. As of June 30, 20222023 and December 31, 2021,2022, the Company's credit card processors were holding back no remittances.
The maximum potential exposure to cash holdbacks by the Company's credit card processors, based upon advance ticket sales and Spirit Saver$ Club® memberships as of June 30, 20222023 and December 31, 2021,2022, was $632.5$530.7 million and $371.8$468.5 million, respectively.
Employees
The Company has 5six union-represented employee groups that together represented approximately 79%85% of all employees as of June 30, 2022.2023. The table below sets forth the Company's employee groups and status of the collective bargaining agreements as of June 30, 2022.agreements.
Employee GroupsRepresentative
Amendable Date (1)
Percentage of Workforce
PilotsAir Line Pilots Association, International ("ALPA")February 2023January 202527%26%
Flight AttendantsAssociation of Flight Attendants ("AFA-CWA")September 2021January 202646%48%
DispatchersProfessional Airline Flight Control Association ("PAFCA")October 20231%
Ramp Service AgentsInternational Association of Machinists and Aerospace Workers ("IAMAW")November 20263%
Passenger Service AgentsTransport Workers Union of America ("TWU")February 20272%
Aircraft Maintenance Technicians
Aircraft Mechanics Fraternal Association (AMFA) (2)
N/A (2)
5%

(1) Subject to standard early opener provisions.
(2) Collective bargaining agreement is currently under negotiation.

The Company's passenger service agents are represented byDuring the TWU, but the representation applies only to the Company's Fort Lauderdale station where the Company has direct employees in the passenger service classification. The Company and the TWU began meeting in late October 2018 to negotiate an initial collective bargaining agreement. During Februaryfourth quarter of 2022, the Company reached a tentativean agreement with the TWU.ALPA for a new two-year agreement, which was ratified by ALPA members on January 10, 2023. The Company's passenger service agents ratified the five-year agreement on February 21, 2022.includes increased pay rates and other enhanced benefits.

In February 2021,2023, the Company entered into a Letter of Agreementand AFA-CWA reached an agreement with the AFA-CWA to change the amendable date of the collective bargaining agreement from May 4, 2021 to September 1, 2021. All other terms of the collective bargaining
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agreement remained the same.In June 2021, the AFA-CWA notified the Company, as requiredCompany's flight attendants which was ratified by the Railway Labor Act, that it intends to submit proposed changes to the collective bargainingflight attendants on April 13, 2023 and becomes amendable in January 2026. The ratified agreement covering the Company’s flight attendants. The Companyincludes increased pay rates and the AFA-CWA began the negotiation sessions on September 27, 2021. As of June 30,other enhanced benefits.
In August 2022, the Company continuedCompany's aircraft maintenance technicians ("AMTs") voted to negotiate with the AFA-CWA.

In May 2022,be represented by the Aircraft Mechanics Fraternal Association ("AMFA") filed an application with the NMB to represent the Company's aircraft maintenance technicians ("AMTs").as their collective bargaining agent. In JuneNovember 2022, AMFA notified the Company received confirmation that the union election was authorized. The union election is currently ongoing through August 25, 2022.of its intent to negotiate a CBA and began negotiations. As of June 30, 2022,2023, the Company continued to negotiate with AMFA. As of June 30, 2023, the Company had approximately 600 AMTs.

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In May 2023, PAFCA provided notice to the eventCompany that it intends to amend its Collective Bargaining Agreement. The parties began negotiating changes to the Company's AMTs vote to be represented by the AMFA, the Company's labor costs may increase.CBA on July 12, 2023.




11.Fair Value Measurements

Under ASC 820, "Fair Value Measurements and Disclosures," disclosures relating to how fair value is determined for assets and liabilities are required, and a hierarchy for which these assets and liabilities must be grouped is established, based on significant levels of inputs, as follows:
Level 1—Quoted prices in active markets for identical assets or liabilities.
Level 2—Observable inputs other than Level 1 prices such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities.
Level 3—Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities.
Fair value is defined as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. The Company utilizes several valuation techniques in order to assess the fair value of the Company’s financial assets and liabilities.
Long-Term Debt
The estimated fair value of the Company's secured notes, term loan debt agreements and revolving credit facilities have been determined to be Level 3 as certain inputs used to determine the fair value of these agreements are unobservable. The Company utilizes a discounted cash flow method to estimate the fair value of the Level 3 long-term debt. The estimated fair value of the Company's publicly and non-publicly held EETC debt agreements and the Company's convertible notes has been determined to be Level 2 as the Company utilizes quoted market prices in markets with low trading volumes to estimate the fair value of its Level 2 long-term debt.
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    The carrying amounts and estimated fair values of the Company's long-term debt at June 30, 20222023 and December 31, 20212022 were as follows:
June 30, 2022December 31, 2021Fair Value Level HierarchyJune 30, 2023December 31, 2022Fair Value Level Hierarchy
Carrying ValueEstimated Fair ValueCarrying ValueEstimated Fair Value Carrying ValueEstimated Fair ValueCarrying ValueEstimated Fair Value
(in millions)(in millions)
8.00% senior secured notes8.00% senior secured notes$510.0 $468.4 $510.0 $530.4 Level 38.00% senior secured notes$1,110.0 $1,105.4 $1,110.0 $1,085.0 Level 3
Fixed-rate term loansFixed-rate term loans1,159.1 1,041.4 1,223.5 1,262.6 Level 3Fixed-rate term loans1,028.3 959.8 1,094.7 1,003.9 Level 3
Unsecured term loansUnsecured term loans136.3 111.0 136.3 146.4 Level 3Unsecured term loans136.3 120.9 136.3 116.0 Level 3
2015-1 EETC Class A2015-1 EETC Class A289.6 271.5 300.6 311.1 Level 22015-1 EETC Class A267.6 239.5 278.6 247.5 Level 2
2015-1 EETC Class B2015-1 EETC Class B52.0 50.3 56.0 56.4 Level 22015-1 EETC Class B44.0 42.5 48.0 45.6 Level 2
2015-1 EETC Class C2015-1 EETC Class C69.5 67.7 75.2 74.0 Level 22015-1 EETC Class C— — 63.8 63.1 Level 2
2017-1 EETC Class AA2017-1 EETC Class AA193.3 175.2 200.3 203.3 Level 22017-1 EETC Class AA179.2 156.8 186.3 161.6 Level 2
2017-1 EETC Class A2017-1 EETC Class A64.4 57.4 66.8 65.8 Level 22017-1 EETC Class A59.7 50.8 62.1 52.3 Level 2
2017-1 EETC Class B2017-1 EETC Class B53.4 47.5 55.8 53.6 Level 22017-1 EETC Class B49.9 44.0 51.7 44.9 Level 2
2017-1 EETC Class C2017-1 EETC Class C85.5 83.7 85.5 84.1 Level 22017-1 EETC Class C— — 85.5 85.1 Level 2
4.75% convertible notes due 20254.75% convertible notes due 202525.4 53.3 28.2 55.6 Level 24.75% convertible notes due 202525.1 42.7 25.4 44.9 Level 2
1.00% convertible notes due 20261.00% convertible notes due 2026500.0 452.0 500.0 432.5 Level 21.00% convertible notes due 2026500.0 404.8 500.0 405.1 Level 2
Total long-term debtTotal long-term debt$3,138.5 $2,879.4 $3,238.2 $3,275.8 Total long-term debt$3,400.1 $3,167.2 $3,642.4 $3,355.0 


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Cash and Cash Equivalents

Cash and cash equivalents at June 30, 20222023 and December 31, 2021 are2022 were comprised of liquid money market funds and cash, and are categorized as Level 1 instruments. The Company maintains cash with various high-quality financial institutions.
Restricted Cash

Restricted cash is comprised of cash held in an account subject to account control agreements or otherwise pledged as collateral against the Company's letters of credit and is categorized as a Level 1 instrument. As of June 30, 2022,2023, the Company had $85.0 million in standby letters of credit secured by $75.0 million of restricted cash, of which $26.2$33.1 million had been drawn upon forwere issued letters of credit. In addition, the Company had $20.4$44.4 million of restricted cash held in accounts subject to control agreements to be used for the payment of interest and fees on the 8.00% senior secured notes.
Short-term Investment Securities

Short-term investment securities at June 30, 20222023 and December 31, 2021 are2022 were classified as available-for-sale and generally consistconsisted of U.S. Treasury and U.S. government agency securities with contractual maturities of 12 months or less. The Company's short-term investment securities are categorized as Level 1 instruments, as the Company uses quoted market prices in active markets when determining the fair value of these securities. For additional information, refer to Note 7, Short-term Investment Securities.

Derivative Liability

As a result ofThe Merger Agreement with JetBlue modified the settlement terms stipulated by the Frontier Merger Agreement, asfor any conversions of the Frontier Merger Agreement date, the convertible notes due 2026 no longer(as defined below) that caused the conversion option, which is an embedded derivative, not to qualify for the derivative accounting scope exception provided under ASC 815. As such, the Company was required to bifurcatebifurcated the fair value of the conversion option of the convertible notes due 2026 as a derivative liability as of the Frontier Merger Agreement date with subsequent changes in fair value recorded in earnings.

As of February 5, 2022, theThe Company recordedrecords the fair value of the embedded derivative of $49.5 million as a derivative liability within deferred gains and other long-term liabilities and a debt discount within long-term debt and finance leases, less current maturities on its condensed consolidated balance sheets. The fair value of the derivative liability was estimated as the difference in value of the traded price of the convertible notes, including the conversion option and the value of the convertible notes in the absence of the conversion option (the debt component). The value of the debt component was estimated using a discounted cash flow analysis with a yield calibrated to the traded price of the convertible notes. The change in fair value of the derivative
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liability is recorded within interest expense on the Company's condensed consolidated statements of operations. During the three and six months ended June 30, 2023, the Company recorded $14.2 million and $12.5 million in favorable mark to market adjustments, respectively, related to the change in fair value of the derivative liability. During the three and six months ended June 30, 2022, the Company recorded $8.4$8.4 million and $9.3 million, in favorable mark to market adjustments, respectively, related to the change in fair value of the derivative liability. The fair value of the derivative liability has been determined to be Level 2 as observable inputs were used to determine the fair value of derivative liability. For additional information, refer to Note 12, Debt and Other Obligations.
    Assets and liabilities measured at gross fair value on a recurring basis are summarized below:
Fair Value Measurements as of June 30, 2022 Fair Value Measurements as of June 30, 2023
TotalLevel
1
Level
2
Level
3
TotalLevel
1
Level
2
Level
3
(in millions)(in millions)
Cash and cash equivalentsCash and cash equivalents$1,197.1 $1,197.1 $— $— Cash and cash equivalents$1,110.7 $1,110.7 $— $— 
Restricted cashRestricted cash95.4 95.4 — — Restricted cash119.4 119.4 — — 
Short-term investment securitiesShort-term investment securities105.9 105.9 — — Short-term investment securities109.5 109.5 — — 
Assets held for saleAssets held for sale2.5 — — 2.5 Assets held for sale1.9 — — 1.9 
Total assetsTotal assets$1,400.9 $1,398.4 $— $2.5 Total assets$1,341.5 $1,339.6 $— $1.9 
Derivative liabilityDerivative liability$40.2 $— $40.2 $— Derivative liability$16.7 $— $16.7 $— 
Total liabilitiesTotal liabilities$40.2 $— $40.2 $— Total liabilities$16.7 $— $16.7 $— 

 Fair Value Measurements as of December 31, 2021
 TotalLevel
1
Level
2
Level
3
(in millions)
Cash and cash equivalents$1,333.5 $1,333.5 $— $— 
Restricted cash95.4 95.4 — — 
Short-term investment securities106.3 106.3 — — 
Assets held for sale2.5 — — 2.5 
Total assets$1,537.7 $1,535.2 $— $2.5 
Total liabilities$— $— $— $— 
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 Fair Value Measurements as of December 31, 2022
 TotalLevel
1
Level
2
Level
3
(in millions)
Cash and cash equivalents$1,346.4 $1,346.4 $— $— 
Restricted cash119.4 119.4 — — 
Short-term investment securities107.1 107.1 — — 
Assets held for sale2.5 — — 2.5 
Total assets$1,575.4 $1,572.9 $— $2.5 
Derivative liability$29.2 $— 29.2 $— 
Total liabilities$29.2 $— $29.2 $— 

The Company had no transfers of assets or liabilities between any of the above levels during the six months ended June 30, 20222023 and the year ended December 31, 2021.

The Company's Valuation Group, which reports to the Chief Financial Officer, is made up of individuals from the Company's Treasury and Corporate Accounting departments. The Valuation Group is responsible for the execution of the Company's valuation policies and procedures. The Valuation Group compares the results of the Company's internally developed valuation methods with counterparty reports at each balance sheet date, assesses the Company's valuation methods for accurateness and identifies any needs for modification.2022.


12. Debt and Other Obligations

As of June 30, 2022,2023, the Company had outstanding public and non-public debt instruments.

Revolving credit facility due in 2024

As of June 30, 20222023 and December 31, 2021,2022, the Company had a $240.0300.0 million revolving credit facility which was undrawn and available under its revolving credit facility due 2024.available. Any amounts drawn on this facility are included in long-term debt and finance leases, less current maturities on the Company's condensed consolidated balance sheets. This facility matures on March 30, 2024.
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Convertible senior notes due 2025

On May 12, 2020, the Company completed the public offering of $175.0 million aggregate principal amount of 4.75% convertible senior notes due 2025 ("convertible notes due 2025").

Noteholders may convert their notes at their option only in the following circumstances: (1) during any calendar quarter commencing after the calendar quarter ending on June 30, 2020 (and only during such calendar quarter), if the last reported sale price per share of the Company’s common stock exceeds 130% of the conversion price for each of at least 20 trading days (whether or not consecutive) during the 30 consecutive trading days ending on, and including, the last trading day of the immediately preceding calendar quarter; (2) during the 5five consecutive business days immediately after any 5five consecutive trading day period (such 5five consecutive trading day period, the “measurement period”) in which the trading price per $1,000 principal amount of notes for each trading day of the measurement period was less than 98% of the product of the last reported sale price per share of the Company’s common stock on such trading day and the conversion rate on such trading day; (3) upon the occurrence of certain corporate events or distributions on the Company’s common stock; and (4) at any time from, and including, February 18, 2025 until the close of business on the second scheduled trading day immediately before the maturity date. As of June 30, 2022,2023, the notes may be converted by noteholders through September 30, 2022.2023.

UponBased on the terms of the indenture, upon conversion, the Company will pay or deliver, as the case may be, cash, shares of the Company’s common stock or a combination of cash and shares of common stock, at the Company’s election. BasedHowever, based on the terms of the Frontier Merger Agreement executed on February 5, 2022 (the Frontier Merger Agreement date),with JetBlue, upon conversion of any convertible notes due 2025 through the closing or termination of the Frontier Merger Agreement with JetBlue, the conversion value, including the principal amount, will be paid all in shares of the Company's common stock. The initial conversion rate iswas 78.4314 shares of voting common stock per $1,000 principal amount of convertible notes (equivalent to an initial conversion price of approximately $12.75 per share of common stock). The conversion rate will be subject to adjustment in some events but will not be adjusted for any accrued and unpaid interest. On July 27, 2022,Due to the Frontier Merger Agreement was terminated; however, on July 28, 2022,payment of the Company entered intoApproval Prepayment and Additional Prepayment Amounts paid by JetBlue to the Merger AgreementCompany's stockholders, in accordance with JetBlue. Based on the terms of the Merger Agreement with JetBlue, uponindenture, the Company has announced related adjustments to the conversion rate of anyits convertible senior notes due 2025. As of June 30, 2023, the conversion rate was 91.4187 shares of voting common stock per $1,000 principal amount of convertible notes due 2025 through(equivalent to a conversion price of approximately $10.94 per
19


share of common stock). Refer to Note 2, Merger for additional information on the closing or termination of the Merger Agreement with JetBlue, the conversion value, including the principal amount, will be paid all in shares of the Company's common stock.Approval Prepayment and Additional Prepayment Amounts.

During the secondfirst quarter of 2022, $2.82023, $0.3 million of the Company's convertible notes due 2025 were converted to 217,22627,204 shares of the Company's voting common stock. As of June 30, 2022,2023, the Company had recorded $2.7$0.3 million, net of issuance costs and common stock, in additional paid-in-capital on its condensed consolidated balance sheets as of June 30, 20222023 related to the conversion of these notes. Since the notes are currently convertible in accordance with the terms of the indenture governing such notes, the Company had $25.4$25.1 million recorded within current maturities of long-term debt and finance leases on its condensed consolidated balance sheets as of June 30, 20222023 related to its convertible notes due 2025. As of June 30, 2022,2023, the if-converted value exceeds the principal amount of the convertible notes due 2025 by $18.8 million and $19.512.3 million and $14.9 million, respectively, using the average stock price for the three and six months ended June 30, 2022,respectively.2023.

Convertible senior notes due 2026

On April 30, 2021, the Company completed the public offering of $500.0 million aggregate principal amount of 1.00% convertible senior notes due 2026 ("convertible notes due 2026").

Noteholders may convert their notes at their option only in the following circumstances: (1) during any calendar quarter commencing after the calendar quarter ending on June 30, 2021 (and only during such calendar quarter), if the last reported sale price per share of the Company’s common stock exceeds 130% of the conversion price for each of at least 20 trading days (whether or not consecutive) during the 30 consecutive trading days ending on, and including, the last trading day of the immediately preceding calendar quarter; (2) during the 5five consecutive business days immediately after any 5five consecutive trading day period (such 5five consecutive trading day period, the “measurement period”) in which the trading price per $1,000 principal amount of notes for each trading day of the measurement period was less than 98% of the product of the last reported sale price per share of the Company’s common stock on such trading day and the conversion rate on such trading day; (3) upon the occurrence of certain corporate events or distributions on the Company’s common stock; (4) if the Company calls such notes for redemption; and (5) at any time from, and including, February 17, 2026 until the close of business on the second scheduled trading day immediately before the maturity date. As of June 30, 2022,2023, the notes did not qualify for conversion by noteholders through September 30, 2022.2023.

Based on the terms of the indenture, the Company will have the right to elect to settle conversions in cash, shares of the Company’s common stock or a combination of cash and shares of common stock. However, uponUpon conversion of any notes, the Company will pay the conversion value will be paid in cash up to at least the principal amount of the notes being converted. BasedHowever, based on the terms of the
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Frontier Merger Agreement executed on February 5, 2022 (the Frontier Merger Agreement date),with JetBlue, upon conversion of any convertible notes due 2026 through the closing or termination of the Frontier Merger Agreement with JetBlue, the conversion value, including the principal amount, will be paid all in cash. The conversion value will be determined over an observation period consisting of 40 trading days, will be paid in cash up to at least the principal amount of the notes being converted.days. The initial conversion rate iswas 20.3791 shares of voting common stock per $1,000 principal amount of convertible notes (equivalent to an initial conversion price of approximately $49.07 per share of common stock). The conversion rate will be subject to adjustment in some events but will not be adjusted for any accrued and unpaid interest. On July 27, 2022,Due to the Frontier Merger Agreement was terminated; however, on July 28, 2022,payment of the Company entered intoApproval Prepayment and Additional Prepayment Amounts paid by JetBlue to the Merger AgreementCompany's stockholders, in accordance with JetBlue. Based on the terms of the indenture, the Company has announced related adjustments to the conversion rate of its convertible senior notes due 2026. As of June 30, 2023, the conversion rate was 23.7536 shares of voting common stock per $1,000 principal amount of convertible notes (equivalent to a conversion price of approximately $42.10 per share of common stock). Refer to Note 2, Merger for additional information on the Approval Prepayment and Additional Prepayment Amounts.

The Merger Agreement with JetBlue uponincludes settlement terms for any conversion of anythe convertible notes due 2026, through the closing or termination of the Merger Agreement with JetBlue,as described above, that cause the conversion value, including the principal amount, will be paid all in cash.

The notes will be redeemable, in whole or in part (subjectoption, which is an embedded derivative, not to certain limitations described below), at the Company’s option at any time, and from time to time, on or after May 15, 2024 and on or before the 40th scheduled trading day immediately before the maturity date, at a cash redemption price equal to the principal amount of the notes to be redeemed, plus accrued and unpaid interest, if any, to, but excluding, the redemption date, but only if the last reported sale price per share of the Company's common stock exceeds 130% of the conversion price for a specified period of time. However, the Company may not redeem less than all of the outstanding notes unless at least $150.0 million aggregate principal amount of notes are outstanding and not called for redemption as of the time the Company sends the related redemption notice.

As a result of the settlement terms stipulated by the Frontier Merger Agreement, as of the Frontier Merger Agreement date, the notes no longer qualify for the derivative accounting scope exception provided under ASC 815. As such, the Company was required to bifurcatebifurcated the fair value of the conversion option of the convertible senior notes due 2026 as a derivative liability as of the Frontier Merger Agreement date with subsequent changes in fair value recorded in earnings.

As of February 5, 2022, the The Company recorded the fair value of the embedded derivative of $49.5 million as a derivative liability within deferred gains and other long-term liabilities and a debt discount within long-term debt and finance leases, less current maturities on its condensed consolidated balance sheets. The debt discount will continue to be amortized through interest expense, using the effective interest rate method, over the remaining life of the instrument.

Since the notes are currently not convertible in accordance with the terms of the indenture governing such notes, the Company had $456.8$466.8 million, net of the related unamortized debt discount of $43.2$33.2 million, recorded within long-term debt and finance leases, less current maturities on the Company's condensed consolidated balance sheets as of June 30, 20222023 related to its convertible notes due 2026. For additional information, refer to Note 11, Fair Value Measurements.

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Long-term debt is comprised of the following:

As ofAs of
June 30, 2022December 31, 2021June 30, 2022December 31, 2021
(in millions)(weighted-average interest rates)
8.00% senior secured notes due 2025$510.0 $510.0 8.00 %8.00 %
Fixed-rate loans due through 2039 (1)
1,159.1 1,223.5 3.52 %3.52 %
Unsecured term loans due in 2031136.3 136.3 1.00 %1.00 %
Fixed-rate class A 2015-1 EETC due through 2028289.6 300.6 4.10 %4.10 %
Fixed-rate class B 2015-1 EETC due through 202452.0 56.0 4.45 %4.45 %
Fixed-rate class C 2015-1 EETC due through 202369.5 75.2 4.93 %4.93 %
Fixed-rate class AA 2017-1 EETC due through 2030
193.3 200.3 3.38 %3.38 %
Fixed-rate class A 2017-1 EETC due through 2030
64.4 66.8 3.65 %3.65 %
Fixed-rate class B 2017-1 EETC due through 2026
53.4 55.8 3.80 %3.80 %
Fixed-rate class C 2017-1 EETC due through 2023
85.5 85.5 5.11 %5.11 %
Convertible notes due 202525.4 28.2 4.75 %4.75 %
Convertible notes due 2026500.0 500.0 1.00 %1.00 %
Long-term debt$3,138.5 $3,238.2 
Less current maturities350.9 208.2 
Less unamortized discounts, net
92.1 54.9 
Total$2,695.5 $2,975.1 
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As ofAs of
June 30, 2023December 31, 2022June 30, 2023December 31, 2022
(in millions)(weighted-average interest rates)
8.00% senior secured notes due 2025$1,110.0 $1,110.0 8.00 %8.00 %
Fixed-rate loans due through 2039 (1)
1,028.3 1,094.7 3.52 %3.52 %
Unsecured term loans due in 2031136.3 136.3 1.00 %1.00 %
Fixed-rate class A 2015-1 EETC due through 2028267.6 278.6 4.10 %4.10 %
Fixed-rate class B 2015-1 EETC due through 202444.0 48.0 4.45 %4.45 %
Fixed-rate class C 2015-1 EETC due through 2023— 63.8 4.93 %4.93 %
Fixed-rate class AA 2017-1 EETC due through 2030
179.2 186.3 3.38 %3.38 %
Fixed-rate class A 2017-1 EETC due through 2030
59.7 62.1 3.65 %3.65 %
Fixed-rate class B 2017-1 EETC due through 2026
49.9 51.7 3.80 %3.80 %
Fixed-rate class C 2017-1 EETC due through 2023
— 85.5 5.11 %5.11 %
Convertible notes due 202525.1 25.4 4.75 %4.75 %
Convertible notes due 2026500.0 500.0 1.00 %1.00 %
Long-term debt$3,400.1 $3,642.4 
Less current maturities235.2 346.4 
Less unamortized discounts, net
84.2 95.8 
Total$3,080.7 $3,200.2 
(1) Includes obligations related to 1one aircraft recorded as a failed sale leaseback. Refer to Note 9, Leases for additional information.
During the three and six months ended June 30, 2023, the Company made scheduled principal payments of $112.4 million and $241.8 million, respectively, on its outstanding debt obligations. During the three and six months ended June 30, 2022, the Company made scheduled principal payments of $52.4 million and $96.8 million, respectively, on its outstanding debt obligations. During the three and six months ended June 30, 2021, the Company made scheduled principal payments of $234.8 million and $370.7 million, respectively, on its outstanding debt obligations.
At June 30, 2022,2023, long-term debt principal payments for the next five years and thereafter arewere as follows:

June 30, 2022June 30, 2023
(in millions)(in millions)
remainder of 2022$96.2 
2023336.6 
Remainder of 2023Remainder of 2023$94.8 
20242024222.1 2024222.1 
20252025723.8 20251,323.5 
20262026731.1 2026731.1 
2027 and beyond1,028.7 
20272027197.3 
2028 and beyond2028 and beyond831.3 
Total debt principal paymentsTotal debt principal payments$3,138.5 Total debt principal payments$3,400.1 













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Interest Expense

Interest expense related to long-term debt and finance leases consists of the following:
Three Months Ended June 30,Six Months Ended June 30, Three Months Ended June 30,Six Months Ended June 30,
20222021202220212023202220232022
(in thousands)(in thousands)
8.00% senior secured notes (1)
8.00% senior secured notes (1)
$10,461 $13,541 20,921 $30,975 
8.00% senior secured notes (1)
$23,252 $10,461 46,505 $20,921 
Fixed-rate term loansFixed-rate term loans10,485 10,746 21,169 21,649 Fixed-rate term loans9,339 10,485 18,901 21,169 
Unsecured term loansUnsecured term loans340 282 676 481 Unsecured term loans340 340 676 676 
Class A 2015-1 EETCClass A 2015-1 EETC2,954 3,178 6,001 6,453 Class A 2015-1 EETC2,730 2,954 5,554 6,001 
Class B 2015-1 EETCClass B 2015-1 EETC575 664 1,191 1,369 Class B 2015-1 EETC487 575 1,015 1,191 
Class C 2015-1 EETCClass C 2015-1 EETC856 997 1,773 2,053 Class C 2015-1 EETC— 856 777 1,773 
Class AA 2017-1 EETCClass AA 2017-1 EETC1,640 1,759 3,278 3,514 Class AA 2017-1 EETC1,521 1,640 3,042 3,278 
Class A 2017-1 EETCClass A 2017-1 EETC591 634 1,182 1,267 Class A 2017-1 EETC548 591 1,097 1,182 
Class B 2017-1 EETCClass B 2017-1 EETC510 556 1,022 1,113 Class B 2017-1 EETC477 510 953 1,022 
Class C 2017-1 EETCClass C 2017-1 EETC1,092 1,092 2,171 2,171 Class C 2017-1 EETC— 1,092 522 2,171 
Convertible notes (2)
Convertible notes (2)
(3,024)1,749 199 3,827 
Convertible notes (2)
(14,087)(3,024)(7,041)199 
Revolving credit facilities— 562 — 1,733 
Finance leasesFinance leases16 24 34 48 Finance leases16 17 34 
Commitment and other feesCommitment and other fees418 604 955 1,032 Commitment and other fees412 418 827 955 
Amortization of deferred financing costsAmortization of deferred financing costs3,210 3,274 7,432 6,783 Amortization of deferred financing costs3,853 3,210 7,829 7,432 
TotalTotal$30,124 $39,662 $68,004 $84,468 Total$28,880 $30,124 $80,674 $68,004 
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(1)
(1) Includes $1.1 million and $2.1 million of accretion and $22.2 million and $44.4 million of interest expense for the three and six months ended June 30, 2023, respectively. Includes $0.3 million and $0.5 million of accretion and $10.2 million and $20.4 million of interest expense for the three and six months ended June 30, 2022, respectively.
(2) Includes $0.3$0.1 million and $0.8 million of accretion and $13.2 million and $30.2 million of interest expense for the three and six months ended June 30, 2021, respectively.
(2) Includes $3.8 million and $6.3$5.5 million of amortization of the discount for the convertible notes due 2026 $1.6as well as interest expense for the convertible notes due 2025 and 2026, offset by $14.2 million and $3.2$12.5 million of favorable mark to market adjustments for the convertible notes due 2026 for the three and six months ended June 30, 2023, respectively. Includes $5.4 million and $9.5 million of amortization of the discount for the convertible notes due 2026, as well as interest expense for the convertible notes due 2025 and 2026, offset by $8.4 million and $9.3 million of favorable mark to market adjustments for the convertible notes due 2026 for the three and six months ended June 30, 2022, respectively. Includes $1.7 million and $3.8 million of interest expense for the convertible notes due 2025 and 2026 for the three and six months ended June 30, 2021, respectively.

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ITEM 2.MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

We evaluate our financial performance utilizing various accounting principles generally accepted in the United States of America (“GAAP”) and non-GAAP financial measures, including Adjusted CASM and Adjusted CASM ex-fuel. These non-GAAP financial measures are provided as supplemental information to the financial information presented in this quarterly report that is calculated and presented in accordance with GAAP and these non-GAAP financial measures are presented because management believes that they supplement or enhance management’s, analysts’ and investors’ overall understanding of our underlying financial performance and trends and facilitate comparisons among current, past and future periods.
Because the non-GAAP financial measures are not calculated in accordance with GAAP, they should not be considered superior to and are not intended to be considered in isolation or as a substitute for the related GAAP financial measures presented in this quarterly report and may not be the same as or comparable to similarly titled measures presented by other companies due to possible differences in the method of calculation and in the items being adjusted. We encourage investors to review our financial statements and other filings with the Securities and Exchange Commission in their entirety and not to rely on any single financial measure.
The information below provides an explanation of certain adjustments reflected in the non-GAAP financial measures and shows a reconciliation of non-GAAP financial measures reported in this quarterly report to the most directly comparable GAAP financial measures. Within the financial tables presented, certain columns and rows may not add due to the use of rounded numbers. Per unit amounts presented are calculated from the underlying amounts.
Operating expenses per available seat mile (“CASM”) is a common metric used in the airline industry to measure an airline’s cost structure and efficiency. We exclude special charges, loss on disposal of assets special charges (credits), federal excise tax recovery adjustments and accelerated depreciationa litigation loss contingency recorded in the second quarter of 2023 to determine Adjusted CASM. We believe that also excluding aircraft fuel and related taxes ("Adjusted CASM ex-fuel") from certain measures is useful to investors because it provides an additional measure of management’s performance excluding the effects of a significant cost item over which management has limited influence and increases comparability with other airlines that also provide a similar metric. In prior periods, we excluded supplemental rent adjustments related to the modification of aircraft or engine leases from Adjusted CASM and Adjusted CASM ex-fuel. However, we no longer exclude supplemental rent adjustments from our non-GAAP measures. Therefore, 2021 non-GAAP measures have been revised to reflect this change and no longer exclude previously reported supplemental rent adjustments.

Forward-Looking Statements
This Quarterly Report on Form 10-Q contains 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 factors 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. Factors that could cause or contribute to such differences include, but are not limited to, those identified below, and those discussed in the section titled “Risk Factors” in this report and in Item 1A "Risk Factors" in our Annual Report on Form 10-K for the year ended December 31, 20212022 and subsequent Quarterly Reports on Form 10-Q or Current Reports on Form 8-K. Furthermore, such forward-looking statements speak only as of the date of this report. 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.
Overview

Spirit Airlines, headquartered in Miramar, Florida, offers affordable travel to value-conscious customers. Our all-Airbus fleet is one of the youngest and most fuel efficient in the United States. We serve destinations throughout the United States, Latin America and the Caribbean, and are dedicated to giving back and improving those communities. Our stock trades under the symbol "SAVE" on the New York Stock Exchange ("NYSE").

We focus on value-conscious travelers who pay for their own travel, and our business model is designed to deliver what our Guests want: low fares and a great experience. We compete based on total price. We allow our Guests to see all available
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options and their respective prices prior to purchasing a ticket, and this full transparency illustrates that our total price, including options selected, is lower on average than other airlines. By offering Guests unbundled base fares, we give them the power to save by paying only for the À La Smarte® options they choose, such as checked and carry-on bags and advance seat
23


assignments. We record revenue related to these options as non-fare passenger revenue, which is recorded within passenger revenues in our statement of operations.

We use low fares to address underserved markets, which helps us to increase passenger volume, load factors and non-ticket revenue. We also have high-density seating configurations on our fuel-efficient, all-Airbus fleet and a simplified onboard product designed to lower costs. High passenger volumes and load factors help us sell more ancillary products and services, which in turn allows us to reduce our fares even further.

We are committed to delivering the best value in the sky while providing an exceptional Guest experience. Our optimized mobile-friendly website makes booking easier. Our updated mobile app allows Guests to search for the lowest fares, book and check in while on the go, and our airport kiosks and self-bag tagging help our Guests move through the airport more quickly.


Comparative Operating Statistics:
The following tables set forth our operating statistics for the three and six month periods ended June 30, 20222023 and 2021:2022:

 
Three Months Ended June 30,Percent ChangeThree Months Ended June 30,Percent Change
20222021 20232022
Operating Statistics (unaudited) (A):Operating Statistics (unaudited) (A):Operating Statistics (unaudited) (A):
Average aircraftAverage aircraft177.6 159.9 11.1 %Average aircraft198.0 177.6 11.5 %
Aircraft at end of periodAircraft at end of period180 164 9.8 %Aircraft at end of period198 180 10.0 %
Average daily aircraft utilization (hours)Average daily aircraft utilization (hours)10.7 9.9 8.1 %Average daily aircraft utilization (hours)11.3 10.7 5.6 %
Average stage length (miles)Average stage length (miles)1,022 1,012 1.0 %Average stage length (miles)1,010 1,022 (1.2)%
DeparturesDepartures63,148 53,984 17.0 %Departures74,787 63,148 18.4 %
Passenger flight segments (PFSs) (thousands)Passenger flight segments (PFSs) (thousands)9,719 8,385 15.9 %Passenger flight segments (PFSs) (thousands)11,189 9,719 15.1 %
Revenue passenger miles (RPMs) (thousands)Revenue passenger miles (RPMs) (thousands)10,192,686 8,635,827 18.0 %Revenue passenger miles (RPMs) (thousands)11,532,450 10,192,686 13.1 %
Available seat miles (ASMs) (thousands)Available seat miles (ASMs) (thousands)11,846,547 10,226,746 15.8 %Available seat miles (ASMs) (thousands)13,908,113 11,846,547 17.4 %
Load factor (%)Load factor (%)86.0 %84.4 %1.6 ptsLoad factor (%)82.9 %86.0 %-3.1 pts
Fare revenue per passenger flight segment ($)Fare revenue per passenger flight segment ($)72.41 44.09 64.2 %Fare revenue per passenger flight segment ($)57.86 72.41 (20.1)%
Non-ticket revenue per passenger flight segment ($)Non-ticket revenue per passenger flight segment ($)68.20 58.39 16.8 %Non-ticket revenue per passenger flight segment ($)70.17 68.20 2.9 %
Total revenue per passenger flight segment ($)Total revenue per passenger flight segment ($)140.61 102.48 37.2 %Total revenue per passenger flight segment ($)128.03 140.61 (8.9)%
Average yield (cents)Average yield (cents)13.41 9.95 34.8 %Average yield (cents)12.42 13.41 (7.4)%
TRASM (cents)TRASM (cents)11.54 8.40 37.4 %TRASM (cents)10.30 11.54 (10.7)%
CASM (cents)CASM (cents)11.92 7.49 59.1 %CASM (cents)10.15 11.92 (14.8)%
Adjusted CASM (cents)Adjusted CASM (cents)11.68 8.62 35.5 %Adjusted CASM (cents)9.96 11.68 (14.7)%
Adjusted CASM ex-fuel (cents)Adjusted CASM ex-fuel (cents)6.96 6.52 6.7 %Adjusted CASM ex-fuel (cents)7.15 6.96 2.7 %
Fuel gallons consumed (thousands)Fuel gallons consumed (thousands)129,972 110,202 17.9 %Fuel gallons consumed (thousands)149,513 129,972 15.0 %
Average economic fuel cost per gallon ($)Average economic fuel cost per gallon ($)4.30 1.95 120.5 %Average economic fuel cost per gallon ($)2.62 4.30 (39.1)%

(A) See "Glossary of Airline Terms" elsewhere in this quarterly report for definitions used in this table.


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Six Months Ended June 30,Percent ChangeSix Months Ended June 30,Percent Change
20222021 20232022
Operating Statistics (unaudited) (A):Operating Statistics (unaudited) (A):Operating Statistics (unaudited) (A):
Average aircraftAverage aircraft176.2 158.6 11.1 %Average aircraft196.4 176.2 11.5 %
Aircraft at end of periodAircraft at end of period180 164 9.8 %Aircraft at end of period198 180 10.0 %
Average daily aircraft utilization (hours)Average daily aircraft utilization (hours)10.7 8.8 21.6 %Average daily aircraft utilization (hours)11.3 10.7 5.6 %
Average stage length (miles)Average stage length (miles)1,034 1,024 1.0 %Average stage length (miles)999 1,034 (3.4)%
DeparturesDepartures124,106 93,986 32.0 %Departures147,536 124,106 18.9 %
Passenger flight segments (PFSs) (thousands)Passenger flight segments (PFSs) (thousands)18,224 13,858 31.5 %Passenger flight segments (PFSs) (thousands)21,787 18,224 19.6 %
Revenue passenger miles (RPMs) (thousands)Revenue passenger miles (RPMs) (thousands)19,242,720 14,383,382 33.8 %Revenue passenger miles (RPMs) (thousands)22,207,330 19,242,720 15.4 %
Available seat miles (ASMs) (thousands)Available seat miles (ASMs) (thousands)23,565,443 18,202,904 29.5 %Available seat miles (ASMs) (thousands)27,117,249 23,565,443 15.1 %
Load factor (%)Load factor (%)81.7 %79.0 %2.7 ptsLoad factor (%)81.9 %81.7 %0.2 pts
Fare revenue per passenger flight segment ($)Fare revenue per passenger flight segment ($)61.58 39.25 56.9 %Fare revenue per passenger flight segment ($)57.66 61.58 (6.4)%
Non-ticket revenue per passenger flight segment ($)Non-ticket revenue per passenger flight segment ($)66.49 56.04 18.6 %Non-ticket revenue per passenger flight segment ($)70.04 66.49 5.3 %
Total revenue per passenger flight segment ($)Total revenue per passenger flight segment ($)128.07 95.29 34.4 %Total revenue per passenger flight segment ($)127.70 128.07 (0.3)%
Average yield (cents)Average yield (cents)12.13 9.18 32.1 %Average yield (cents)12.53 12.13 3.3 %
TRASM (cents)TRASM (cents)9.90 7.25 36.6 %TRASM (cents)10.26 9.90 3.6 %
CASM (cents)CASM (cents)10.99 7.31 50.3 %CASM (cents)10.60 10.99 (3.5)%
Adjusted CASM (cents)Adjusted CASM (cents)10.76 8.90 20.9 %Adjusted CASM (cents)10.42 10.76 (3.2)%
Adjusted CASM ex-fuel (cents)Adjusted CASM ex-fuel (cents)6.82 6.93 (1.6)%Adjusted CASM ex-fuel (cents)7.18 6.82 5.3 %
Fuel gallons consumed (thousands)Fuel gallons consumed (thousands)254,888 190,748 33.6 %Fuel gallons consumed (thousands)291,855 254,888 14.5 %
Average economic fuel cost per gallon ($)Average economic fuel cost per gallon ($)3.64 1.88 93.6 %Average economic fuel cost per gallon ($)3.01 3.64 (17.3)%

    (A) See "Glossary of Airline Terms" elsewhere in this quarterly report for definitions used in this table.



Executive Summary

Termination of Frontier Merger

On July 27, 2022, Spirit, Frontier Group Holdings, Inc., a Delaware corporation (“Frontier”), and Top Gun Acquisition Corp., a Delaware corporation and a direct, wholly owned subsidiary of Frontier (“Frontier Merger Sub”), entered into a Termination Agreement (the “Termination Agreement”), pursuant to which the parties agreed to terminate the Agreement and Plan of Merger, dated as of February 5, 2022 (as amended on June 2, 2022 and June 24, 2022, the “Frontier Merger Agreement”), among Spirit, Frontier and Frontier Merger Sub, effective immediately. Under the terms of the Termination Agreement, Spirit paid $25.0 million in cash to Frontier for Frontier’s reasonable and documented out-of-pocket costs and expenses (the “Frontier Expenses”).

Announcement of JetBlue Merger

On July 28, 2022, we entered into an Agreement and Plan of Merger (the “Merger Agreement”) with JetBlue Airways Corporation, a Delaware corporation (“JetBlue”), and Sundown Acquisition Corp., a Delaware corporation and a direct, wholly owned subsidiary of JetBlue (“Merger Sub”), pursuant to which and subject to the terms and conditions therein, Merger Sub will merge with and into Spirit, with Spirit continuing as the surviving entity (the “Merger”). As a result of the Merger, each existing share of Spirit's common stock (except for dissenting shares, treasury stock, and shares of Spirit's common stock owned by JetBlue, Merger Sub or any of their respective wholly owned subsidiaries), will be converted into the right to receive an amount in cash per share, without interest, equal to (such amount, the “Merger Consideration”) (i) $33.50 minus (ii) (A) $2.50 (the “Approval Prepayment Amount”), to the extent paid (the “Approval Prepayment”) uponon October 26, 2022 following the adoption by Spirit stockholders of the Merger Agreement (or, in the event that the closing of the Merger (the “Closing”) occurs after the record date for the prepayment of, but before the payment date of, such Approval Prepayment Amount, to the extent payable after the Closing),on October 19, 2022, and (B) an additional monthly per share prepayment amount calculated as the product of $0.10 and the number of additional
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prepayments paid (or, in the event the Closing occurs after the record date of, but before the payment date of any such additional prepayment, to the extent payable after the Closing), not to exceed $1.15 per share of Spirit common stock, by JetBlue to Spirit stockholders in accordance with the Merger Agreement after December 31, 2022 (each such payment is referred to as an “Additional Prepayment” and such $0.10 amount is referred to as the “Additional Prepayment Amount”). If an aggregate of $1.15 of Additional Prepayment Amounts has been paid out before consummation or termination of the Merger, Spirit stockholders will thereafter continue to receive monthly Additional Prepayments, at the same $0.10 per month rate until the transaction closes or the Merger Agreement is terminated. The Merger Agreement becomes unilaterally terminable by either JetBlue or Spirit after July 24, 2024.

In accordance with the terms of the Merger Agreement, JetBlue willis required to pay or cause to be paid the Approval Prepayment Amount to Spirit stockholders as of the record date established by Spirit for the special meeting to approve the Merger Agreement within five business days following such Spirit stockholder approval. Thereafter, on or prior to the last
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business day of each month beginning after December 31, 2022 until the earlier of the Closing or termination of the Merger Agreement, JetBlue will also pay or cause to be paid the Additional Prepayment Amount to Spirit stockholders as of a record date not more than 5five business days prior to the last business day of such month. We expect paymentsPayments made from JetBlue to Spirit stockholders willdo not impact our results of operations or cash flows. Under

On October 19, 2022, Spirit’s stockholders approved the Merger Agreement at a special meeting of stockholders. The record date for both Spirit's special meeting and the Approval Prepayment was September 12, 2022. In accordance with the terms of the Merger Agreement, on October 26, 2022, JetBlue reimbursedpaid the Spirit forstockholders the $25.0 million Frontier Expenses discussed above.Approval Prepayment Amount of $2.50 per share. Additionally, on January 31, 2023, February 28, 2023, March 31, 2023, April 28, 2023, May 31, 2023 and June 30, 2023, JetBlue paid the Additional Prepayments of $0.10 per share of common stock to all Spirit stockholders of record as of January 25, 2023, February 22, 2023, March 27, 2023, April 24, 2023, May 24, 2023 and June 26, 2023, respectively.

Due to the payment of the Approval Prepayment and each of the Additional Prepayment Amounts, in accordance with the terms of the respective debt indentures and warrant agreements, we announced related adjustments to the conversion rates of our convertible notes due 2025 and our convertible notes due 2026 as well as adjustments to the exercise prices and warrant shares of the PSP1, PSP2 and PSP3 warrants outstanding. As of June 30, 2023, the conversion rate of the convertible notes due 2025 and 2026 were 91.4187 and 23.7536 shares of voting common stock per $1,000 principal amount of convertible notes, respectively. In addition, as of June 30, 2023, the exercise price of the PSP1, PSP2 and PSP3 warrants were $12.137, $21.051 and $31.421, respectively, and the number of warrant shares issuable upon the exercise of the PSP1, PSP2 and PSP3 warrants were adjusted to 604,170.87, 159,798.98 and 93,429.46, respectively.

Completion of the Merger is subject to the satisfaction or waiver of certain closing conditions, including, among other things: (1) approval of the transactions by Spirit’s stockholders;stockholders, which was received on October 19, 2022; (2) receipt of applicable regulatory approvals, including approvals from the U.S. Federal Communications Commission, the U.S. Federal Aviation Administration and the U.S. Department of Transportation and the expiration or early termination of the statutory waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, and other competition laws, and other required regulatory approvals; (3) the absence of any law or order prohibiting the consummation of the transactions; and (4) the absence of any material adverse effect (as defined in the Merger Agreement) on Spirit.

Spirit, JetBlueOn March 7, 2023, the U.S. Justice Department filed suit to block the Merger. The trial date for the lawsuit has been set for October 16, 2023 and Merger Sub each make certain customary representations, warranties and covenants, as applicable,will be held at the United States District Court of Massachusetts in the Merger Agreement.Boston.

In addition, Spirit has agreed, among other things, that neither it nor any of its directors, officers, employees and representatives will (1) solicit alternative transactions, (2) participate in any discussions or negotiations relating to alternative transactions, (3) furnish any non-public information in connection with alternative transactions or (4) enter into any agreement relating to alternative transactions, except under limited circumstances described in the Merger Agreement. However, in certain circumstances, Spirit may terminate the Merger Agreement to enter into a definitive agreement for a Superior Proposal (as defined in the Merger Agreement). In addition, Spirit, JetBlue and Merger Sub each make certain customary representations, warranties and covenants, as applicable, in the Merger Agreement.

The Merger Agreement contains certain customary termination rights for Spirit and JetBlue, including, without limitation, a right for either party to terminate if the Merger is not consummated on or before July 28, 2023 (the "Outside Date"), subject to certain automatic extensions up to July 24, 2024 if needed to obtain regulatory approvals. Since all regulatory approvals required to consummate the Merger were not obtained as of July 28, 2023, the current Outside Date has been automatically extended to January 28, 2024. Upon the termination of the Merger Agreement under specified circumstances, Spirit will be required to pay JetBlue a breakuptermination fee of $94.2 million. Upon the termination of the Merger Agreement by JetBlue because of a material, uncured breach by Spirit of the Merger Agreement, Spirit will be required to pay JetBlue an amount equal to the sum of all amounts paid by JetBlue to the Spirit stockholders. Upon the termination of the Merger Agreement for failure to obtain antitrust regulatory clearance, JetBlue will be required to pay (i) to Spirit, $70.0 million, and (ii) to the Spirit stockholders, the excess of (A) $400.0 million minus (B) the sum of the Approval Prepayment Amount and all Additional Prepayment Amounts previously paid by JetBlue to the Spirit stockholders.

Summary of Results

For the second quarter of 2022,2023, we had an operating margin of 1.4%, an improvement of 4.7 percentage points compared to a negative operating margin of 3.3%, a decrease of 14.1 percentage points compared to an operating margin of 10.8% in the prior year period. We generated pre-tax income of $15.0 million and a net loss of $2.3 million on operating revenues of $1,432.5 million. For the second quarter of 2022, we generated a pre-tax loss of $67.5 million and a net loss of $52.4 million on operating revenues of $1,366.6 million. For the second quarter of 2021, we generated a pre-tax loss of $273.3 million and a net loss of $287.9 million on operating revenues of $859.3 million.
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Our Adjusted CASM ex-fuel for the second quarter of 20222023 was 6.967.15 cents compared to 6.526.96 cents in the same period in the prior year.year period. The increase on a per-ASM basis was primarily due to increases in reaccommodation expense, salaries, wages and benefits expense and ground handlingaircraft rent expense, period over period. On a per-ASM basis, these increases were partially offset by decreasesa decrease in primarily fixed operating costs such as depreciation and amortization expense and aircraft rentpassenger reaccommodation expense. Improved air travel demand, as compared to the prior year period, drove an increase in ASMs of 15.8%, period over period.
Due to the impacts of the pandemic on the demand for airline travel, beginning in 2020, we paused hiring across all work groups, including pilots and flight attendants, for nearly a year. During this time, we continued to take scheduled delivery of aircraft per our contractual purchase commitments with Airbus. In early 2021, as travel demand improved, we re-launched our recruiting, hiring and training initiatives. The pause in hiring during 2020 through early 2021, as well as staffing and
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operational challenges that have affected the airline industry overall, have restricted our ability to both optimize our network and operate our fleet at full utilization. As a result, on a per-ASM basis, we have experienced higher costs since early 2020 and expect this trend to continue until we are able to reach full fleet utilization.
As of June 30, 2022,2023, we had 180198 Airbus A320-family aircraft in our fleet comprised of 3124 A319s, 64 A320s, 30 A321s, 1 A321neo and 5579 A320neos. With theAs of June 30, 2023, we had 133 A320 family aircraft scheduled for delivery through 2027, of 17which 13 aircraft are scheduled for delivery during the remainder of 2022, we expect2023.
In July 2023, Pratt & Whitney and Airbus announced that additional inspections would be required for PW1100G engines on pre-2022 A320neo aircraft, which is expected to end 2022 with 197result in diminished service availability for certain of our aircraft in 2023 and 2024. We continue to evaluate the impact of such inspections and our fleet.contractual rights for reimbursement of related expenses.

Comparison of three months ended June 30, 20222023 to three months ended June 30, 20212022
Operating Revenues

Operating revenues increased $507.3$65.8 million, or 59.0%4.8%, to $1,366.6$1,432.5 million for the second quarter of 2022,2023, as compared to the second quarter of 2021,2022, primarily due to an increase in traffic of 13.1%, offset by a decrease in average yield of 34.8%, an increase in traffic of 18.0%7.4% and an increasea decrease in load factor of 1.6 pts,3.1 percentage points, year over year, driven by increased air travel demand as compared to prior year period.year.

Total revenue per passenger flight segment increased 37.2%decreased 8.9%, year over year. The increasedecrease in total revenue per passenger flight segment was primarily driven by a 34.8% increase7.4% decrease in average yield, period over period. Fare revenue per passenger flight segment increased 64.2%decreased 20.1% and non-ticket revenue per passenger flight segment increased 16.8%2.9%. The increase in non-ticket revenue per passenger flight segment was primarily attributable to increases in bag revenue, passenger usage fee revenue, change fee revenue, seat revenue and boost-it and bundle-itbundled ancillary revenue per passenger flight segment, as compared to the prior year.

Operating Expenses

Operating expenses increased $645.9remained flat, with a slight increase of $0.3 million or 84.3%,to $1,412.3 million for the second quarter of 2023 compared to $1,412.0 million for the second quarter of 2022, compared to $766.1 million for the second quarter of 2021, primarily due to an increase in salaries, wages and benefits, aircraft rent and landing fees and other rents, partially offset by a decrease in aircraft fuel, expense, period over period. We alsoIn addition, we had an increase in other operating expense primarily due to an increase in operations as reflected by an 18.0%a 13.1% increase in traffic and 15.8%a 17.4% increase in capacity. In addition, we had $18.0 million in special charges in the second quarter of 2022 compared to $115.0 million in special credits during the second quarter of 2021. For additional information, refer to "Notes to Condensed Consolidated Financial Statements—5. Special Charges (Credits)."
Aircraft fuel expense includes into-plane fuel expense (defined below) and realized and unrealized gains and losses associated with our fuel derivative contracts, if any. Into-plane fuel expense is defined as the price that we generally pay at the airport, including taxes and fees. Into-plane fuel prices are affected by the global oil market, refining costs, taxes and fees, which can vary by region in the United States and other countries where we operate. Into-plane fuel expense approximates cash paid to the supplier and does not reflect the effect of any fuel derivatives. We had no activity related to fuel derivative instruments during the three months ended June 30, 20222023 and 2021.2022.
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Aircraft fuel expense increaseddecreased by $343.8$167.6 million, or 160.0%30.0%, from $214.8 million in the second quarter of 2021 to $558.6 million in the second quarter of 2022.2022 to $391.0 million in the second quarter of 2023. This higherdecrease in fuel expense, period over period, was due to a 120.5% increase39.1% decrease in average economic fuel cost per gallon, andpartially offset by a 17.9%15.0% increase in fuel gallons consumed.
The elements of the changes in aircraft fuel expense are illustrated in the following table:
Three Months Ended June 30, Three Months Ended June 30,
20222021 20232022
(in thousands, except per-gallon amounts)Percent Change(in thousands, except per-gallon amounts)Percent Change
Fuel gallons consumedFuel gallons consumed129,972 110,202 17.9 %Fuel gallons consumed149,513 129,972 15.0 %
Into-plane fuel cost per gallonInto-plane fuel cost per gallon$4.30 $1.95 120.5 %Into-plane fuel cost per gallon$2.62 $4.30 (39.1)%
Aircraft fuel expense (per condensed consolidated statements of operations)Aircraft fuel expense (per condensed consolidated statements of operations)$558,633 $214,825 160.0 %Aircraft fuel expense (per condensed consolidated statements of operations)$391,032 $558,633 (30.0)%
Gulf Coast Jet indexed fuel is the basis for a substantial majority of our fuel consumption and is impacted by both the price of crude oil as well as increases or decreases in refining margins associated with the conversion of crude oil to jet fuel. The into-plane fuel cost per gallon increasedecrease of 120.5%39.1% was primarily a result of an increasea decrease in jet fuel prices.

We measure our operating cost performance on a per-ASM basis, since one ASM is the unit of production of an airline’s capacity. The following table presents our cost per-ASM, or unit cost, for the three months ended June 30, 20222023 and 2021,2022, followed by explanations of the material changes on a dollar basis and/or unit cost basis:
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Three Months Ended June 30,Dollar ChangePercent ChangeCost per ASMPer-ASM ChangePercent Change Three Months Ended June 30,Dollar ChangePercent ChangeCost per ASMPer-ASM ChangePercent Change
Three Months Ended June 30,Three Months Ended June 30,
2022202120222021 2023202220232022
(in thousands)(in cents)(in thousands)(in cents)
Aircraft fuelAircraft fuel$391,032 $558,633 $(167,601)(30.0)%2.81 4.72 (1.91)(40.5)%
Salaries, wages, and benefitsSalaries, wages, and benefits$308,634 $257,236 $51,398 20.0 %2.61 2.52 0.09 3.6 %Salaries, wages, and benefits407,705 308,634 99,071 32.1 %2.93 2.61 0.32 12.3 %
Aircraft fuel558,633 214,825 343,808 160.0 %4.72 2.10 2.62 124.8 %
Landing fees and other rentsLanding fees and other rents92,021 81,497 10,524 12.9 %0.78 0.80 (0.02)(2.5)%Landing fees and other rents106,487 92,021 14,466 15.7 %0.77 0.78 (0.01)(1.3)%
Depreciation and amortizationDepreciation and amortization76,469 73,703 2,766 3.8 %0.65 0.72 (0.07)(9.7)%Depreciation and amortization80,542 76,469 4,073 5.3 %0.58 0.65 (0.07)(10.8)%
Aircraft rentAircraft rent68,632 64,641 3,991 6.2 %0.58 0.63 (0.05)(7.9)%Aircraft rent92,101 68,632 23,469 34.2 %0.66 0.58 0.08 13.8 %
Maintenance, materials and repairsMaintenance, materials and repairs45,407 39,639 5,768 14.6 %0.38 0.39 (0.01)(2.6)%Maintenance, materials and repairs56,825 45,407 11,418 25.1 %0.41 0.38 0.03 7.9 %
DistributionDistribution48,724 35,263 13,461 38.2 %0.41 0.34 0.07 20.6 %Distribution50,701 48,724 1,977 4.1 %0.36 0.41 (0.05)(12.2)%
Special chargesSpecial charges19,972 18,004 1,968 NM0.14 0.15 (0.01)NM
Loss on disposal of assetsLoss on disposal of assets10,636 189 10,447 NM0.09 — 0.09 NMLoss on disposal of assets802 10,636 (9,834)NM0.01 0.09 (0.08)NM
Special charges (credits)18,004 (115,002)133,006 NM0.15 (1.12)1.27 NM
Other operatingOther operating184,813 114,107 70,706 62.0 %1.56 1.12 0.44 39.3 %Other operating206,094 184,813 21,281 11.5 %1.48 1.56 (0.08)(5.1)%
Total operating expensesTotal operating expenses$1,411,973 $766,098 $645,875 84.3 %11.92 7.49 4.43 59.1 %Total operating expenses$1,412,261 $1,411,973 $288  %10.15 11.92 (1.77)(14.8)%
Adjusted CASM (1)Adjusted CASM (1)11.68 8.62 3.06 35.5 %Adjusted CASM (1)9.96 11.68 (1.72)(14.7)%
Adjusted CASM ex-fuel (2)Adjusted CASM ex-fuel (2)6.96 6.52 0.44 6.7 %Adjusted CASM ex-fuel (2)7.15 6.96 0.19 2.7 %
 
(1)Reconciliation of CASM to Adjusted CASM:
Three Months Ended June 30,Three Months Ended June 30,
2022202120232022
(in millions)Per ASM(in millions)Per ASM(in millions)Per ASM(in millions)Per ASM
CASM (cents)CASM (cents)11.92 7.49 CASM (cents)10.15 11.92 
Special chargesSpecial charges$20.0 0.14 $18.0 0.15 
Loss on disposal of assetsLoss on disposal of assets$10.6 0.09 $0.2 — Loss on disposal of assets0.8 0.01 10.6 0.09 
Special charges (credits)18.0 0.15 (115.0)(1.12)
Litigation Loss ContingencyLitigation Loss Contingency6.0 0.04 — — 
Federal excise tax recovery— — (2.2)(0.02)
Accelerated depreciation— — 1.8 0.02 
Adjusted CASM (cents)Adjusted CASM (cents)11.68 8.62 Adjusted CASM (cents)9.96 11.68 

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(2)Excludes aircraft fuel expense, special charges, loss on disposal of assets special charges (credits), amounts related to out-of-period interrupted trip expense credits recognizedand a litigation loss contingency recorded in connection with Federal Excise Tax recovery and accelerated depreciation on aircraft seats related to the retrofitsecond quarter of 36 aircraft with new Acro6 seats completed in 2021.2023.
Our Adjusted CASM ex-fuel for the second quarter of 20222023 was 6.967.15 cents, compared to 6.526.96 cents in the same period in the prior year.year period. The increase on a per-ASM basis was primarily due to increases in reaccommodation expense, salaries, wages and benefits expense and ground handlingaircraft rent expense period over period. On a per-ASM basis, these increases were partially offset by decreasesa decrease in primarily fixed operating costs such as depreciation and amortization expense and aircraft rentpassenger reaccommodation expense. Improved air travel demand, as compared to the prior year period, drove an increase in ASMs of 15.8%, period over period.
Salaries, wages and benefits for the second quarter of 20222023 increased $51.4$99.1 million, or 20.0%32.1%, as compared to the second quarter of 2021. This increase on2022. On a dollar and per-ASM basis, was primarily driven bysalaries, wages and benefits expense increased due to higher salaries, vacation-time expense, crew overtime and 401(k) expense period overas compared to the prior year period. The increase in salaries and crew overtime wasThese increases were mainly driven by contractual pay rate increases related to the collective bargaining agreements with our pilots and flight attendants ratified in January 2023 and April 2023, respectively. In addition, these increases were driven by a 15.8%20.6% increase in our pilot and flight attendant workforce, period over period, as well as due to an increase in operations, as compared to the prior year period. The increase in 401(k) expense was mainly driven by higher pay to our pilot workforce driven by an increase in operations as well as higher average pay rates and 401(k) employer contribution rates to our pilots as compared to the prior year period.
Landing fees and other rents for the second quarter of 2022 2023 increased $10.5$14.5 million, or 12.9%15.7%, as compared to the second quarter of 2021.2022. On a dollar basis, landing fees and other rents expense primarily increased as a result of an increase inin landing fees, facility rent and related airport services driven by increased operations, higher rent rates and the addition of new stations as well as new gates at our existing stations, period over period. AGate charges and landing fees as well as a portion of our facility rent isand baggage rent are variable in nature and variesvary based on factors such as the number of departures. departures and passengers. As compared to the prior year period, departures increased by 17.0%18.4% and passenger flight segments increased by 15.1%. On a per-ASM basis, landing fees and other rents decreased,remained relatively consistent, period over period,
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period.
primarily due to a lower average rate per landing based on the location and volume of where we operated, partially offset by an increase in facility rent.

Depreciation and amortization for the second quarter of 20222023 increased by $2.8$4.1 million, or 3.8%5.3%, as compared to the prior year period. The increase in depreciation and amortization expense on a dollar basis was primarily driven by an increase in spare engines and computer software, as well as amortization of new engine overhauls capitalized in the period. Since the second quarter of 2022, we have taken delivery of five spare engines purchased with cash. This increase was partially offset by a decrease in depreciation and hardware.amortization expense in the current period as a result of the impact of the impairment of 29 of our A319 aircraft associated with the decision to accelerate their retirement during the fourth quarter of 2022 and the sale of 7 A319 airframes and 11 A319 engines during the six months ended June 30, 2023. On a per-ASM basis, depreciation and amortization expense decreased due to a change in the composition of our aircraft fleet between purchased aircraft (for which depreciation expense is recorded under depreciation and amortization) and leased aircraft (for which rent expense is recorded under aircraft rent). Since the prior year period, we have taken delivery of 25 new leased aircraft, which increased capacity but had no effect on depreciation expense.
We account for heavy maintenance under the deferral method. Under the deferral method, the cost of heavy maintenance is capitalized and amortized as a component of depreciation and amortization expense in the statement of operations until the earlier of the next heavy maintenance event or the end of the lease term. The amortization of heavy maintenance costs was $22.5$19.9 million and $22.6$22.5 million for the second quarters of 20222023 and 2021,2022, respectively. The amortization of heavy maintenance costs is driven by the timing and number of maintenance events. AsThe decrease in amortization of heavy maintenance costs, period over period, was primarily related to the impact of the impairment of 29 of our A319 aircraft, including the related net capitalized maintenance, associated with the decision to accelerate their retirement during the fourth quarter of 2022; however, as our fleet continues to grow and age, we generally expect that the amount of deferred heavy maintenance events will increase and will result in an increase in the amortization of those costs. If heavy maintenance events were amortized within maintenance, materials and repairs expense in the condensed consolidated statements of operations, our maintenance, materials and repairs expense would have been $67.9$76.7 million and $62.2$67.9 million for the second quarter of 20222023 and 2021,2022, respectively.
Aircraft rent expense for the second quarter of 20222023 increased by $4.0$23.5 million, or 6.2%34.2%, as compared to the second quarter of 2021.2022. This increase in aircraft rent expense on a dollar and per-ASM basis was primarily due to an increase in the number of aircraft financed under operating leases throughout the current period, as compared to the prior year period. Since the second quarter of 2021,2022, we have acquired 1525 new aircraft financed under operating leases. The increase in aircraft rent was partially offset by a decrease in supplemental rent, period over period. The decrease in supplemental rent is driven by the accrual of lease return costs in the prior year period related to the purchase of two A319 aircraft off lease made during the second quarter of 2021, partially offset by the accrual of lease return costs during the second quarter of 2022 related to our short-term spare engines. The decrease on a per-ASM basis was primarily due to the decrease in supplemental rent noted above, partially offset by the increase in rent expense related to the increase in aircraft financed under operating leases throughout the current period.
Maintenance, materials and repairs expense for the second quarter of 20222023 increased by $5.8$11.4 million, or 14.6%25.1%, as compared to the second quarter of 2021. On2022. The increase on a per dollar basis the increase in maintenance, materials and repairs expense was mainly due to a higher volume of aircraft and rotable maintenance events as a result of an 8.1% increase in average daily aircraft utilizationoperations as evidenced by an 18.4% increase in the current perioddepartures as compared to the priorwell as rate increases, year period.over year. On a per-ASM basis, the increase in maintenance, materials and repairs expense remained relatively stable, period overwas primarily due to rate increases since the prior year period.

Distribution costs increased by $13.5$2.0 million, or 38.2%4.1%, in the second quarter of 20222023 as compared to the second quarter of 2021.2022. The increase on a dollar and per-ASM basis was primarily due to increased sales volume, which impacts our variable distribution costs
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such as credit card fees. On a per-ASM basis, distribution costs decreased primarily due to lower average fare resulting in a decrease in credit card fees year over year.

Special charges for the three months ended June 30, 2023 consisted of $13.1 million in legal, advisory and other fees related to the Merger Agreement with JetBlue, as well as $6.9 million related to the retention award program in connection with the Merger Agreement with JetBlue. Special charges for the three months ended June 30, 2022 consisted of $10.4 million in legal, advisory and other fees related to the Former Frontier Merger Agreement and the Merger Agreement with JetBlue and $7.6 million related to the Frontier Retention Award Program. For additional information, refer to "Notes to Condensed Consolidated Financial Statements—5. Special Charges."

Loss on disposal of assets for the three months ended June 30, 2023 primarily consisted of a $2.3 million loss related to the write-off of obsolete assets and other adjustments, partially offset by a $1.2 million gain related to three aircraft sale leaseback transactions, as well as a net gain of $0.3 million related to the sale of three A319 airframes and four A319 engines. Loss on disposal of assets for the three months ended June 30, 2022 primarily consisted of $10.2 million related to the loss on four aircraft sale leaseback transactions completed during the second quarter of 2022. Loss on disposal of assets for the three months ended June 30, 2021 primarily consisted of $0.2 million related to the loss on two aircraft sale leaseback transactions completed during the second quarter of 2021.

Special charges for the three months ended June 30, 2022 consisted of $10.4 million in legal, advisory and other fees related to the Merger Agreement with Frontier and JetBlue's unsolicited proposal to acquire all of our outstanding shares in an all-cash transaction as well as $7.6 million related to our retention bonus program. Special credits for the three months ended June 30, 2021 consisted of $99.3 million related to the grant component of the PSP2 and PSP3 agreements with the Treasury. In addition, we recorded $16.3 millionrelated to the CARES Act Employee Retention credit. These special credits were partially offset by $0.6 million in special charges recorded in connection with the rehire of Team Members previously terminated under our involuntary employee separation program which were rehired in compliance with the restrictions mandated by our participation in the PSP2. For additional information, refer to "Notes to Condensed Consolidated Financial Statements—5. Special Charges (Credits).4. Loss on Disposal."

Other operating expenses for the three months ended June 30, 20222023 increased by $70.7$21.3 million, or 62.0%11.5%, as compared to the three months ended June 30, 2021.2022. The increase in other operating expenses on a dollar basis was primarily due to an increase in ground handling expense travel and lodging expense and passenger reaccomodation expense,other airport services expense. These increases are primarily a result of an increase in operations as well as an increase in ground handling rates at certain airports at which we operate, period over period. As compared to the prior year period, departures increased by 17.0%18.4% and passenger flight segments increased by 15.9%15.1%, which drove these increases in variable other operating expenses. The increaseAdditionally, we recorded a litigation loss contingency of $6.0 million in ground handling expense was also attributable to higher rates, period over period. In addition, we had higherthe second quarter of 2023.These increases were partially offset by a decrease in passenger reaccomodationreaccommodation expense, period over period, relateddue to a number of adverse weather events and increases in air traffic control ("ATC") programs and restrictions, which led to a significant number
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of flight delays and cancellations during the second quarter of 2022. The increasedecrease on a per-ASM basis was primarily attributable to highera decrease in passenger reaccommodation expense, ground handling rates and travel and lodging expense as compared to the prior year period.period, partially offset by higher ground handling expense and software expense, period over period, and the litigation loss contingency of $6.0 million recorded in the second quarter of 2023.


Other (Income) Expense

Our interest expense and corresponding capitalized interest for the three months ended June 30, 2023 primarily represented interest and accretion related to our 8.00% senior secured notes as well as the interest related to the financing of purchased aircraft, the discount amortization and mark to market adjustments related to our convertible notes due 2026 and the interest related to our convertible notes. Our interest expense and corresponding capitalized interest for the three months ended June 30, 2022, primarilyprimarily represented interest related to the financing of purchased aircraft as well as the interest and accretion related to our 8.00% senior secured notes, the discount amortization related to our convertible notes due in 2026 and the interest related to our convertible notes. In addition, our interest expense for the three months ended As of both June 30, 2022, includes mark to market adjustments of $8.4 million to the derivative liability related to our convertible notes due 2026. Refer to "Notes to Condensed Consolidated Financial Statements—11. Fair Value Measurements" for additional information. Our interest expense2023 and corresponding capitalized interest for the three months ended June 30, 2021, primarily represents interest related to the financing of purchased aircraft as well as the interest related to our convertible notes and the interest and accretion related to our 8.00% senior secured notes. As of June 30, 2022, and 2021, we had 73 and 72 aircraft financed through fixed-rate long-term debt, respectively.debt.

During the three months ended June 30, 2022, we had no loss on extinguishment of debt in our condensed consolidated statement of operations. Our loss on extinguishment of debt for the three months ended June 30, 2021 primarily represents premiums paid to early extinguish a portion of our 8.00% senior secured notes and our convertible notes due 2025. In addition, it includes the write-off of related deferred financing costs and original issuance discount.

Our interest income for the three months ended June 30, 2023 and 2022 primarily represents interest income earned on our cash, cash equivalents, restricted cash and short-term investments as well as interest earned on income tax refunds. Our interest income forDuring the three months ended June 30, 2021 represents2023 and 2022, we had interest income earned on cash, cash equivalentsof $16.0 million and short-term investments.$2.6 million, respectively. The increase in interest income was primarily due to an increase in interest rates as compared to the prior year period.


Income Taxes

Our effective tax rate for the second quarter of 20222023 was 22.4%115.7%, compared to (5.3)%22.4% for the second quarter of 2021.2022. The increase in the tax rate, as compared to the prior year period, is primarily due to an unfavorable permanentadjustment in tax adjustment recorded duringexpense driven by a change in the three months ended June 30, 2021, related to the repurchase of a portion of our convertible notes due 2025. Excluding the impact from the unfavorable permanent tax adjustment, ourannualized effective tax rate for the three months ended June 30, 2021 would have been 22.0%.rate. While we expect our tax rate to be a fairly consistent in the near term, it will tend to vary depending on items such as changes to permanent tax items, the amount of income we earn in each state and the state tax applicable to such income. Discrete items particular to a given year may also affect our effective tax rates.


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Comparison of six months ended June 30, 20222023 to six months ended June 30, 20212022
Operating Revenues
Operating revenues increased $1,013.4$448.3 million, or 76.7%19.2%, to $2,334.0$2,782.2 million for the six months ended June 30, 2022,2023, as compared to the prior year period, primarily due to an increase in traffic of 33.8%15.4%, an increase in average yield of 32.1%3.3% and an increase in load factor of 2.7 pts driven by increased air travel demand as compared to prior year period.0.2 pts.

Total revenue per passenger flight segment increased 34.4%decreased slightly, 0.3%, year over year. The increaseslight decrease in total revenue per passenger flight segment was primarily due toin line with a small increase of 3.3% in average yield and an increase in passenger flight segments of 32.1% in average yield,19.6%, period over period. Fare revenue per passenger flight segment increased 56.9%decreased 6.4%, as compared to the prior year period, while non-ticket revenue per passenger flight segment increased 18.6%5.3%, as compared to the prior year period. The increase in non-ticket revenue per passenger flight segment was primarily attributable to increases in passenger usage fee revenue change fee revenue, bag revenue, seat revenue and boost-it and bundle-itbundled ancillary revenue per passenger flight segment, as compared to the prior year.

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Operating Expenses
Operating expenses increased for the six months ended June 30, 20222023 by $1,260.8$283.7 million, or 94.8%10.9%, as compared to the prior year period primarily due to a 93.6%an increase in average economic fuel cost per gallonsalaries, wages and benefits, aircraft rent and landing fees and other rents, offset by a 33.6% increase in fuel gallons consumed, both of which contributed to a $569.5 million increasedecrease in aircraft fuel, expense, period over period. We alsoIn addition, we had an increase in other operating expense primarily due to an increase in operations, as reflected by a 33.8%15.4% increase in traffic and a 29.5%15.1% increase in capacity, as a result of increased travel demand as compared to the prior year period. In addition, we had $33.6 million in special charges during the six months ended June 30, 2022 compared to $291.9 million in special credits in the same period in the prior year. For additional information, refer to "Notes to Condensed Consolidated Financial Statements—5. Special Charges (Credits)."capacity.
The elements of the changes in aircraft fuel expense are illustrated in the following table:
Six Months Ended June 30, Six Months Ended June 30,
20222021 20232022
(in thousands, except per-gallon amounts)Percent Change(in thousands, except per-gallon amounts)Percent Change
Fuel gallons consumedFuel gallons consumed254,888 190,748 33.6 %Fuel gallons consumed291,855 254,888 14.5 %
Into-plane fuel cost per gallonInto-plane fuel cost per gallon$3.64 $1.88 93.6 %Into-plane fuel cost per gallon$3.01 $3.64 (17.3)%
Aircraft fuel expense (per condensed consolidated statements of operations)Aircraft fuel expense (per condensed consolidated statements of operations)$927,218 $357,755 159.2 %Aircraft fuel expense (per condensed consolidated statements of operations)$878,743 $927,218 (5.2)%

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We measure our operating cost performance on a per-ASM basis, since one ASM is the unit of production of an airline’s capacity. The following table presents our cost per-ASM, or unit cost, for the six months ended June 30, 20222023 and 2021,2022, followed by explanations of the material changes on a unit cost basis and/or dollar basis:
Six Months Ended June 30,Dollar ChangePercent ChangeCost per ASMPer-ASM ChangePercent Change Six Months Ended June 30,Dollar ChangePercent ChangeCost per ASMPer-ASM ChangePercent Change
Six Months Ended June 30,Six Months Ended June 30,
2022202120222021 2023202220232022
(in thousands)(in cents)(in thousands)(in cents)
Aircraft fuelAircraft fuel$878,743 $927,218 $(48,475)(5.2)%3.24 3.93 (0.69)(17.6)%
Salaries, wages, and benefitsSalaries, wages, and benefits$614,524 $502,928 $111,596 22.2 %2.61 2.76 (0.15)(5.4)%Salaries, wages, and benefits796,890 614,524 182,366 29.7 %2.94 2.61 0.33 12.6 %
Aircraft fuel927,218 357,755 569,463 159.2 %3.93 1.97 1.96 99.5 %
Landing fees and other rentsLanding fees and other rents174,957 153,605 21,352 13.9 %0.74 0.84 (0.10)(11.9)%Landing fees and other rents203,832 174,957 28,875 16.5 %0.75 0.74 0.01 1.4 %
Depreciation and amortizationDepreciation and amortization152,660 148,015 4,645 3.1 %0.65 0.81 (0.16)(19.8)%Depreciation and amortization158,533 152,660 5,873 3.8 %0.58 0.65 (0.07)(10.8)%
Aircraft rentAircraft rent134,676 119,423 15,253 12.8 %0.57 0.66 (0.09)(13.6)%Aircraft rent177,368 134,676 42,692 31.7 %0.65 0.57 0.08 14.0 %
Maintenance, materials and repairsMaintenance, materials and repairs90,922 69,542 21,380 30.7 %0.39 0.38 0.01 2.6 %Maintenance, materials and repairs111,239 90,922 20,317 22.3 %0.41 0.39 0.02 5.1 %
DistributionDistribution84,075 58,905 25,170 42.7 %0.36 0.32 0.04 12.5 %Distribution98,718 84,075 14,643 17.4 %0.36 0.36 — — %
Special chargesSpecial charges33,955 33,567 388 NM0.13 0.14 (0.01)NM
Loss on disposal of assetsLoss on disposal of assets22,188 1,306 20,882 NM0.09 0.01 0.08 NMLoss on disposal of assets7,902 22,188 (14,286)NM0.03 0.09 (0.06)NM
Special charges (credits)33,567 (291,940)325,507 NM0.14 (1.60)1.74 NM
Other operatingOther operating355,969 210,368 145,601 69.2 %1.51 1.16 0.35 30.2 %Other operating407,250 355,969 51,281 14.4 %1.50 1.51 (0.01)(0.7)%
Total operating expensesTotal operating expenses$2,590,756 $1,329,907 $1,260,849 94.8 %10.99 7.31 3.68 50.3 %Total operating expenses$2,874,430 $2,590,756 $283,674 10.9 %10.60 10.99 (0.39)(3.5)%
Adjusted CASM (1)Adjusted CASM (1)10.76 8.90 1.86 20.9 %Adjusted CASM (1)10.42 10.76 (0.34)(3.2)%
Adjusted CASM ex-fuel (2)Adjusted CASM ex-fuel (2)6.82 6.93 (0.11)(1.6)%Adjusted CASM ex-fuel (2)7.18 6.82 0.36 5.3 %
 
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(1)Reconciliation of CASM to Adjusted CASM:
Six Months Ended June 30,Six Months Ended June 30,
2022202120232022
(in millions)Per ASM(in millions)Per ASM(in millions)Per ASM(in millions)Per ASM
CASM (cents)CASM (cents)10.99 7.31 CASM (cents)10.60 10.99 
Special chargesSpecial charges$34.0 0.13 $33.6 0.14 
Loss on disposal of assetsLoss on disposal of assets$22.2 0.09 $1.3 0.01 Loss on disposal of assets7.9 0.03 22.2 0.09 
Special charges (credits)33.6 0.14 (291.9)(1.60)
Litigation Loss ContingencyLitigation Loss Contingency6.0 0.02 — — 
Federal excise tax recovery— — (2.2)(0.01)
Accelerated depreciation— — 3.5 0.02 
Adjusted CASM (cents)Adjusted CASM (cents)10.76 8.90 Adjusted CASM (cents)10.42 10.76 

(2)Excludes aircraft fuel expense, special charges, loss on disposal of assets special charges (credits), amounts related to out-of-period interrupted trip expense credits recognizedand a litigation loss contingency recorded in connection with Federal Excise Tax recovery, and accelerated depreciation on current aircraft seats related to the retrofitsecond quarter of 36 aircraft with new Acro6 seats.2023.
Our Adjusted CASM ex-fuel for the six months ended June 30, 20222023 was 6.827.18 cents as compared to 6.936.82 cents for the six months ended June 30, 2021. Improved air travel demand, as compared to the prior year period, drove an2022. The increase of 29.5% in ASMs, period over period. This increase in ASMs drove a decrease in operating expenses on a per-ASM basis with the greatest impact noted onwas primarily fixed costs such asdue to increases in salaries, wages and benefits expense depreciation and amortization expense and landing fees and other rents expense and aircraft rent expense. On a per-ASM basis, these decreases wereexpense, partially offset by increasesa decrease in passenger reaccommodation expense and ground handling expense, period over period.expense.
Salaries, wages and benefits for the six months ended June 30, 20222023 increased $111.6$182.4 million, or 22.2%29.7%, as compared to the prior year period. This increase on a dollar and per-ASM basis was primarily driven by higher salaries, crew overtime and per diem pay andvacation-time expense, 401(k) expense period over period. The increase in salaries and crew overtime and per diem pay wasovertime. These increases were mainly driven by contractual pay rate increases related to the collective bargaining agreements with our pilots and flight attendants ratified in January 2023 and April 2023, respectively. In addition, these increases were driven by a 17.2%19.7% increase in our pilot and flight attendant workforce, period over period, as well as due to an increase in operations as compared to the prior year period. The increase in 401(k) expense was mainly driven by higher pay to our pilot workforce driven by an increase in operations as well as higher average pay rates and 401(k) employer contribution rates to our pilots as compared to the prior year period.

Landing fees and other rents for the six months ended June 30, 20222023 increased $21.4$28.9 million, or 13.9%16.5%, as compared to the prior year period. On a dollar basis, landing fees and other rents expense primarily increased as a result of an increase in landing fees, facility rent gate charges and overfly feesstation baggage rent driven by increased operations, higher rent rates and the addition of new stations as well as new gates at our existing stations, period over period. Gate charges, landing fees, as well as a portion of facility rent and overfly feesstation baggage rent are variable in nature and vary based on factors such as the number of departures and
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passengers. As compared to the prior year period, departures increased by 32.0%18.9% and passenger flight segments increased by 31.5%19.6%. These increases were partially offset by an increase in signatory adjustment credits as compared to the prior year period. On a per-ASM basis, landing fees and other rents decreased,remained relatively consistent, period over period, primarily due to a lower average rate per landing based on the location and volume of where we operated.period.
Depreciation and amortization for the six months ended June 30, 20222023 increased by $4.6$5.9 million, or 3.1%3.8%, as compared to the prior year period. The increase in depreciation and amortization expense on a dollar basis was primarily driven by an increase in spare engines and computer hardwaresoftware, as well as amortization of new engine overhauls capitalized in the period. Since the second quarter of 2022, we have taken delivery of five spare engines purchased with cash. This increase was partially offset by a decrease in depreciation and softwareamortization expense in the current period as a result of the impact of the impairment of 29 of our A319 aircraft associated with the decision to accelerate their retirement during the fourth quarter of 2022 and spare rotables.the sale of 7 A319 airframes and 11 A319 engines during the six months ended June 30, 2023. On a per-ASM basis, depreciation and amortization expense decreased due to a change in the composition of our aircraft fleet between purchased aircraft (for which depreciation expense is recorded under depreciation and amortization) and leased aircraft (for which rent expense is recorded under aircraft rent). Since the prior year period, we have taken delivery of 25 new leased aircraft, which increased capacity but had no effect on depreciation expense.
We account for heavy maintenance under the deferral method. Under the deferral method, the cost of heavy maintenance is capitalized and amortized as a component of depreciation and amortization expense in the statement of operations until the earlier of the next heavy maintenance event or end of the lease term. The amortization of heavy maintenance costs was $46.0$36.3 million and $46.5$46.0 million for the six months ended June 30, 20222023 and 2021,2022, respectively. As our fleet continues to grow and age, we generally expect that the amount of deferred heavy maintenance events will increase and will result in an increase in the amortization of those costs. If heavy maintenance events were amortized within maintenance, materials and repairs expense in the condensed consolidated statements of operations, our maintenance, materials and repairs expense would have been $136.9$147.6 million and $116.0$136.9 million for the six months ended June 30, 20222023 and 2021,2022, respectively.
Aircraft rent expense for the six months ended June 30, 20222023 increased by $15.3$42.7 million, or 12.8%31.7%, as compared to the prior year period. ThisThe increase on a dollar and per-ASM basis increase in aircraft rent expense was primarily due to an increase in the number of aircraft financed under operating leases throughout the current period, as compared to the prior year period. Since the second quarter of 2021,2022, we have acquired 1525 new aircraft financed under operating leases. The increase in aircraft rent was partially offset by a decrease in
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supplemental rent, period over period. The decrease in supplemental rent is driven by the accrual of lease return costs in the prior year period related to the purchase of four aircraft off lease made during the six months ended June 30, 2021, partially offset by the accrual of lease return cost in the current year period related to our short-term spare engines. The decrease on a per-ASM basis was primarily due to the decrease in supplemental rent noted above.
Maintenance, materials and repairs expense for the six months ended June 30, 20222023 increased by $21.4$20.3 million, or 30.7%22.3%, as compared to the prior year period. The increase on a dollar basis was mainly due to a higher volume of aircraft and rotable maintenance events as a result of an increase of 21.6%18.9% in average daily aircraft utilizationdepartures in the current period as compared to the prior year period. On a per-ASM basis, the increase in maintenance, materials and repairs expense remained relatively stable, period overwas primarily due to rate increases since the prior year period.
Distribution costs increased by $25.2$14.6 million, or 42.7%17.4%, for the six months ended June 30, 20222023 as compared to the prior year period. The increase on a dollar and per-ASM basis was primarily due to increased sales volume, which impacts our variable distribution costs such as credit card fees. On a per-ASM basis, distribution costs remained stable year over year.
Special charges for the six months ended June 30, 2023 consisted of $20.4 million in legal, advisory and other fees related to the Merger Agreement with JetBlue, as well as $13.6 million related to the retention award program in connection with the Merger Agreement with JetBlue. Special charges for the six months ended June 30, 2022 consisted of $21.5 million in legal, advisory and other fees related to the Former Frontier Merger Agreement and the Merger Agreement with JetBlue as well as $12.1 million related to the Frontier Retention Award Program.
Loss on disposal of assets for the six months ended June 30, 2023 primarily consisted of $6.6 million loss related to the five aircraft sale leaseback transactions, as well as loss of $2.8 million related to the write-off of obsolete assets and other adjustments, partially offset by a net gain of $1.5 million related to the sale of 7 A319 airframes and 11 A319 engines. Loss on disposal of assets for the six months ended June 30, 2022 primarily consisted of $14.5 million related to the loss on seven aircraft sale leaseback transactions completed during the first and second quarters of 2022 and $6.6 million related to the impairment of one spare engine during the first quarter of 2022 which was damaged beyond economic repair. Loss on disposal of assets for the six months ended June 30, 2021 consisted of $1.1 million related to the sale of auxiliary power units ("APUs"), $0.2 million related to the loss on two aircraft sale leaseback transactions completed during the second quarter of 2021 and disposal of excess and obsolete inventory.
Special charges for the six months ended June 30, 2022 consisted of $21.5 million in legal, advisory and other fees related to the Merger Agreement with Frontier and JetBlue's unsolicited proposal to acquire all of our outstanding shares in an all-cash transaction as well as $12.1 million related to our retention bonus program. Special credits for the six months ended June 30, 2021 consisted of $255.8 million related to the grant component of the PSP agreement with the Treasury. In addition, we recorded $37.5 million related to the CARES Act Employee Retention credit. These special credits were partially offset by $1.4 million in special charges recorded in connection with the rehire of Team Members previously terminated under our involuntary employee separation program which were rehired in compliance with the restrictions mandated by our participation in the PSP2. For additional information, refer to "Notes to Condensed Consolidated Financial Statements—5. Special Charges (Credits)."
Other operating expenses for the six months ended June 30, 20222023 increased by $145.6$51.3 million, or 69.2%14.4%, as compared to the prior year period. The increase in other operating expenses on a dollar basis was primarily due to an increase in passenger reaccomodation expense, ground handling expense, andsoftware maintenance, travel and lodging expense, security expense and wheelchair expense, period over period.period, primarily as a result of an increase in operations. As compared to the prior year period, departures increased by 32.0%18.9%, and we had 31.5%19.6% more passenger flight segments, which drove increases in variable other operating expenses. In addition, we had higherThese increases were offset by a decrease in passenger reaccomodationreaccommodation expense, period over period, related to a number of adverse weather events and increases in ATC programs and restrictions, which led to a significant number of flight delays and cancellations during the first half of 2022. The increase onOn a per-ASM basis was primarily attributable to higher passenger reaccommodation expense, ground handling rates and travel and lodging expense,other operating expenses remained relatively consistent, as compared to the prior year period.
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Other (Income) Expense

Our interest expense and corresponding capitalized interest for the six months ended June 30, 20222023 primarily represented interest and accretion related to our 8.00% senior secured notes as well as the interest related to the financing of purchased aircraft, the discount amortization and mark to market adjustments related to our convertible notes due 2026 and the interest related to our convertible notes. Our interest expense and corresponding capitalized interest for the six months ended June 30, 2022 primarily represent interest related to the financing of purchased aircraft as well as the interest and accretion related to our 8.00% senior secured notes, the discount amortization related to our convertible notes due in 2026 and the interest related to our convertible notes. In addition, our interest expense for the six months endedAs of both June 30, 2022, includes mark to market adjustments of $9.3 million to the derivative liability related to our convertible notes due 2026. Refer to "Notes to Condensed Consolidated Financial Statements—11. Fair Value Measurements" for additional information. Our interest expense2023 and corresponding capitalized interest for the six months ended June 30, 2021 primarily represents interest related to the financing of purchased aircraft as well as the interest related to our convertible notes and the interest and accretion related to our 8.00% senior secured notes. As of June 30, 2022, and 2021, we had 73 anaid 72 aircraftrcraft financed through securedfixed-rate long-term debt arrangements, respectively.debt.

During the six months ended June 30, 2022, we had no loss on extinguishment of debt in our condensed consolidated statement of operations. Our loss on extinguishment of debt for the six months ended June 30, 2021 primarily represents premiums paid to early extinguish a portion of our 8.00% senior secured notes and 4.75% convertible notes due 2025. In addition, it includes the write-off of related deferred financing costs and original issuance discount.

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Our interest income for the six months ended June 30, 20222023 and 20212022 represents interest income earned on cash, cash equivalents, restricted cash and short-term investments as well as interest earned on income tax refunds. During the six months ended June 30, 2023 and 2022, we had interest income of $31.4 million and $3.0 million, respectively. The increase in interest income was primarily due to an increase in interest rates as compared to the prior year period.


Income Taxes

Our effective tax rate for the six months ended June 30, 20222023 was 20.7%16.1%, compared to 2.7%20.7% for the six months ended June 30, 2021.2022. The increasedecrease in tax rate, as compared to the prior year period, is primarily due to an unfavorable permanentadjustment in tax adjustment recorded duringexpense driven by a change in the six months ended June 30, 2021, related to the repurchase of a portion of our convertible notes due 2025. Excluding this unfavorable permanent tax adjustment, ourannualized effective tax rate for the six months ended June 30, 2021 would have been 20.9%.rate. While we expect our tax rate to be fairly consistent in the near term, it will tend to vary depending on items such as changes to permanent tax items, the amount of income we earn in each state and the state tax applicable to such income. Discrete items particular to a given year may also affect our effective tax rates.


Liquidity and Capital Resources

Our primary sources of liquidity generally include cash on hand, cash provided by operations and capital from debt and equity financing. Primary uses of liquidity are for working capital needs, capital expenditures, aircraft and engine pre-delivery deposit payments ("PDPs") and debt and lease obligations. We expect to meet our cash needs for the next twelve months with cash and cash equivalents, financing arrangements and cash flows from operations. As of June 30, 2022,2023, we had $1,543.0$1,520.2 million of liquidity comprised of unrestricted cash and cash equivalents, short-term investment securities and funds available under our revolving credit facility due in 2024.

As of June 30, 2022,2023, we had $25.4$25.1 million recorded within current maturities of long-term debt and finance leases on our condensed consolidated balance sheets related to our convertible notes due 2025. As of June 30, 2022,2023, the convertible notes due 2025 may be converted by noteholders through September 30, 2022.2023. During the secondfirst quarter of 2022, $2.82023, $0.3 million of our convertible notes due 2025 were converted to 217,22627,204 shares of our voting common stock. Refer to "Notes to Condensed Consolidated Financial Statements—12. Debt and Other Obligations," for additional information on the convertible notes due 2025.

As of June 30, 2022,2023, we had $456.8466.8 million, net of the related unamortized debt discount of $43.2$33.2 million, recorded within long-term debt, net and finance leases, less current maturities on our condensed consolidated balance sheets related to our convertible notes due 2026. As of June 30, 2022,2023, the convertible notes due 2026 did not qualify for conversion by noteholders through September 30, 2022.2023. Refer to "Notes to Condensed Consolidated Financial Statements —12. Debt and Other Obligations" for additional information on the convertible notes due 2026.

Currently, one of our largest capital expenditure needs is funding the acquisition costs of our aircraft. Aircraft may be acquired through debt financing, cash purchases, direct leases or sale leaseback transactions. During the six months ended June 30, 2022,2023, we took delivery of sevensix aircraft under direct operating leases, five aircraft under sale leaseback transactions and twothree spare enginesengine purchased with cash. During the six months ended June 30, 2022,2023, we made $135.3$276.8 million in debt payments (principal, interest and fees) on our outstanding aircraft debt obligations.

Under our purchase agreements for aircraft and engines, we are required to pay PDPs relating to future deliveries at various times prior to each delivery date. During the six months ended June 30, 2022,2023, we paid $7.4$15.1 million in PDPs, net of refunds, and $8.9$10.9 million of capitalized interest for future deliveries of aircraft and spare engines. As of June 30, 2022,2023, we had $488.3
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$509.0 million of pre-delivery deposits on flight equipment, including capitalized interest, on our condensed consolidated balance sheets.

As of June 30, 2022,2023, we havehad secured financing for 4029 aircraft to be leased directly from third-party lessors and 1013 aircraft which will be financed through sale leaseback transactions, with deliveries expected through 2024.2025. We do not have financing commitments in place for the remaining 10391 Airbus firm aircraft orders, scheduled for delivery through 2027. However, we have a financing letter of agreement with Airbus which provides backstop financing for a majority of the aircraft included in the A320 NEO Family Purchase Agreement signed in the fourth quarter of 2019. The agreement provides a standby credit facility in the form of senior secured mortgage debt financing. Future aircraft deliveries may be paid in cash, leased or otherwise financed based on market conditions, our prevailing level of liquidity, and capital market availability.

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Net Cash Flows Provided By Operating Activities. Operating activities in the six months ended June 30, 20222023 provided $86.8$130.7 million in cash compared to $484.1$86.8 million provided in the six months ended June 30, 2021.2022. Cash provided by operating activities in the six months ended June 30, 2022 is2023 was primarily related to cash provided from an increase in air traffic liability,other liabilities, an increase in other liabilitiesair traffic liability, as well as higher non-cash expense of depreciation and amortization. These increases were partially offset by the net loss in the period as well as thean increase in the deferred income tax benefit in the period and deferred heavy maintenance, net.maintenance.

Net Cash Flows Used In Investing Activities. During the six months ended June 30, 2022,2023, investing activities used $123.1$122.0 million, compared to $179.0$123.1 million used in the prior year period. The decreaseCash used by investing activities during the six months ended June 30, 2023 was mainly driven by a decrease in PDPs paid, net of refunds,primarily related to cash used to purchase property and equipment, partially offset by any increase in purchasesthe proceeds from the sale of property and equipment, year over year.equipment.

Net Cash Flows Used By Financing Activities. During the six months ended June 30, 2022,2023, financing activities used $100.2$244.3 million in cash compared to $240.3$100.2 million used in the six months ended June 30, 2021.2022. During the six months ended June 30, 2022,2023, we paid $96.8$241.8 million in debt principal payment obligations.

Commitments and Contractual Obligations

Our contractual purchase commitments consist primarily of aircraft and engine acquisitions through manufacturers and aircraft leasing companies. As of June 30, 2022,2023, our aircraft orders consisted of 113104 A320 family aircraft with Airbus, including A319neos, A320neos and A321neos, with deliveries expected through 2027. Out of these 113104 aircraft, we have 106 aircraft scheduled for delivery in the remainder of 20222023 and 1718 aircraft scheduled for delivery in 2023.2024. As of June 30, 2023, the number of aircraft expected for delivery in 2024 was higher than expected due to delivery delays from Airbus over the last 18 months resulting in aircraft originally scheduled for delivery in 2022 through 2024 being delayed primarily into 2023 through 2025. In late July 2023, we signed an amendment to our A320NEO Family Purchase Agreement to stagger the delivery of ordered aircraft over the next six years more evenly. With this amendment, we postponed a number of aircraft deliveries into 2025 through 2029, converted all 31 A319neo aircraft originally ordered into A321neo aircraft, and changed the timing of our option aircraft delivery dates (2026 through 2028) by one year (2027 through 2029). As of June 30, 2023, we had secured financing for the 1013 aircraft scheduled for delivery from Airbus through the remainder of 2022,2024, which will be financed through sale leaseback transactions. As of June 30, 2022,2023, we dodid not have financing commitments in place for the remaining 10391 Airbus aircraft on firm order through 2027. However, we have a financing letter of agreement with Airbus which provides backstop financing for a majority of the aircraft included in the A320 NEO Family Purchase Agreement signed in the fourth quarter of 2019. The agreement provides a standby credit facility in the form of senior secured mortgage debt financing. The contractual purchase amounts for all aircraft orders from Airbus are included within the flight equipment purchase obligations in the table below. In addition, rent commitments related to aircraft that will be financed through sale leaseback transactions are included within the aircraft rent commitments below.

During the third quarter of 2021, we entered into an Engine Purchase Support Agreement which requires us to purchase a certain number of spare engines in order to maintain a contractual ratio of spare engines to aircraft in the fleet. As of June 30, 2022,2023, we arewere committed to purchase 1416 PW1100G-JM spare engines, with deliveries through 2027.

During the third quarter of 2019, the United States announced its decision to levy tariffs on certain imports from the European Union, including commercial aircraft and related parts. These tariffs would include aircraft and other parts that we are already contractually obligated to purchase including those reflected above. In June 2021, the United States Trade Representative announced that the United States and European Union had agreed to suspend reciprocal tariffs on large civilian aircraft for five years, pending discussions to resolve their trade dispute.

As
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In addition to the aircraft purchase agreement, as of June 30, 2022,2023, we had secured 4029 direct leases for aircraft with third-party lessors, with deliveries in the remainder of 20222023 through 2024.2025. Aircraft rent commitments for future aircraft deliveries to be financed under direct leases from third-party lessors and sale leaseback transactions are expected to be approximately $18.0$19.5 million for the remainder of 2022, $110.8 million in 2023, $188.9$133.8 million in 2024, $217.9$186.5 million in 2025, $217.9$189.0 million in 2026, and $1,861.5$189.0 million in 2027, and $1,549.7 million in 2028 and beyond.

We have significant obligations for aircraft and spare engines as 7499 of our 180198 aircraft and 126 of our 3433 spare engines are financed under operating leases. These leases expire between 20222024 and 2040.2041. Aircraft rent payments were $68.0$93.5 million and $68.5$68.0 million for the three months ended June 30, 20222023 and June 30, 2021,2022, respectively. Aircraft rent payments were $132.9$180.5 million and $127.5$132.9 million for the six months ended June 30, 20222023 and June 30, 2021,2022, respectively.

Our fixed-rate operating leases with terms greater than 12 months are included within operating lease right-of-use assets with the corresponding liabilities included within current maturities of operating leases and operating leases, less current maturities on our condensed consolidated balance sheets. Leases with a term of 12 months or less and variable-rate leases are not recorded on our condensed consolidated balance sheets. Please see "Notes to Condensed Consolidated Financial Statements—9. Leases" for further discussion on our leases.

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We have contractual obligations and commitments primarily with regard to future purchases of aircraft and engines, payments of debt, and lease arrangements. The following table discloses aggregate information about our contractual obligations as of June 30, 20222023 and the periods in which payments are due (in millions): 
Remainder of 20222023 - 20242025 - 20262027 and beyondTotalRemainder of 20232024 - 20252026 - 20272028 and beyondTotal
Long-term debt (1)Long-term debt (1)$96 $559 $1,455 $1,029 $3,139 Long-term debt (1)$95 $1,546 $928 $831 $3,400 
Interest and fee commitments (2)Interest and fee commitments (2)71 215 135 104 525 Interest and fee commitments (2)78 285 78 70 511 
Finance and operating lease obligationsFinance and operating lease obligations145 557 481 2,047 3,230 Finance and operating lease obligations195 737 651 3,190 4,773 
Flight equipment purchase obligations (3)Flight equipment purchase obligations (3)507 1,907 2,411 873 5,698 Flight equipment purchase obligations (3)358 2,635 2,309 — 5,302 
Other (4)Other (4)34 40 36 19 129 Other (4)53 41 34 130 
Total future payments on contractual obligationsTotal future payments on contractual obligations$853 $3,278 $4,518 $4,072 $12,721 Total future payments on contractual obligations$779 $5,244 $4,000 $4,093 $14,116 

(1) Includes principal only associated with our 8.00% senior secured notes, senior term loans, fixed-rate loans, unsecured term loans, Class A, Class B, and Class C Series 2015-1 EETCs, Class AA, Class A, Class B, and Class C Series 2017-1 EETCs and convertible notes. Refer to "Notes to Condensed Consolidated Financial Statements—12. Debt and Other Obligations."
(2) Related to our 8.00% senior secured notes, senior term loans, fixed-rate loans, unsecured term loans, Class A, Class B, and Class C Series 2015-1 EETCs, Class AA, Class A, Class B, and Class C Series 2017-1 EETCs and convertible notes. Includes interest accrued as of June 30, 20222023 related to our variable-rate revolving credit facility.
(3) Includes estimated amounts for contractual price escalations and PDPs.
(4) Primarily related to our reservation system, construction commitments related to our new headquarters campus and residential building and other miscellaneous subscriptions and services. Refer to "Notes to Condensed Consolidated Financial Statements—10. Commitments and Contingencies."

Currently, one of our lease agreements require that we pay maintenance reserves to aircraft lessors to be held as collateral in advance of our required performance of major maintenance activities.

During the fourth quarter of 2019, we purchased an 8.5-acre parcel of land for $41.0 million and entered into a 99-year lease agreement for the lease of a 2.6-acre parcel of land, in Dania Beach, Florida, where we are building a new headquarters campus and a 200-unit residential building. During the first quarter of 2022, we began building our new headquarters campus and a 200-unit residential building with the project having an expected completion during the fourthfirst quarter 2023.2024. Operating lease commitments related to this lease are included in the table above under the caption "Finance and operating lease obligations." For more detailed information, please refer to “Notes to Condensed Consolidated Financial Statements—9. Leases." Commitments related to the construction of the headquarters campus and the 200-unit residential building are included in the table above under the caption "Other."

Off-Balance Sheet Arrangements
As of June 30, 2022,2023, we had lines of credit related to corporate credit cards of $20.1 million, from which we had drawn $1.1$1.5 million.

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As of June 30, 2022,2023, we had lines of credit with counterparties for both physical fuel delivery and derivatives in the amount of $41.5$28.5 million. As of June 30, 2022,2023, we had drawn $15.9$2.1 million on these lines of credit for physical fuel delivery. We are required to post collateral for any excess above the lines of credit if the derivatives are in a net liability position and make periodic payments in order to maintain an adequate undrawn portion for physical fuel delivery. As of June 30, 2022,2023, we did not hold any derivatives.
As of June 30, 2022,2023, we had $11.4$13.7 million in uncollateralized surety bonds and $85.0 million in standby letters of credit, collateralized by $75.0 million of restricted cash, representing an off-balance sheet commitment, of which $26.2$33.1 million had been drawn upon forwere issued letters of credit.


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GLOSSARY OF AIRLINE TERMS
Set forth below is a glossary of industry terms:
“Adjusted CASM” means operating expenses, excluding special charges, loss on disposal of assets special charges and credits, accelerated depreciation and federal excise tax recovery,a litigation loss contingency recorded in the second quarter of 2023, divided by ASMs.
“Adjusted CASM ex fuel” means operating expenses excluding aircraft fuel expense, special charges, loss on disposal of assets special charges and credits, accelerated depreciation and federal excise tax recovery,a litigation loss contingency recorded in the second quarter of 2023, divided by ASMs.
“AFA-CWA” means the Association of Flight Attendants-CWA.
“Air traffic liability” or “ATL” means the value of tickets sold in advance of travel.
“ALPA” means the Air Line Pilots Association, International.
“AMFA” means the Aircraft Mechanics Fraternal Association.
“ASIF” means an Aviation Security Infrastructure Fee assessed by the TSA on each airline.
“Available seat miles” or “ASMs” means the number of seats available for passengers multiplied by the number of miles the seats are flown, also referred to as "capacity."
“Average aircraft” means the average number of aircraft in our fleet as calculated on a daily basis.
“Average daily aircraft utilization” means block hours divided by number of days in the period divided by average aircraft.
“Average fuel cost per gallon” means total aircraft fuel expense divided by the total number of fuel gallons consumed.
“Average stage length” represents the average number of miles flown per flight.
“Average yield” means average operating revenue earned per RPM, calculated as total revenue divided by RPMs, also referred to as "passenger yield."
“Block hours” means the number of hours during which the aircraft is in revenue service, measured from the time of gate departure before take-off until the time of gate arrival at the destination.
“CASM” or “unit costs” means operating expenses divided by ASMs.

“CBA” means a collective bargaining agreement.

“CBP” means United States Customs and Border Protection.

“DOT” means the United States Department of Transportation.

"EETC" means enhanced equipment trust certificate.

“EPA” means the United States Environmental Protection Agency.
“FAA” means the United States Federal Aviation Administration.
“Fare revenue per passenger flight segment” means total fare passenger revenue divided by passenger flight segments.
“FCC” means the United States Federal Communications Commission.
"FLL Airport" means the Fort Lauderdale Hollywood International Airport.
“GDS” means Global Distribution System (e.g., Amadeus, Galileo, Sabre and Worldspan).
"IAMAW" means the International Association of Machinists and Aerospace Workers.
“Into-plane fuel cost per gallon” means into-plane fuel expense divided by number of fuel gallons consumed.
“Into-plane fuel expense” represents the cost of jet fuel and certain other charges such as fuel taxes and oil.
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“Load factor” means the percentage of aircraft seats actually occupied on a flight (RPMs divided by ASMs).
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“NMB” means the National Mediation Board.
"Non-ticket revenue" means total non-fare passenger revenue and other revenue
“Non-ticket revenue per passenger flight segment” means total non-fare passenger revenue and other revenue divided by passenger flight segments.
“OTA” means Online Travel Agent (e.g., Orbitz and Travelocity).
"PAFCA" means the Professional Airline Flight Control Association.
“Passenger flight segments” means the total number of passengers flown on all flight segments.
“PDP” means pre-delivery deposit payment.
“Revenue passenger mile” or “RPM” means one revenue passenger transported one mile. RPMs equals revenue passengers multiplied by miles flown, also referred to as “traffic.”
“RLA” means the United States Railway Labor Act.
"Total operating revenue per-ASM," "TRASM" or "unit revenue" means operating revenue divided by ASMs.
“TWU” means the Transport Workers Union of America.
“TSA” means the United States Transportation Security Administration.
“ULCC” means “ultra low-cost carrier.”


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ITEM 3.QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Market Risk-Sensitive Instruments and Positions

We are subject to certain market risks, including commodity prices (specifically aircraft fuel) and interest rates. We purchase the majority of our jet fuel at prevailing market prices and seek to manage market risk through execution of our hedging strategy and other means. We have market-sensitive instruments in the form of fixed-rate debt instruments, short-term investment securities and, from time to time, financial derivative instruments used to hedge our exposure to jet fuel price increases and interest rate increases. We do not purchase or hold any derivative financial instruments for trading purposes. The adverse effects of changes in these markets could pose a potential loss as discussed below. The sensitivity analysis provided below does not consider the effects that such adverse changes may have on overall economic activity, nor does it consider additional actions we may take to mitigate our exposure to such changes. Actual results may differ.

Aircraft Fuel. Our results of operations can vary materially due to changes in the price and availability of aircraft fuel. Aircraft fuel expense for the six months ended June 30, 20222023 represented approximately 35.8%30.6% of our operating expenses. Volatility in aircraft fuel prices or a shortage of supply could have a material adverse effect on our operations and operating results. We source a significant portion of our fuel from refining resources located in the southeast United States, particularly facilities adjacent to the Gulf of Mexico. Gulf Coast fuel is subject to volatility and supply disruptions, particularly during hurricane season when refinery shutdowns have occurred, or when the threat of weather-related disruptions has caused Gulf Coast fuel prices to spike above other regional sources. Both jet fuel swaps and jet fuel options are used at times to protect the refining price risk between the price of crude oil and the price of refined jet fuel, and to manage the risk of increasing fuel prices. Gulf Coast Jet indexed fuel is the basis for a substantial majority of our fuel consumption. Based on our annual fuel consumption over the last 12 months, a hypothetical 10% increase in the average price per gallon of aircraft fuel would have increased into-plane aircraft fuel expense by approximately $148$188 million. As of June 30, 2022,2023, we did not have any outstanding jet fuel derivatives, and we have not engaged in fuel derivative activity since 2015.

Interest Rates. We have market risk associated with our short-term investment securities, which had a fair market value of $105.9109.5 million as of June 30, 2022.2023.

Fixed-Rate Debt. As of June 30, 2022,2023, we had $1,966.8$1,628.7 million outstanding in fixed-rate debt related to 43 Airbus A320 aircraft and 30 Airbus A321 aircraft which had a fair value of $1,794.7$1,493.4 million. In addition, as of June 30, 2022,2023, we had $510.0$1,110.0 million and $136.3 million outstanding in fixed-rate debt related to our 8.00% senior secured notes and our unsecured term loans, respectively, which had fair values of $468.4$1,105.4 million and $111.0$120.9 million. As of June 30, 2022,2023, we also had $525.4$525.1 million outstanding in convertible debt which had a fair value of $505.3$447.5 million.

Variable-Rate Debt. As of June 30, 2022,2023, we did not have any outstanding variable-rate long term debt.
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ITEM 4.CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures

Management, with the participation of our Chief Executive Officer and our Chief Financial Officer, evaluated the effectiveness of our disclosure controls and procedures as of June 30, 2022.2023. The term “disclosure controls and procedures,” as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act, means controls and other procedures of a company that are designed to ensure that information required to be disclosed by a company in the reports that it files or submits under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the SEC’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by a company in the reports that it files or submits under the Exchange Act is accumulated and communicated to our management, including its chief executive and principal financial officers, as appropriate to allow timely decisions regarding required disclosure.

Management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving their objectives and management necessarily applies its judgment in evaluating the cost-benefit relationship of possible controls and procedures.

Based on the evaluation of our disclosure controls and procedures as of June 30, 2022,2023, our Chief Executive Officer and Chief Financial Officer concluded that, as of such date, our disclosure controls and procedures were effective at the reasonable assurance level.

Changes in Internal Control over Financial Reporting

There were no changes in our internal control over financial reporting (as defined in Rule 13a-15(f) under the Exchange Act), during the quarter ended June 30, 20222023 that have materially affected or are reasonably likely to materially affect our internal control over financial reporting.
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PART II. OTHER INFORMATION

ITEM 1.LEGAL PROCEEDINGS

We are subject to commercial litigation claims and to administrative and regulatory proceedings and reviews that may be asserted or maintained from time to time. We believe the ultimate outcome of such lawsuits, proceedings and reviews will not, individually or in the aggregate, have a material adverse effect on our financial position, liquidity or results of operations. In making a determination regarding accruals, using available information, we evaluate the likelihood of an unfavorable outcome in legal or regulatory proceedings and assessments to which we are a party and record a loss contingency when it is probable a liability has been incurred and the amount of the loss can be reasonably estimated. These subjective determinations are based on the status of such legal or regulatory proceedings, the merits of our defenses, and consultation with legal counsel. Actual outcomes of these legal and regulatory proceedings may materially differ from our current estimates. It is possible that resolution of one or more of the legal matters currently pending or threatened could result in losses material to our consolidated results of operations, liquidity or financial condition.
In 2017, we were sued in the Eastern District of New York in a purported class action, Cox, et al. v. Spirit Airlines, Inc., alleging state-law claims of breach of contract, unjust enrichment and fraud relating to our practice of charging fees for ancillary products and services. The original action was dismissed by the District Court; however, following the plaintiff's appeal to the Second Circuit, the case was remanded to the District Court for further review on the breach of contract claim. A hearing on the Company's Motion for Summary Judgment and plaintiff's Motion for Class Certification was held on December 10, 2021. The Court granted the plaintiff's class certification motion and denied Spirit’s summary judgment motion on March 29, 2022. We subsequently filed a motion for reconsideration on April 26, 2022, and an oral argument was held on May 19, 2022. The Court denied Spirit’s motion for reconsideration on February 14, 2023. On April 3, 2023, Spirit moved to compel arbitration of and/or dismiss certain class members’ claims for lack of personal jurisdiction. Trial was set to begin on January 16, 2024. However, in June 2023, we reached a tentative settlement in mediation for a maximum amount of $8.3 million. The total amount paid will depend on a number of factors, including participation of class members and any conditions on the settlement approved by the Court. Currently, our best estimate of the probable loss associated with the settlement is $6.0 million, and we have recorded this amount in other operating expenses within our condensed consolidated statements of operations.
Following an audit by the IRSInternal Revenue Service ("IRS") related to the collection of federal excise taxes on optional passenger seat selection charges covering the period of the second quarter 2018 through the fourth quarter 2020, on March 31, 2022, we were assessed $34.9 million. On July 19, 2022, the assessment was reduced to $27.5 million. We believe the assessment is without merit and intend to challenge the assessment.assessment; therefore, we believe a loss in this matter is not probable and have not recognized a loss contingency.
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ITEM 1A.RISK FACTORS

There have been no material changes to the risk factors disclosed in Item 1A "Risk Factors" contained in our Annual Report on Form 10-K for the year ended December 31, 2021,2022, filed with the Securities and Exchange Commission on February 8, 2022,6, 2023, other than the addition of the following risk factors.factor. Investors are urged to review all such risk factors carefully.

The pendencyWe depend on a limited number of the proposed Merger may cause disruption insuppliers for our business.aircraft and engines.

On July 28,One of the elements of our business strategy is to save costs by operating a single-family aircraft fleet - currently Airbus A320-family, single-aisle aircraft, powered by engines manufactured by IAE and Pratt & Whitney. If any of Airbus, IAE or Pratt & Whitney become unable to perform its contractual obligations, or if we are unable to acquire or lease aircraft or engines from these or other owners, operators or lessors on acceptable terms, we would have to find other suppliers for a similar type of aircraft or engine. In late 2022, we enteredwere notified by Airbus that a number of the aircraft we originally had scheduled for delivery in 2023 will be delayed into 2024 and beyond. These delays have required us to reduce capacity expectations for the Merger Agreementnext year or so. If we have to lease or purchase aircraft from another supplier, we would lose the significant benefits we derive from our current single fleet composition. We may also incur substantial transition costs, including costs associated with JetBlueretraining our employees, replacing our manuals and Merger Sub, pursuantadapting our facilities and maintenance programs. Our operations could also be harmed by the failure or inability of aircraft, engine and parts suppliers to provide sufficient spare parts or related support services on a timely basis, particularly in connection with new-generation introductory technology. Our business would be significantly harmed if a design defect or mechanical problem with any of the types of aircraft, engines or components currently on order or that we operate were discovered that would halt or delay our aircraft delivery stream or that would ground any of our aircraft while the defect or problem was corrected, assuming it could be corrected at all. Since the addition of A320neo aircraft in 2016, we had experienced introductory issues with the new-generation PW1100G engines, designed and manufactured by Pratt & Whitney, which had previously resulted in diminished service availability of such aircraft. Beginning in the second half of 2020, the A320neo aircraft fleet reliability had stabilized and subjectthe PW1100G engine technical issues had improved. However, beginning in the second half of 2022, we began experiencing reliability issues with the PW1100G engines once again resulting in diminished service availability of aircraft. In July 2023, Pratt & Whitney and Airbus announced that additional inspections would be required for PW1100G engines on pre-2022 A320neo aircraft, which is expected to result in diminished service availability for certain of our aircraft in 2023 and 2024. Supply chain delivery issues and limited capacity at engine maintenance, repair, and overhaul (“MRO”) shops available to service PW1100G engines have resulted in extended turnaround time to perform these inspections and the termsmodifications required to improve the reliability of these engines. These impacts are expected to continue throughout 2023 and conditions therein, Merger Sub will merge with2024, until supply chain and into Spirit, with Spirit continuing as the surviving entity.engine MRO shop capacity returns to required levels to support our growth.

The Merger Agreement restricts us from taking specified actions without JetBlue’s consent until the Merger is completed or the Merger Agreement is terminated, including amending our organizational documents, issuing shares of our common stock, divestingWe cannot be certain assets (including certain intellectual property rights), declaring or paying dividends, making certain significant acquisitions or investments, entering into anythat new lines of business, incurring certain indebtedness in excess of certain thresholds, amending or modifying certain material contracts, making non-ordinary course capital expenditures, making certain non-ordinary course changes to personnel and employee compensation, changing the cabin configuration or amenities on our aircraft and taking actions that may result in the loss of our FAA airworthiness certification or takeoff and landing slots. These restrictions and others more fully described in the Merger Agreement may affect our ability to execute our business strategies and attain our financial and other goals and may impact our business, results of operations and financial condition.

The pendency of the proposed Merger could cause disruptions to our business or business relationships, which could have an adverse impact on our results of operations. Parties with which we have business relationships, including Guests, pilots, employees, suppliers, third-party service providers and third-party distribution channels,technical issues may be uncertain asmitigated given the relatively short life these engines have been in service. We continuously work with the engine manufacturer to the future of such relationshipssecure support and may delayrelief in connection with possible engine related operation disruptions. Should appropriate design or defer certain business decisions, seek alternative relationships with third partiesmechanical modifications not be implemented or seek to alter their present business relationships with us. Parties with whom we otherwise may have sought to establish business relationships may seek alternative relationships with third parties.

The pursuit of the Merger is expected to place a significant burden on our management and internal resources. The diversion of management’s attention away from day-to-day business concerns and any difficulties encountered in the transition processnot be effective, this could materially adversely affect our business, results of operations and financial condition.

We have incurred and will continue to incur significant costs, expenses and fees for professional services and other transaction costs in connection with the Merger. The substantial majority These types of these costs will be non-recurring expenses relating to the Merger, and many of these costs are payable regardless of whetherevents, if appropriate design or not the Merger is consummated. We also could be subject to litigation related to the proposed Merger, which could prevent or delay the consummation of the Merger and result in significant costs and expenses.

Failure to complete the Merger in a timely manner or at all could negatively impact the market price of our common stock, as well as our future business and our results of operations and financial condition.

The Mergermechanical modifications cannot be completed until conditions to closing are satisfied or (if permissible under applicable law) waived. The Merger is subject to numerous closing conditions, including among other things: (1) approval of the transactions by our stockholders; (2) receipt of applicable regulatory approvals, including approvals from the FCC, FAAimplemented, and DOT and the expiration or early termination of the statutory waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, and other competition laws, and other required regulatory approvals; (3) the absence of any law or order prohibiting the consummation of the transactions; and (4) the absence of any material adverse effect (as defined in the Merger Agreement) on the Company.

The satisfaction of the required conditions could delay the completion of the Merger for a significant period of time or prevent it from occurring. Further, there can be no assurance that the conditions to the closing of the Merger will be satisfied or waived or that the Merger will be completed.

If the Merger is not completed in a timely manner or at all, our ongoing business may be adversely affected as follows:

we may experience negative reactions from the financial markets, and our stock price could decline to the extent that the current market price reflects an assumption that the Merger will be completed;
we may experience negative reactions from employees, Guests, suppliers or other third parties;
we may be subject to litigation, which could result in significant costs and expenses;
management’s focus may be diverted from day-to-day businessrelated operations and from pursuing other opportunities that could have been beneficial to the Company; and
our costs of pursuing the Merger may be higher than anticipated.
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Additionally, in approving the Merger Agreement, the Board of Directors considered a number of factors and potential benefits, including the fact that the merger consideration to be received by holders of common stock represented a significant premium over the last closing stock price prior to announcement of the Merger. If the Merger is not completed, the holders of our common stock will not realize this benefit of the Merger.

In addition to the above risks, we may be required, under certain circumstances, to pay JetBlue a breakup fee equal to $94.2 million and/or to reimburse or indemnify JetBlue for certain of its expenses. If the Merger is not consummated due to the inability to receive regulatory approval, JetBlue would be required to pay Spirit a reverse termination fee of $70 million. The reverse termination fee may not be sufficient to cover all of the expenses Spirit incurred in connection with the Merger, which may have an adverse effect on our liquidity and results of operations. If the Merger is not consummated, there can be no assurance that these risks will not materialize and will not materially adversely affect our stock price, business, results of operations and financial condition.

In order to complete the Merger, the Company and JetBlue must obtain certain governmental approvals, and if such approvals are not granted or are granted with conditions, completion of the Merger may be jeopardized or the anticipated benefits of the Merger could be reduced.

Although the Company and JetBlue have agreed to use reasonable best efforts, subject to certain limitations, to make certain governmental filings and obtain the required governmental approvals,disruptions, including from the FCC, FAA and DOT, or expiration or earlier termination of relevant waiting periods, as the case may be, there can be no assurance that the relevant waiting periods will expire or be terminated or that the relevant approvals will be obtained. In connection with its prior tender offer, JetBlue has made regulatory submissions to certain governmental authorities, and received a “second request” for information from the U.S. Department of Justice, with which the Company and JetBlue are in the process of complying. Complying with requests for information from governmental authorities is time-consuming and expensive and distracts management from the day-to-day operations of the Company. As a condition to approving the Merger, these governmental authorities may impose conditions, terms, obligations or restrictions or require divestitures or place restrictions on the conduct of our business after completion of the Merger. There can be no assurance that regulators will not impose conditions, terms, obligations or restrictions and that such conditions, terms, obligations or restrictions will not have the effect of delaying or preventing completion of the Merger or imposing additional material costs on orrequired inspections, could materially limiting the revenues of the combined company following the Merger, or otherwise adversely affecting, including to a material extent, our business, results of operations and financial condition after completion of the Merger. If we are required to divest assets or businesses, there can be no assurance that we will be able to negotiate such divestitures expeditiously or on favorable terms or that the governmental authorities will approve the terms of such divestitures. We can provide no assurance that these conditions, terms, obligations or restrictions will not result in the abandonment of the Merger. Any of the governmental authorities from which we need approvals may also sue us and JetBlue in U.S. federal court to prevent the Merger from being consummated. Defending any such lawsuit will be time-consuming and expensive and there can be no assurance that we and JetBlue would ultimately be successful.

If the Merger is not consummated, holders of convertible notes or warrants will not receive any adjustment to the conversion rate or exercise price as a result of any prepayment of merger consideration or ticking fee.

The indentures governing each series of our convertible notes outstanding and the warrant agreements governing our outstanding warrants do not provide for an adjustment to the conversion rate or exercise price when payments are made by a third party to our stockholders, as JetBlue has agreed to do in the Merger Agreement. As a result, if the Merger is not consummated, convertible noteholders and warrant holders will not receive the benefit of these payments.

You must be a Spirit stockholder as of the specified record dates to receive the prepayments of merger consideration.

The prepayments of merger consideration by JetBlue will only be made to Spirit stockholders as of the specified record dates. If you are not a Spirit stockholder as of that record date, you will not receive the relevant prepayment even if you are a Spirit stockholder at the time of consummation of the Merger. As a result, if you are not a Spirit stockholder at each relevant time, you will receive less than $33.50 (or less than the up to $34.15 maximum amount of merger consideration, depending on the timing of Closing) in total for each share of Spirit common stock you own upon the consummation of the Merger.

Increased labor costs, union disputes, employee strikes and other labor-related disruption may adversely affect our business, results of operations and financial conditions.condition. Moreover, the use of our aircraft could be suspended or restricted by regulatory authorities in the event of actual or perceived mechanical or design problems. Our business would also be significantly harmed if the public began to avoid flying with us due to an adverse perception of the types of aircraft, engines or components that we operate stemming from safety concerns or other problems, whether real or perceived, or in the event of an accident involving those types of aircraft, engines or components. Carriers that operate a more diversified fleet are better positioned than we are to manage such events.

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Our business is labor intensive, with labor costs representing approximately 32.4%, 39.3% and 26.0% of our total operating costs for 2021, 2020 and 2019, respectively. As of June 30, 2022, approximately 79% of our workforce was represented by labor unions. We cannot assure that our labor costs going forward will remain competitive, because in the future our labor agreements may be amended or become amendable and new agreements could have terms with higher labor costs; one or more of our competitors may significantly reduce their labor costs, thereby reducing or eliminating our comparative advantages as to one or more of such competitors; or our labor costs may increase in connection with our growth. If our aircraft maintenance technicians (“AMTs”) vote to unionize, as further described below, we will be required to negotiated a collective bargaining agreement with the Aircraft Mechanics Fraternal Association (the “AMFA”). Any such negotiation may cause us to incur higher labor costs for our AMTs over the term of the agreement than we would have incurred absent such agreement. We may also become subject to additional collective bargaining agreements in the future if other non-unionized workers unionize.

Relations between air carriers and labor unions in the United States are governed by the RLA. Under the RLA, collective bargaining agreements generally contain “amendable dates” rather than expiration dates, subject to standard opener provisions, and the RLA requires that a carrier maintain the existing terms and conditions of employment following the amendable date through a multi-stage and usually lengthy series of bargaining processes overseen by the NMB. This process continues until either the parties have reached agreement on a new collective bargaining agreement or the parties have been released to “self-help” by the NMB. In most circumstances, the RLA prohibits strikes; however, after release by the NMB, carriers and unions are free to engage in self-help measures such as lockouts and strikes.

During 2017, we experienced operational disruption from pilot-related work action which adversely impacted our results. We obtained a temporary restraining order to enjoin further illegal labor action. In January 2018, under the guidance of the NMB-assigned mediators, the parties reached a tentative agreement. In February 2018, the pilot group voted to approve the current five-year agreement with us.

In March 2016, under the supervision of the NMB, we reached a tentative agreement for a five-year contract with our flight attendants. Our flight attendants ratified the agreement in May 2016. In February 2021, we entered into a Letter of Agreement with the AFA-CWA to change the amendable date of the collective bargaining agreement from May 4, 2021 to September 1, 2021. All other terms of the collective bargaining agreement remained the same. In June 2021, the AFA-CWA notified us, as required by the RLA, that it intended to submit proposed changes to the collective bargaining agreement covering our flight attendants. We commenced negotiations with the AFA-CWA on September 27, 2021. As of June 30, 2022, we continued to negotiate with the AFA-CWA.

Our dispatchers are represented by the PAFCA. In October 2018, we reached a tentative agreement with PAFCA for a new five-year agreement, which was ratified by the PAFCA members in October 2018.

Our ramp service agents are represented by IAMAW. In February 2020, the IAMAW notified us, as required by the RLA, that it intended to submit proposed changes to the collective bargaining agreement covering our ramp service agents which became amendable in June 2020. On September 28, 2021, we filed an “Application for Mediation Services” with the NMB. We were able to reach a tentative agreement with the IAMAW with the assistance of the NMB on October 16, 2021. Our ramp service agents ratified the five-year agreement in November 2021.

In June 2018, our passenger service agents voted to be represented by the TWU, but the representation only applies to our Fort Lauderdale station where we have direct employees in the passenger service classification. We began meeting with the TWU in late October 2018 to negotiate an initial collective bargaining agreement. During February 2022, we reached a tentative agreement with the TWU. Our passenger service agents ratified the five-year agreement on February 21, 2022.

In May 2022, the AMFA filed an application with the NMB to represent our AMTs. In June 2022, we received confirmation that the union election was authorized. The union election is currently ongoing through August 25, 2022. As of June 30, 2022, we had approximately 600 AMTs. In the event that our AMTs vote to be represented by the AMFA, our labor costs may increase as a result of any collective bargaining agreement we enter into with the AMTs.

If we are unable to reach agreement with any of our unionized work groups in current or future negotiations regarding the terms of their CBAs, we may be subject to work interruptions or stoppages, such as the strike by our pilots in June 2010 and the operational disruption from pilot-related work action experienced in 2017. A strike or other significant labor dispute with our unionized employees is likely to adversely affect our ability to conduct business. Any agreement we do reach could increase our labor and related expenses.

The Patient Protection and Affordable Care Act was enacted in 2010. A decision in the Supreme Court regarding this law is pending and it may be repealed in its entirety or certain aspects may be changed or replaced. If the law is repealed or
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significantly modified or if new healthcare legislation is passed, such action could significantly increase cost of the healthcare benefits provided to our U.S. employees. In addition, the failure to comply materially with such existing and new laws, rules and regulations could adversely affect our business, results of operations and financial conditions.
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ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

Repurchases of Equity Securities
The following table reflects our repurchases of our common stock during the second quarter of 2022.2023. All stock repurchases during this period were made from employees who received restricted stock. All employee stock repurchases were made at the election of each employee pursuant to an offer to repurchase by us. In each case, the shares repurchased constituted the portion of vested shares necessary to satisfy tax withholding requirements.
ISSUER PURCHASES OF EQUITY SECURITIESISSUER PURCHASES OF EQUITY SECURITIESISSUER PURCHASES OF EQUITY SECURITIES
PeriodPeriodTotal Number of Shares PurchasedAverage Price Paid per ShareTotal Number of Shares Purchased as Part of Publicly Announced Plans or ProgramsApproximate Dollar Value of Shares that May Yet be Purchased Under Plans or ProgramsPeriodTotal Number of Shares PurchasedAverage Price Paid per ShareTotal Number of Shares Purchased as Part of Publicly Announced Plans or ProgramsApproximate Dollar Value of Shares that May Yet be Purchased Under Plans or Programs
April 1-30, 202269 $26.06 — $— 
May 1-31, 2022176 16.94 — — 
June 1-30, 202231 21.74 — — 
April 1-30, 2023April 1-30, 202369 $17.46 — $— 
May 1-31, 2023May 1-31, 2023— — — — 
June 1-30, 2023June 1-30, 202330 15.89 — — 
TotalTotal276 $19.76  Total99 $16.98  

ITEM 3.DEFAULTS UPON SENIOR SECURITIES

None

ITEM 4.MINE SAFETY DISCLOSURES

Not applicable


























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ITEM 5.OTHER INFORMATION

NoneAmendment to A320 NEO Family Purchase Agreement with Airbus

On July 31, 2023, the Company entered into Amendment No. 6 (the “Amendment”) to the A320 NEO Family Purchase Agreement, dated as of December 20, 2019 (the “Airbus Purchase Agreement”) with Airbus S.A.S. (“Airbus”). The Amendment converts the remaining A319neo aircraft to be delivered under the Airbus Purchase Agreement to A321neo aircraft. The Amendment also (i) defers certain A320neo aircraft deliveries from 2024 to 2025 and later years, (ii) extends delivery dates for certain A320neo and A321neo aircraft deliveries from 2025-2027 to 2025-2029 and (iii) adjusts the timing of option aircraft delivery dates from 2026-2028 to 2027-2029. In addition, the Amendment creates a more equal distribution of aircraft deliveries and option rights across the delivery periods.
The preceding description is qualified in its entirety by reference to the full text of the Amendment, a copy of which the Company intends to file as an exhibit to its Quarterly Report on Form 10-Q for the quarter ended September 30, 2023.

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ITEM 6.EXHIBITS
 
Exhibit NumberDescription of Exhibits
2.1
2.2
31.1
31.2
32.1*
32.2*
101.INSXBRL Instance Document - The instance document does not appear in the interactive data file because its XBRL tags are embedded within the inline XBRL document.
101.SCHXBRL Taxonomy Extension Schema
101.CALXBRL Taxonomy Extension Calculation Linkbase
101.LABXBRL Taxonomy Extension Label Linkbase
101.PREXBRL Taxonomy Extension Presentation Linkbase
104Cover Page Interactive Data File (formatted as inline XBRL and contained in Exhibit 101)
 
*Exhibits 32.1 and 32.2 are being furnished and shall not be deemed to be “filed” for purposes of Section 18 of the Exchange Act, or otherwise subject to the liability of that section, nor shall such exhibits be deemed to be incorporated by reference in any registration statement or other document filed under the Securities Act or the Exchange Act, except as otherwise specifically stated in such filing.

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SIGNATURE

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 thereunto duly authorized.

 
SPIRIT AIRLINES, INC.
August 8, 20222, 2023 By:/s/ Scott M. Haralson
Scott M. Haralson
SeniorExecutive Vice President and
Chief Financial Officer

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