Spirit Airlines (SAVEQ) 8-K Results of Operations and Financial Condition

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the

Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): June 29, 2011

SPIRIT AIRLINES, INC.

(Exact name of registrant as specified in its charter)

Delaware

(State or other jurisdiction of incorporation)

001-35186	38-1747023
(Commission File Number)	(IRS Employer Identification Number)

2800 Executive Way

Miramar, Florida 33025

(Address of principal executive offices, including Zip Code)

(954) 447-7920

(Registrant’s telephone number, including area code)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

¨ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

¨ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

¨ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

¨ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Item 2.02. Results of Operations and Financial Condition.

Item 7.01. Regulation FD Disclosure.

The information in this report furnished pursuant to Items 2.02 and 7.01 shall not be deemed “filed” for the purposes of Section 18 of the Securities and Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liabilities of that section. It may only be incorporated by reference in another filing under the Exchange Act or the Securities Act of 1933, as amended, if such subsequent filing specifically references the information furnished pursuant to Items 2.02 and 7.01 of this report.

Spirit Airlines, Inc. (the “Company” or “Spirit”) is providing below the following supplemental financial information to facilitate further analysis of its financial results:

• Statement of operations data, under generally accepted accounting principles (“GAAP”), for each of the four quarters of the year ended December 31, 2010 and for the quarter ended March 31, 2011. This data is unchanged from that presented in the final prospectus, dated May 25, 2011 (the “Final Prospectus”), filed with the Securities and Exchange Commission in connection with our initial public offering (“IPO”);

• Operating expense and net income data for the same periods referenced above, adjusted to exclude the impact of certain special items identified in the presentation;

• Operating expense and net income data for the same periods referenced above, adjusted to exclude the impact of certain special items, and further adjusted to give pro forma effect to our IPO as if completed on January 1, 2010;

• Selected operating metrics for the same periods referenced above, adjusted to exclude the impact of certain special items, and further adjusted to give pro forma effect to our IPO as if completed on January 1, 2010; and

• Guidance regarding management’s current expectations regarding weighted average shares outstanding, effective income tax rates and capacity for the balance of 2011.

This data should be read in conjunction with our historical audited financial statements, Management’s Discussion and Analysis of Financial Condition and Results of Operations and other information included in the Final Prospectus, as well as the information provided under the caption “Forward Looking Statements” below. A copy of the Final Prospectus may be obtained by accessing the Edgar database maintained by the Securities and Exchange Commission at www.sec.gov.

The financial data provided herein that reflects adjustments from historical financial data prepared under GAAP, including adjustments for special items and for pro forma calculations assuming our IPO had been completed as of an earlier date than it was actually completed, are non-GAAP financial measures included as supplemental disclosures because we believe they are useful indicators of our operating performance for comparative purposes. These non-GAAP financial measures are well recognized performance measurements in the airline industry that are frequently used by investors, securities analysts and other interested parties in comparing the operating performance of

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companies in our industry. These non-GAAP financial measures have limitations as an analytical tool. Because of these limitations, determinations of our operating performance adjusted for special items and pro forma for our IPO should not be considered in isolation or as a substitute for performance measures calculated in accordance with GAAP. We have also provided reconciliations of these non-GAAP financial measures to the appropriate GAAP financial measures.

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Statement of Operations Data- GAAP (1)

(Unaudited)

	1Q10			2Q10			3Q10			4Q10			2010			1Q11
	(in thousands except per share data)
Operating Revenue:
Passenger	$	136,909		$	126,372		$	138,232		$	136,456		$	537,969		$	153,280
Non-ticket		47,142			50,987			65,423			79,744			243,296			79,382
Total operating revenue		184,051			177,359			203,655			216,200			781,265			232,662
Operating Expense:
Aircraft fuel		53,826			60,780			63,553			70,047			248,206			80,912
Salaries, wages and benefits		36,064			38,720			39,935			41,724			156,443			43,193
Aircraft rent		22,576			24,873			25,487			28,409			101,345			27,708
Landing fees and other rents		10,744			11,868			13,039			12,467			48,118			11,655
Distribution		9,288			10,227			10,906			10,758			41,179			11,932
Maintenance, material and repairs		6,692			5,714			8,238			7,545			28,189			8,058
Depreciation and amortization		1,370			1,430			1,518			1,302			5,620			1,546
Other operating		19,338			21,985			19,783			21,488			82,594			20,733
Loss on disposal of assets		49			28			—			—			77			—
Restructuring		(20	)		(57	)		214			484			621			81
Total operating expense		159,927			175,568			182,673			194,224			712,392			205,818
Operating income		24,124			1,791			20,982			21,976			68,873			26,844
Other expense (income)
Interest expense		12,772			12,667			12,568			12,306			50,313			14,286
Capitalized interest		(237	)		(293	)		(397	)		(564	)		(1,491	)		(1,037	)
Interest income		(60	)		(99	)		(83	)		(86	)		(328	)		(86	)
Gain on extinguishment of debt		—						—			—			—			—
Other expense		34			45			23			92			194			48
Total other expense		12,509			12,320			12,111			11,748			48,688			13,211
Income/(loss) before income taxes		11,615			(10,529	)		8,871			10,228			20,185			13,633
Provision/(benefit) for income taxes		339			(463	)		(52,869	)		697			(52,296	)		5,750
Net income/(loss)	$	11,276		$	(10,066	)	$	61,740		$	9,531		$	72,481		$	7,883
Weighted average shares, basic		26,057			26,164			26,241			26,270			26,184			26,348
Weighted average shares, diluted		26,761			26,164			26,525			26,678			26,690			26,689
Earnings/(loss) per share, basic	$	0.43		$	(0.38	)	$	2.35		$	0.36		$	2.77		$	0.30
Earnings/(loss) per share, diluted	$	0.42		$	(0.38	)	$	2.33		$	0.36		$	2.72		$	0.30

(1) The data in this table is as presented in the Final Prospectus.

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Reconciliation of Operating Expenses and Net Income as Adjusted for Special Items

(Unaudited)

	1Q10			2Q10			3Q10			4Q10			FY10			1Q11
	(in thousands except per share data)
Total operating revenue	$	184,051		$	177,359		$	203,655		$	216,200		$	781,265		$	232,662
Total operating expense		159,927			175,568			182,673			194,224			712,392			205,818
Less Special Items:
Restructuring expense (credit) (1)		(20	)		(57	)		214			484			621			81
Unrealized mark-to-market (gains) losses (2)		(628	)		2,294			(2,594	)		(1,137	)		(2,065	)		(546	)
Loss on disposal of assets		49			28			—			—			77			—
Adjusted total operating expense		160,526			173,303			185,053			194,877			713,759			206,283
Adjusted operating income		23,525			4,056			18,602			21,323			67,506			26,379
Total other expense		12,509			12,320			12,111			11,748			48,688			13,211
Adjusted income/(loss) before income taxes		11,016			(8,264	)		6,491			9,575			18,818			13,168
Provision/(benefit) for income taxes (3)		322			(363	)		366			653			978			5,554
Adjusted net income/(loss)	$	10,694		$	(7,901	)	$	6,125		$	8,922		$	17,840		$	7,614
Adjusted earnings/(loss) per share, basic	$	0.41		$	(0.30	)	$	0.23		$	0.34		$	0.68		$	0.29
Adjusted earnings/(loss) per share, diluted	$	0.40		$	(0.30	)	$	0.23		$	0.33		$	0.67		$	0.29

(1) Restructuring charges include: (i) for 2009 and 2010, amounts relating to the sale of previously-expensed MD-80 parts and (ii) for 2010 and for the three months ended March 31, 2011, amounts relating to exit facility costs associated with moving our Detroit, Michigan maintenance operations to Fort Lauderdale, Florida.

(2) Unrealized mark-to-market gains and losses is comprised of non-cash adjustments to aircraft fuel expenses.

(3) Excludes a $(52.9) million net tax benefit in the third quarter of 2010 primarily due to the release of a valuation allowance resulting in a deferred tax benefit of $(53.5) million in that quarter.

Note: Additional detail regarding the foregoing adjustments is available on page 77 of the Final Prospectus.

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Reconciliation of Pro Forma Adjustments (1)

(Unaudited)

	1Q10			2Q10			3Q10			4Q10			FY10			1Q11
	(in thousands except per share data)
Adjusted operating income (2)	$	23,525		$	4,056		$	18,602		$	21,323		$	67,506		$	26,379
Total other expense		12,509			12,320			12,111			11,748			48,688			13,211
Less:
Interest expense		12,772			12,667			12,568			12,306			50,313			14,286
Pro forma total other income		(263	)		(347	)		(457	)		(558	)		(1,625	)		(1,075	)
Pro forma adjusted Income before income taxes		23,788			4,403			19,059			21,881			69,131			27,454
Provision for income taxes		8,875			1,643			7,111			8,164			25,793			10,512
Pro forma adjusted net income	$	14,913		$	2,760		$	11,948		$	13,717		$	43,338		$	16,942
Pro forma adjusted:
Weighted average shares, basic		71,735			71,844			71,920			71,950			71,155			71,320
Weighted average shares, diluted		72,440			72,473			72,205			72,358			71,662			71,661
Earnings per share, basic	$	0.21		$	0.04		$	0.17		$	0.19		$	0.61		$	0.24
Earnings per share, diluted	$	0.21		$	0.04		$	0.17		$	0.19		$	0.60		$	0.24

(1) Pro forma earnings is presented to give effect to the following transactions as if they occurred as of January 1, 2010: (i) the elimination of all of our outstanding indebtedness and preferred stock, and the termination of any outstanding letter of credit facility supporting collateral obligations due to our credit card processors through (x) the application of a portion of the net proceeds from the sale of shares of common stock by us in our IPO, (y) the exchange of any notes not repaid with net proceeds from the IPO for shares of common stock and (z) the exchange of any shares of preferred stock not redeemed with net proceeds from the IPO for shares of common stock; (ii) adding back to net income the interest expense recorded in our statement of operations related to the indebtedness and preferred stock assumed to be retired ($50.3 million for 2010 and $14.3 million for the three months ended March 31, 2011); (iii) the issuance of shares of common stock in the IPO and in connection with the related recapitalization transactions; and (iv) the estimated tax impact resulting from the above transactions.

(2) Excludes special items as described in the prior table.

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Selected Operating Metrics

(Unaudited)

	1Q10		2Q10		3Q10		4Q10		FY10		1Q11
Available Seat Miles (000’s)		1,820,131		1,905,053		2,194,099		2,200,640		8,119,923		2,200,097
Unit costs (cost per ASM, “CASM”) (cents)
CASM		8.79		9.22		8.33		8.83		8.77		9.35
Adjusted CASM (1)(3)		8.82		9.10		8.43		8.86		8.79		9.38
Aircraft fuel per ASM (2)(3)		2.99		3.07		3.01		3.24		3.08		3.71
Adjusted CASM excluding fuel		5.83		6.03		5.42		5.62		5.71		5.67

(1) Excludes special items as described in the prior tables.

(2) Includes fuel taxes and into plane fuel costs; excludes unrealized mark-to-market gains and losses.

(3) Pro forma adjustments for the IPO do not affect this calculation.

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Selected Financial Guidance

										Pro forma
Estimated weighted average shares (000’s)				2Q11E			FY11E			2Q11E			FY11E
Basic					41,493			53,200			72,114			72,097
Diluted					42,139			53,845			72,759			72,743
Estimated tax rates				2Q11E			FY11E
Estimated tax rate*					35.3	%		37.9	%
* Second quarter tax rate is not indicative of the tax rate for the remainder of the year.
Capacity - Available Seat Miles (ASMs)	1Q11A			2Q11E			3Q11E			4Q11E			FY11E
ASMs Year-over-Year % Change		20.9	%		27.5	%		11.7	%		6.7	%		16.1	%

Forward-Looking Statements

This report includes forward-looking statements, including in particular as provided under the caption “Selected Financial Guidance.” We have based these forward-looking statements largely on our current expectations and projections about future events and financial trends affecting the financial condition of our business. Forward-looking statements should not be read as a guarantee of future performance or results, and will not necessarily be accurate indications of the times at, or by, which such performance or results will be achieved. Forward-looking statements are based on information available at the time those statements are made and/or management’s belief as of that time with respect to future events, and are subject to risks and uncertainties that could cause actual performance or results to differ materially from those expressed in or suggested by the forward-looking statements, including the information under the caption “Risk Factors” included in the Final Prospectus. Important factors that could cause such differences include, but are not limited to:

• the competitive environment in our industry;

• our ability to keep cost low;

• changes in our fuel cost;

• the impact of worldwide economic conditions, including the impact of the economic recession on customer travel behavior;

• actual or threatened terrorist attacks, global instability and potential U.S. military actions or activities;

• ability to generate non-ticket revenues;

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• restriction on third-party membership programs;

• external conditions, including air traffic congestion, weather and outbreak of disease;

• air travel substitutes;

• labor disputes, employee strikes and other labor-related disruptions, including in connection with our current negotiations with the union representing our flight attendants;

• ability to attract and retain qualified personnel;

• loss of key personnel;

• aircraft-related fixed obligations;

• dependence on cash balances and operating cash flows;

• ability to hedge fuel requirements;

• our aircraft utilization rate;

• maintenance costs;

• our reliance on automated systems and the risks associated with changes made to those systems;

• use of personal data;

• lack of marketing alliances;

• government regulation;

• our ability to fulfill growth strategy;

• operational disruptions;

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• our liquidity;

• the concentration of our revenue from South Florida;

• our reliance on third-party vendors and partners;

• our reliance on a single fuel provider;

• an aircraft accident or incident;

• our aircraft and engine suppliers;

• changes in the Caribbean and Latin America markets;

• insurance costs;

• environmental regulations; and

• other risk factors included under “Risk Factors” in the Final Prospectus.

In addition, in this report, the words “believe,” “may,” “estimate,” “continue,” “anticipate,” “intend,” “expect,” “predict,” “potential” and similar expressions, as they relate to our company, our business and our management, are intended to identify forward-looking statements. In light of these risks and uncertainties, the forward-looking events and circumstances discussed in this report may not occur and actual results could differ materially from those anticipated or implied in the forward-looking statements.

All forward-looking statements attributable to us are expressly qualified in their entirety by the cautionary statements set forth above. Forward-looking statements speak only as of the date of this report. You should not put undue reliance on any forward-looking statements. We assume no obligation to update forward-looking statements to reflect actual results, changes in assumptions or changes in other factors affecting forward-looking information, except to the extent required by applicable law. If we update one or more forward-looking statements, no inference should be drawn that we will make additional updates with respect to those or other forward-looking statements.

* * * * * * * * *

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

Date: June 29, 2011	SPIRIT AIRLINES, INC.
	By:	/s/ Thomas Canfield
	Name:	Thomas Canfield
	Title:	Senior Vice President and General Counsel

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