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ý
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QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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o
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TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|
Delaware
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38-1747023
|
(State or other jurisdiction of
incorporation or organization)
|
(I.R.S. Employer
Identification No.)
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|
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2800 Executive Way
Miramar, Florida
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33025
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(Address of principal executive offices)
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(Zip Code)
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Large accelerated filer
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ý
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Accelerated filer
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o
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Non-accelerated filer
|
o
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Smaller reporting company
|
o
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Class
|
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Number of Shares
|
Common Stock, $0.0001 par value
|
|
69,322,496
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Page No.
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||||
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|||||
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||||
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||||
ITEM 1.
|
UNAUDITED CONDENSED FINANCIAL STATEMENTS
|
|
Three Months Ended September 30,
|
|
Nine Months Ended September 30,
|
||||||||||||
|
2016
|
|
2015
|
|
2016
|
|
2015
|
||||||||
Operating revenues:
|
|
|
|
|
|
|
|
||||||||
Passenger
|
$
|
331,004
|
|
|
$
|
319,812
|
|
|
$
|
900,031
|
|
|
$
|
901,851
|
|
Non-ticket
|
290,325
|
|
|
255,029
|
|
|
843,574
|
|
|
719,766
|
|
||||
Total operating revenues
|
621,329
|
|
|
574,841
|
|
|
1,743,605
|
|
|
1,621,617
|
|
||||
|
|
|
|
|
|
|
|
||||||||
Operating expenses:
|
|
|
|
|
|
|
|
||||||||
Aircraft fuel
|
121,844
|
|
|
115,899
|
|
|
321,018
|
|
|
356,232
|
|
||||
Salaries, wages and benefits
|
120,190
|
|
|
95,081
|
|
|
349,530
|
|
|
281,175
|
|
||||
Aircraft rent
|
49,367
|
|
|
53,525
|
|
|
151,433
|
|
|
159,440
|
|
||||
Landing fees and other rents
|
39,345
|
|
|
34,577
|
|
|
114,096
|
|
|
98,487
|
|
||||
Distribution
|
25,565
|
|
|
23,074
|
|
|
73,190
|
|
|
65,920
|
|
||||
Maintenance, materials and repairs
|
30,443
|
|
|
21,473
|
|
|
72,010
|
|
|
61,904
|
|
||||
Depreciation and amortization
|
25,304
|
|
|
19,628
|
|
|
73,370
|
|
|
51,630
|
|
||||
Other operating
|
66,277
|
|
|
54,151
|
|
|
197,833
|
|
|
156,071
|
|
||||
Loss on disposal of assets
|
423
|
|
|
290
|
|
|
1,166
|
|
|
1,300
|
|
||||
Special charges (credits)
|
7,355
|
|
|
(76
|
)
|
|
31,609
|
|
|
673
|
|
||||
Total operating expenses
|
486,113
|
|
|
417,622
|
|
|
1,385,255
|
|
|
1,232,832
|
|
||||
|
|
|
|
|
|
|
|
||||||||
Operating income
|
135,216
|
|
|
157,219
|
|
|
358,350
|
|
|
388,785
|
|
||||
|
|
|
|
|
|
|
|
||||||||
Other (income) expense:
|
|
|
|
|
|
|
|
||||||||
Interest expense
|
11,362
|
|
|
5,951
|
|
|
29,588
|
|
|
13,182
|
|
||||
Capitalized interest
|
(3,067
|
)
|
|
(3,030
|
)
|
|
(9,163
|
)
|
|
(8,392
|
)
|
||||
Interest income
|
(1,222
|
)
|
|
(233
|
)
|
|
(4,235
|
)
|
|
(544
|
)
|
||||
Other expense
|
180
|
|
|
166
|
|
|
407
|
|
|
282
|
|
||||
Total other (income) expense
|
7,253
|
|
|
2,854
|
|
|
16,597
|
|
|
4,528
|
|
||||
|
|
|
|
|
|
|
|
||||||||
Income before income taxes
|
127,963
|
|
|
154,365
|
|
|
341,753
|
|
|
384,257
|
|
||||
Provision for income taxes
|
46,581
|
|
|
57,251
|
|
|
125,367
|
|
|
141,437
|
|
||||
|
|
|
|
|
|
|
|
||||||||
Net income
|
$
|
81,382
|
|
|
$
|
97,114
|
|
|
$
|
216,386
|
|
|
$
|
242,820
|
|
Basic earnings per share
|
$
|
1.17
|
|
|
$
|
1.35
|
|
|
$
|
3.06
|
|
|
$
|
3.35
|
|
Diluted earnings per share
|
$
|
1.17
|
|
|
$
|
1.35
|
|
|
$
|
3.05
|
|
|
$
|
3.34
|
|
|
Three Months Ended September 30,
|
|
Nine Months Ended September 30,
|
||||||||||||
|
2016
|
|
2015
|
|
2016
|
|
2015
|
||||||||
Net income
|
$
|
81,382
|
|
|
$
|
97,114
|
|
|
$
|
216,386
|
|
|
$
|
242,820
|
|
Unrealized gain (loss) on interest rate derivative instruments, net of deferred taxes of $0, ($320), $0 and ($511)
|
—
|
|
|
(553
|
)
|
|
—
|
|
|
(909
|
)
|
||||
Unrealized gain (loss) on investment securities, net of deferred taxes of $3, $0, $3 and $0
|
4
|
|
|
—
|
|
|
4
|
|
|
—
|
|
||||
Interest rate swap losses reclassified into earnings, net of taxes of $32, $15, $97 and $15
|
56
|
|
|
25
|
|
|
170
|
|
|
25
|
|
||||
Other comprehensive income (loss)
|
$
|
60
|
|
|
$
|
(528
|
)
|
|
$
|
174
|
|
|
$
|
(884
|
)
|
Comprehensive income
|
$
|
81,442
|
|
|
$
|
96,586
|
|
|
$
|
216,560
|
|
|
$
|
241,936
|
|
|
September 30, 2016
|
|
December 31, 2015
|
||||
Assets
|
|
|
|
||||
Current assets:
|
|
|
|
||||
Cash and cash equivalents
|
$
|
825,904
|
|
|
$
|
803,632
|
|
Investment securities
|
100,083
|
|
|
—
|
|
||
Accounts receivable, net
|
35,892
|
|
|
28,266
|
|
||
Aircraft maintenance deposits
|
87,105
|
|
|
73,415
|
|
||
Prepaid income taxes
|
6,060
|
|
|
72,278
|
|
||
Prepaid expenses and other current assets
|
48,455
|
|
|
48,749
|
|
||
Total current assets
|
1,103,499
|
|
|
1,026,340
|
|
||
|
|
|
|
||||
Property and equipment:
|
|
|
|
||||
Flight equipment
|
1,386,310
|
|
|
834,927
|
|
||
Ground property and equipment
|
109,451
|
|
|
74,814
|
|
||
Less accumulated depreciation
|
(105,653
|
)
|
|
(65,524
|
)
|
||
|
1,390,108
|
|
|
844,217
|
|
||
Deposits on flight equipment purchase contracts
|
272,690
|
|
|
286,837
|
|
||
Long-term aircraft maintenance deposits
|
198,426
|
|
|
206,485
|
|
||
Deferred heavy maintenance, net
|
79,878
|
|
|
89,127
|
|
||
Other long-term assets
|
85,024
|
|
|
77,539
|
|
||
Total assets
|
$
|
3,129,625
|
|
|
$
|
2,530,545
|
|
|
|
|
|
||||
Liabilities and shareholders’ equity
|
|
|
|
||||
Current liabilities:
|
|
|
|
||||
Accounts payable
|
$
|
29,906
|
|
|
$
|
17,043
|
|
Air traffic liability
|
238,793
|
|
|
216,831
|
|
||
Current maturities of long-term debt
|
84,443
|
|
|
49,637
|
|
||
Other current liabilities
|
217,779
|
|
|
182,729
|
|
||
Total current liabilities
|
570,921
|
|
|
466,240
|
|
||
|
|
|
|
||||
Long-term debt, less current maturities
|
894,809
|
|
|
596,693
|
|
||
Long-term deferred income taxes
|
299,231
|
|
|
221,481
|
|
||
Deferred gains and other long-term liabilities
|
20,108
|
|
|
20,821
|
|
||
Shareholders’ equity:
|
|
|
|
||||
Common stock
|
7
|
|
|
7
|
|
||
Additional paid-in-capital
|
549,375
|
|
|
544,277
|
|
||
Treasury stock, at cost
|
(218,572
|
)
|
|
(116,182
|
)
|
||
Retained earnings
|
1,015,140
|
|
|
798,754
|
|
||
Accumulated other comprehensive loss
|
(1,394
|
)
|
|
(1,546
|
)
|
||
Total shareholders’ equity
|
1,344,556
|
|
|
1,225,310
|
|
||
Total liabilities and shareholders’ equity
|
$
|
3,129,625
|
|
|
$
|
2,530,545
|
|
|
Nine Months Ended September 30,
|
||||||
|
2016
|
|
2015
|
||||
Operating activities:
|
|
|
|
||||
Net income
|
$
|
216,386
|
|
|
$
|
242,820
|
|
Adjustments to reconcile net income to net cash provided by operations:
|
|
|
|
||||
Unrealized losses on open derivative contracts, net
|
—
|
|
|
2,239
|
|
||
Losses reclassified from other comprehensive income
|
267
|
|
|
—
|
|
||
Equity-based compensation
|
5,503
|
|
|
6,999
|
|
||
Allowance for doubtful accounts
|
213
|
|
|
7
|
|
||
Amortization of deferred gains and losses
|
3,837
|
|
|
730
|
|
||
Depreciation and amortization
|
73,370
|
|
|
51,630
|
|
||
Deferred income tax expense
|
77,627
|
|
|
63,960
|
|
||
Loss on disposal of assets
|
1,166
|
|
|
1,300
|
|
||
Lease termination cost
|
31,609
|
|
|
—
|
|
||
Changes in operating assets and liabilities:
|
|
|
|
|
|
||
Accounts receivable
|
(7,840
|
)
|
|
(10,374
|
)
|
||
Aircraft maintenance deposits
|
(38,299
|
)
|
|
(17,488
|
)
|
||
Prepaid income taxes
|
66,218
|
|
|
—
|
|
||
Long-term deposits and other assets
|
(43,252
|
)
|
|
(44,294
|
)
|
||
Accounts payable
|
(7,044
|
)
|
|
2,340
|
|
||
Air traffic liability
|
21,684
|
|
|
56,960
|
|
||
Other liabilities
|
38,596
|
|
|
12,161
|
|
||
Net cash provided by operating activities
|
440,041
|
|
|
368,990
|
|
||
Investing activities:
|
|
|
|
||||
Proceeds from sale of property and equipment
|
50
|
|
|
—
|
|
||
Capitalized interest
|
(7,032
|
)
|
|
(2,707
|
)
|
||
Pre-delivery deposits for flight equipment, net of refunds
|
(109,260
|
)
|
|
(87,658
|
)
|
||
Purchase of investment securities
|
(100,076
|
)
|
|
—
|
|
||
Purchase of property and equipment
|
(447,455
|
)
|
|
(451,799
|
)
|
||
Net cash used in investing activities
|
(663,773
|
)
|
|
(542,164
|
)
|
||
Financing activities:
|
|
|
|
||||
Proceeds from issuance of long-term debt
|
378,569
|
|
|
416,000
|
|
||
Proceeds from stock options exercised
|
92
|
|
|
32
|
|
||
Payments on debt and capital lease obligations
|
(29,663
|
)
|
|
(16,609
|
)
|
||
Proceeds from sale and leaseback transactions
|
—
|
|
|
7,300
|
|
||
Excess tax benefit (deficiency) from equity-based compensation
|
(497
|
)
|
|
8,818
|
|
||
Repurchase of common stock
|
(102,390
|
)
|
|
(112,162
|
)
|
||
Debt issuance costs
|
(107
|
)
|
|
(14,092
|
)
|
||
Net cash provided by financing activities
|
246,004
|
|
|
289,287
|
|
||
Net increase in cash and cash equivalents
|
22,272
|
|
|
116,113
|
|
||
Cash and cash equivalents at beginning of period
|
803,632
|
|
|
632,784
|
|
||
Cash and cash equivalents at end of period
|
$
|
825,904
|
|
|
$
|
748,897
|
|
Supplemental disclosures
|
|
|
|
||||
Cash payments for:
|
|
|
|
||||
Interest, net of capitalized interest
|
$
|
26,025
|
|
|
$
|
3,851
|
|
Income taxes paid, net of refunds
|
$
|
(18,169
|
)
|
|
$
|
95,135
|
|
1.
|
Basis of Presentation
|
2.
|
Recent Accounting Developments
|
3.
|
Special Charges
|
4.
|
Earnings per Share
|
|
Three Months Ended September 30,
|
|
Nine Months Ended September 30,
|
||||||||||||
|
2016
|
|
2015
|
|
2016
|
|
2015
|
||||||||
|
(in thousands, except per share amounts)
|
||||||||||||||
Numerator
|
|
|
|
|
|
|
|
||||||||
Net income
|
$
|
81,382
|
|
|
$
|
97,114
|
|
|
$
|
216,386
|
|
|
$
|
242,820
|
|
Denominator
|
|
|
|
|
|
|
|
||||||||
Weighted-average shares outstanding, basic
|
69,727
|
|
|
71,738
|
|
|
70,689
|
|
|
72,432
|
|
||||
Effect of dilutive stock awards
|
81
|
|
|
146
|
|
|
143
|
|
|
248
|
|
||||
Adjusted weighted-average shares outstanding, diluted
|
69,808
|
|
|
71,884
|
|
|
70,832
|
|
|
72,680
|
|
||||
Net income per share
|
|
|
|
|
|
|
|
||||||||
Basic earnings per common share
|
$
|
1.17
|
|
|
$
|
1.35
|
|
|
$
|
3.06
|
|
|
$
|
3.35
|
|
Diluted earnings per common share
|
$
|
1.17
|
|
|
$
|
1.35
|
|
|
$
|
3.05
|
|
|
$
|
3.34
|
|
|
|
|
|
|
|
|
|
||||||||
Anti-dilutive weighted-average shares
|
122
|
|
|
57
|
|
|
87
|
|
|
47
|
|
5.
|
Investment Securities
|
6.
|
Accrued Liabilities
|
|
September 30, 2016
|
|
December 31, 2015
|
||||
|
(in thousands)
|
||||||
Salaries and wages
|
$
|
45,696
|
|
|
$
|
34,123
|
|
Federal excise and other passenger taxes and fees payable
|
41,452
|
|
|
38,254
|
|
||
Aircraft maintenance
|
39,393
|
|
|
21,688
|
|
||
Airport obligations
|
36,788
|
|
|
30,849
|
|
||
Interest payable
|
14,796
|
|
|
12,355
|
|
||
Fuel
|
11,225
|
|
|
7,084
|
|
||
Aircraft and facility lease obligations
|
11,117
|
|
|
24,014
|
|
||
Other
|
17,312
|
|
|
14,362
|
|
||
Other current liabilities
|
$
|
217,779
|
|
|
$
|
182,729
|
|
7.
|
Financial Instruments and Risk Management
|
|
Three Months Ended September 30,
|
|
Nine Months Ended September 30,
|
||||||||||||
|
2016
|
|
2015
|
|
2016
|
|
2015
|
||||||||
|
(in thousands)
|
||||||||||||||
Into-plane fuel cost
|
$
|
121,844
|
|
|
$
|
114,081
|
|
|
$
|
321,018
|
|
|
$
|
349,549
|
|
Realized losses (gains) related to fuel derivative contracts, net
|
—
|
|
|
1,736
|
|
|
—
|
|
|
8,575
|
|
||||
Unrealized losses (gains) related to fuel derivative contracts, net
|
—
|
|
|
82
|
|
|
—
|
|
|
(1,892
|
)
|
||||
Aircraft fuel
|
$
|
121,844
|
|
|
$
|
115,899
|
|
|
$
|
321,018
|
|
|
$
|
356,232
|
|
|
|
Airbus
|
|
Third-Party Lessor
|
|
|
||||||||
|
|
A320ceo
|
|
A320neo
|
|
A321ceo
|
|
A320neo
|
|
Total
|
||||
remainder of 2016
|
|
—
|
|
|
—
|
|
|
1
|
|
|
5
|
|
|
6
|
2017
|
|
4
|
|
|
—
|
|
|
11
|
|
|
—
|
|
|
15
|
2018
|
|
5
|
|
|
4
|
|
|
5
|
|
|
—
|
|
|
14
|
2019
|
|
1
|
|
|
12
|
|
|
—
|
|
|
—
|
|
|
13
|
2020
|
|
—
|
|
|
16
|
|
|
—
|
|
|
—
|
|
|
16
|
2021
|
|
—
|
|
|
18
|
|
|
—
|
|
|
—
|
|
|
18
|
|
|
10
|
|
|
50
|
|
|
17
|
|
|
5
|
|
|
82
|
|
|
Operating Leases
|
||||||||||
|
|
Aircraft and Spare Engine Leases
|
|
Property Facility Leases
|
|
Total Operating Lease Obligations
|
||||||
|
(in thousands)
|
|||||||||||
remainder of 2016
|
|
$
|
50,986
|
|
|
$
|
10,824
|
|
|
$
|
61,810
|
|
2017
|
|
194,607
|
|
|
34,988
|
|
|
229,595
|
|
|||
2018
|
|
177,717
|
|
|
34,714
|
|
|
212,431
|
|
|||
2019
|
|
158,818
|
|
|
30,312
|
|
|
189,130
|
|
|||
2020
|
|
150,842
|
|
|
19,111
|
|
|
169,953
|
|
|||
2021 and thereafter
|
|
520,857
|
|
|
60,513
|
|
|
581,370
|
|
|||
Total minimum lease payments
|
|
$
|
1,253,827
|
|
|
$
|
190,462
|
|
|
$
|
1,444,289
|
|
Employee Groups
|
|
Representative
|
|
Amendable Date
|
|
Percentage of Workforce
|
Pilots
|
|
Air Line Pilots Association, International (ALPA)
|
|
August 2015
|
|
26%
|
Flight Attendants
|
|
Association of Flight Attendants (AFA-CWA)
|
|
May 2021
|
|
42%
|
Dispatchers
|
|
Transport Workers Union (TWU)
|
|
August 2018
|
|
1%
|
Ramp Service Agents
|
|
International Association of Machinists and Aerospace Workers (IAMAW)
|
|
June 2020
|
|
3%
|
9.
|
Fair Value Measurements
|
|
September 30, 2016
|
|
December 31, 2015
|
|
|
||||||||||||
|
Carrying Value
|
|
Estimated Fair Value
|
|
Carrying Value
|
|
Estimated Fair Value
|
|
Fair value level hierarchy
|
||||||||
|
(in millions)
|
|
|
||||||||||||||
Senior long-term debt
|
$
|
460.1
|
|
|
$
|
477.4
|
|
|
$
|
484.2
|
|
|
$
|
477.8
|
|
|
Level 3
|
Junior long-term debt
|
48.9
|
|
|
50.5
|
|
|
54.3
|
|
|
54.6
|
|
|
Level 3
|
||||
Class A enhanced equipment trust certificates
|
394.8
|
|
|
402.7
|
|
|
95.8
|
|
|
94.8
|
|
|
Level 2
|
||||
Class B enhanced equipment trust certificates
|
104.5
|
|
|
106.1
|
|
|
25.0
|
|
|
25.2
|
|
|
Level 2
|
||||
Total long-term debt
|
$
|
1,008.3
|
|
|
$
|
1,036.7
|
|
|
$
|
659.3
|
|
|
$
|
652.4
|
|
|
|
|
Fair Value Measurements as of September 30, 2016
|
||||||||||||||
|
Total
|
|
Level
1 |
|
Level
2 |
|
Level
3 |
||||||||
|
(in millions)
|
||||||||||||||
Cash and cash equivalents
|
$
|
825.9
|
|
|
$
|
825.9
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Investment securities
|
$
|
100.1
|
|
|
$
|
100.1
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Total assets
|
$
|
926.0
|
|
|
$
|
926.0
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Total liabilities
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
Fair Value Measurements as of December 31, 2015
|
||||||||||||||
|
Total
|
|
Level
1 |
|
Level
2 |
|
Level
3 |
||||||||
|
(in millions)
|
||||||||||||||
Cash and cash equivalents
|
$
|
803.6
|
|
|
$
|
803.6
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Total assets
|
$
|
803.6
|
|
|
$
|
803.6
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Total liabilities
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
10.
|
Long-Term Debt
|
|
|
As of
|
|
Three Months Ended September 30,
|
|
Nine Months Ended September 30,
|
||||||||||||||
|
September 30, 2016
|
|
December 31, 2015
|
|
2016
|
|
2015
|
|
2016
|
|
2015
|
|||||||||
|
|
(in millions)
|
|
(weighted-average interest rates)
|
||||||||||||||||
Fixed-rate senior term loans due through 2027
|
|
$
|
460.1
|
|
|
$
|
484.2
|
|
|
4.10
|
%
|
|
4.10
|
%
|
|
4.10
|
%
|
|
4.10
|
%
|
Fixed-rate junior term loans due through 2022
|
|
48.9
|
|
|
54.3
|
|
|
6.90
|
%
|
|
6.90
|
%
|
|
6.90
|
%
|
|
6.90
|
%
|
||
Fixed-rate class A enhanced equipment trust certificates due through 2028
|
|
394.8
|
|
|
95.8
|
|
|
4.03
|
%
|
|
N/A
|
|
|
4.03
|
%
|
|
N/A
|
|
||
Fixed-rate class B enhanced equipment trust certificates due through 2024
|
|
104.5
|
|
|
25.0
|
|
|
4.38
|
%
|
|
N/A
|
|
|
4.38
|
%
|
|
N/A
|
|
||
Long-term debt
|
|
$
|
1,008.3
|
|
|
$
|
659.3
|
|
|
|
|
|
|
|
|
|
||||
Less current maturities
|
|
84.4
|
|
|
49.6
|
|
|
|
|
|
|
|
|
|
||||||
Less unamortized discounts, net
|
|
29.1
|
|
|
13.0
|
|
|
|
|
|
|
|
|
|
||||||
Total
|
|
$
|
894.8
|
|
|
$
|
596.7
|
|
|
|
|
|
|
|
|
|
|
|
September 30, 2016
|
||
|
|
(in millions)
|
||
remainder of 2016
|
|
$
|
34.7
|
|
2017
|
|
84.6
|
|
|
2018
|
|
80.4
|
|
|
2019
|
|
79.1
|
|
|
2020
|
|
77.3
|
|
|
2021 and thereafter
|
|
652.2
|
|
|
Total debt principal payments
|
|
$
|
1,008.3
|
|
|
Three Months Ended September 30
|
|
Nine Months Ended September 30,
|
||||||||||||
2016
|
|
2015
|
|
2016
|
|
2015
|
|||||||||
|
(in thousands)
|
||||||||||||||
Senior term loans
|
$
|
4,917
|
|
|
$
|
4,639
|
|
|
$
|
14,929
|
|
|
$
|
10,260
|
|
Junior term loans
|
879
|
|
|
926
|
|
|
2,721
|
|
|
2,023
|
|
||||
Class A enhanced equipment trust certificates
|
3,538
|
|
|
—
|
|
|
7,419
|
|
|
—
|
|
||||
Class B enhanced equipment trust certificates
|
1,015
|
|
|
—
|
|
|
2,124
|
|
|
—
|
|
||||
Commitment fees
|
32
|
|
|
—
|
|
|
97
|
|
|
—
|
|
||||
Amortization of debt discounts
|
979
|
|
|
340
|
|
|
2,289
|
|
|
729
|
|
||||
Total
|
$
|
11,360
|
|
|
$
|
5,905
|
|
|
$
|
29,579
|
|
|
$
|
13,012
|
|
11.
|
Subsequent Events
|
ITEM 2.
|
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
|
|
Three Months Ended September 30,
|
|
Percent Change
|
|||||
|
2016
|
|
2015
|
|
||||
Operating Statistics (unaudited) (A):
|
|
|
|
|
|
|||
Average aircraft
|
87.4
|
|
|
74.6
|
|
|
17.2
|
%
|
Aircraft at end of period
|
89
|
|
|
76
|
|
|
17.1
|
%
|
Average daily aircraft utilization (hours)
|
12.3
|
|
|
12.8
|
|
|
(3.9
|
)%
|
Average stage length (miles)
|
968
|
|
|
983
|
|
|
(1.5
|
)%
|
Block hours
|
98,586
|
|
|
88,045
|
|
|
12.0
|
%
|
Departures
|
38,310
|
|
|
34,032
|
|
|
12.6
|
%
|
Passenger flight segments (PFSs) (thousands)
|
5,674
|
|
|
4,776
|
|
|
18.8
|
%
|
Revenue passenger miles (RPMs) (thousands)
|
5,599,370
|
|
|
4,768,692
|
|
|
17.4
|
%
|
Available seat miles (ASMs) (thousands)
|
6,507,204
|
|
|
5,597,997
|
|
|
16.2
|
%
|
Load factor (%)
|
86.0
|
%
|
|
85.2
|
%
|
|
0.8 pts
|
|
Average ticket revenue per passenger flight segment ($)
|
58.34
|
|
|
66.96
|
|
|
(12.9
|
)%
|
Average non-ticket revenue per passenger flight segment ($)
|
51.17
|
|
|
53.39
|
|
|
(4.2
|
)%
|
Total revenue per passenger flight segment ($)
|
109.51
|
|
|
120.35
|
|
|
(9.0
|
)%
|
Average yield (cents)
|
11.10
|
|
|
12.05
|
|
|
(7.9
|
)%
|
TRASM (cents)
|
9.55
|
|
|
10.27
|
|
|
(7.0
|
)%
|
CASM (cents)
|
7.47
|
|
|
7.46
|
|
|
0.1
|
%
|
Adjusted CASM (cents)
|
7.35
|
|
|
7.45
|
|
|
(1.3
|
)%
|
Adjusted CASM ex-fuel (cents)
|
5.48
|
|
|
5.39
|
|
|
1.7
|
%
|
Fuel gallons consumed (thousands)
|
78,288
|
|
|
67,684
|
|
|
15.7
|
%
|
Average economic fuel cost per gallon ($)
|
1.56
|
|
|
1.71
|
|
|
(8.8
|
)%
|
|
Nine Months Ended September 30,
|
|
Percent Change
|
|||||
|
2016
|
|
2015
|
|
||||
Operating Statistics (unaudited) (A):
|
|
|
|
|
|
|||
Average aircraft
|
84.1
|
|
|
71.1
|
|
|
18.3
|
%
|
Aircraft at end of period
|
89
|
|
|
76
|
|
|
17.1
|
%
|
Average daily aircraft utilization (hours)
|
12.6
|
|
|
12.8
|
|
|
(1.6
|
)%
|
Average stage length (miles)
|
978
|
|
|
982
|
|
|
(0.4
|
)%
|
Block hours
|
290,529
|
|
|
248,941
|
|
|
16.7
|
%
|
Departures
|
111,495
|
|
|
95,240
|
|
|
17.1
|
%
|
Passenger flight segments (PFSs) (thousands)
|
16,268
|
|
|
13,271
|
|
|
22.6
|
%
|
Revenue passenger miles (RPMs) (thousands)
|
16,219,093
|
|
|
13,267,314
|
|
|
22.2
|
%
|
Available seat miles (ASMs) (thousands)
|
18,909,627
|
|
|
15,540,759
|
|
|
21.7
|
%
|
Load factor (%)
|
85.8
|
%
|
|
85.4
|
%
|
|
0.4 pts
|
|
Average ticket revenue per passenger flight segment ($)
|
55.32
|
|
|
67.96
|
|
|
(18.6
|
)%
|
Average non-ticket revenue per passenger flight segment ($)
|
51.85
|
|
|
54.24
|
|
|
(4.4
|
)%
|
Total revenue per passenger flight segment ($)
|
107.17
|
|
|
122.20
|
|
|
(12.3
|
)%
|
Average yield (cents)
|
10.75
|
|
|
12.22
|
|
|
(12.0
|
)%
|
TRASM (cents)
|
9.22
|
|
|
10.43
|
|
|
(11.6
|
)%
|
CASM (cents)
|
7.33
|
|
|
7.93
|
|
|
(7.6
|
)%
|
Adjusted CASM (cents)
|
7.15
|
|
|
7.93
|
|
|
(9.8
|
)%
|
Adjusted CASM ex-fuel (cents)
|
5.45
|
|
|
5.63
|
|
|
(3.2
|
)%
|
Fuel gallons consumed (thousands)
|
225,851
|
|
|
187,541
|
|
|
20.4
|
%
|
Average economic fuel cost per gallon ($)
|
1.42
|
|
|
1.91
|
|
|
(25.7
|
)%
|
|
Three Months Ended September 30,
|
|
|
|||||||
|
2016
|
|
2015
|
|
||||||
|
(in thousands, except per gallon amounts)
|
|
Percent Change
|
|||||||
Fuel gallons consumed
|
78,288
|
|
|
67,684
|
|
|
15.7
|
%
|
||
Into-plane fuel cost per gallon
|
$
|
1.56
|
|
|
$
|
1.69
|
|
|
(7.7
|
)%
|
Into-plane fuel expense
|
121,844
|
|
|
114,081
|
|
|
6.8
|
%
|
||
Realized losses (gains) related to fuel derivative contracts, net
|
—
|
|
|
1,736
|
|
|
NM
|
|
||
Unrealized losses (gains) related to fuel derivative contracts, net
|
—
|
|
|
82
|
|
|
NM
|
|
||
Aircraft fuel expense (per statement of operations)
|
$
|
121,844
|
|
|
$
|
115,899
|
|
|
5.1
|
%
|
|
Three Months Ended September 30,
|
|
|
|||||||
|
2016
|
|
2015
|
|
||||||
|
(in thousands, except per gallon amounts)
|
|
Percent Change
|
|||||||
Into-plane fuel expense
|
$
|
121,844
|
|
|
$
|
114,081
|
|
|
6.8
|
%
|
Realized losses (gains) related to fuel derivative contracts, net
|
—
|
|
|
1,736
|
|
|
NM
|
|
||
Economic fuel expense
|
$
|
121,844
|
|
|
$
|
115,817
|
|
|
5.2
|
%
|
Fuel gallons consumed
|
78,288
|
|
|
67,684
|
|
|
15.7
|
%
|
||
Economic fuel cost per gallon
|
$
|
1.56
|
|
|
$
|
1.71
|
|
|
(8.8
|
)%
|
|
Three Months Ended September 30,
|
|
Per-ASM Change
|
|
Percent Change
|
||||||
|
2016
|
|
2015
|
|
|||||||
|
(in cents, except for percentages)
|
||||||||||
Aircraft fuel
|
1.87
|
|
|
2.07
|
|
|
(0.20
|
)
|
|
(9.7
|
)%
|
Salaries, wages, and benefits
|
1.85
|
|
|
1.70
|
|
|
0.15
|
|
|
8.8
|
%
|
Aircraft rent
|
0.76
|
|
|
0.96
|
|
|
(0.20
|
)
|
|
(20.8
|
)%
|
Landing fees and other rents
|
0.60
|
|
|
0.62
|
|
|
(0.02
|
)
|
|
(3.2
|
)%
|
Distribution
|
0.39
|
|
|
0.41
|
|
|
(0.02
|
)
|
|
(4.9
|
)%
|
Maintenance, materials and repairs
|
0.47
|
|
|
0.38
|
|
|
0.09
|
|
|
23.7
|
%
|
Depreciation and amortization
|
0.39
|
|
|
0.35
|
|
|
0.04
|
|
|
11.4
|
%
|
Other operating
|
1.02
|
|
|
0.97
|
|
|
0.05
|
|
|
5.2
|
%
|
Loss on disposal of assets
|
0.01
|
|
|
0.01
|
|
|
—
|
|
|
NM
|
|
Special charges (credits)
|
0.11
|
|
|
—
|
|
|
0.11
|
|
|
NM
|
|
CASM
|
7.47
|
|
|
7.46
|
|
|
0.01
|
|
|
0.1
|
%
|
Adjusted CASM (1)
|
7.35
|
|
|
7.45
|
|
|
(0.10
|
)
|
|
(1.3
|
)%
|
Adjusted CASM ex-fuel (2)
|
5.48
|
|
|
5.39
|
|
|
0.09
|
|
|
1.7
|
%
|
(1)
|
Reconciliation of CASM to Adjusted CASM:
|
|
Three Months Ended September 30,
|
||||||||||||
|
2016
|
|
2015
|
||||||||||
|
(in millions)
|
|
Per ASM
|
|
(in millions)
|
|
Per ASM
|
||||||
CASM (cents)
|
|
|
7.47
|
|
|
|
|
7.46
|
|
||||
Less:
|
|
|
|
|
|
|
|
||||||
Unrealized losses (gains) related to fuel derivative contracts, net
|
$
|
—
|
|
|
—
|
|
|
$
|
0.1
|
|
|
—
|
|
Loss on disposal of assets
|
0.4
|
|
|
0.01
|
|
|
0.3
|
|
|
0.01
|
|
||
Special charges (credits)
|
7.4
|
|
|
0.11
|
|
|
(0.1
|
)
|
|
—
|
|
||
Adjusted CASM (cents)
|
|
|
7.35
|
|
|
|
|
7.45
|
|
(2)
|
Excludes aircraft fuel expense, loss on disposal of assets and special charges.
|
|
Nine Months Ended September 30,
|
|
|
|||||||
|
2016
|
|
2015
|
|
||||||
|
(in thousands, except per gallon amounts)
|
|
Percent Change
|
|||||||
Fuel gallons consumed
|
225,851
|
|
|
187,541
|
|
|
20.4
|
%
|
||
Into-plane fuel cost per gallon
|
$
|
1.42
|
|
|
$
|
1.86
|
|
|
(23.7
|
)%
|
Into-plane fuel expense
|
$
|
321,018
|
|
|
$
|
349,549
|
|
|
(8.2
|
)%
|
Realized losses (gains) related to fuel derivative contracts, net
|
—
|
|
|
8,575
|
|
|
NM
|
|
||
Unrealized losses (gains) related to fuel derivative contracts, net
|
—
|
|
|
(1,892
|
)
|
|
NM
|
|
||
Aircraft fuel expense (per statement of operations)
|
$
|
321,018
|
|
|
$
|
356,232
|
|
|
(9.9
|
)%
|
|
Nine Months Ended September 30,
|
|
|
|||||||
|
2016
|
|
2015
|
|
||||||
|
(in thousands, except per gallon amounts)
|
|
Percent Change
|
|||||||
Into-plane fuel expense
|
$
|
321,018
|
|
|
$
|
349,549
|
|
|
(8.2
|
)%
|
Realized losses (gains) related to fuel derivative contracts, net
|
—
|
|
|
8,575
|
|
|
NM
|
|
||
Economic fuel expense
|
$
|
321,018
|
|
|
$
|
358,124
|
|
|
(10.4
|
)%
|
Fuel gallons consumed
|
225,851
|
|
|
187,541
|
|
|
20.4
|
%
|
||
Economic fuel cost per gallon
|
$
|
1.42
|
|
|
$
|
1.91
|
|
|
(25.7
|
)%
|
|
Nine Months Ended September 30,
|
|
Per-ASM Change
|
|
Percent Change
|
||||||
|
2016
|
|
2015
|
|
|||||||
|
(in cents, except for percentages)
|
||||||||||
Aircraft fuel
|
1.70
|
|
|
2.29
|
|
|
(0.59
|
)
|
|
(25.8
|
)%
|
Salaries, wages, and benefits
|
1.85
|
|
|
1.81
|
|
|
0.04
|
|
|
2.2
|
%
|
Aircraft rent
|
0.80
|
|
|
1.03
|
|
|
(0.23
|
)
|
|
(22.3
|
)%
|
Landing fees and other rents
|
0.60
|
|
|
0.63
|
|
|
(0.03
|
)
|
|
(4.8
|
)%
|
Distribution
|
0.39
|
|
|
0.42
|
|
|
(0.03
|
)
|
|
(7.1
|
)%
|
Maintenance, materials and repairs
|
0.38
|
|
|
0.40
|
|
|
(0.02
|
)
|
|
(5.0
|
)%
|
Depreciation and amortization
|
0.39
|
|
|
0.33
|
|
|
0.06
|
|
|
18.2
|
%
|
Other operating
|
1.05
|
|
|
1.00
|
|
|
0.05
|
|
|
5.0
|
%
|
Loss on disposal of assets
|
0.01
|
|
|
0.01
|
|
|
—
|
|
|
NM
|
|
Special charges (credits)
|
0.17
|
|
|
—
|
|
|
0.17
|
|
|
NM
|
|
CASM
|
7.33
|
|
|
7.93
|
|
|
(0.60
|
)
|
|
(7.6
|
)%
|
Adjusted CASM (1)
|
7.15
|
|
|
7.93
|
|
|
(0.78
|
)
|
|
(9.8
|
)%
|
Adjusted CASM ex-fuel (2)
|
5.45
|
|
|
5.63
|
|
|
(0.18
|
)
|
|
(3.2
|
)%
|
(1)
|
Reconciliation of CASM to Adjusted CASM:
|
|
Nine Months Ended September 30,
|
||||||||||||
|
2016
|
|
2015
|
||||||||||
|
(in millions)
|
|
Per ASM
|
|
(in millions)
|
|
Per ASM
|
||||||
CASM (cents)
|
|
|
7.33
|
|
|
|
|
7.93
|
|
||||
Less:
|
|
|
|
|
|
|
|
||||||
Unrealized losses (gains) related to fuel derivative contracts, net
|
$
|
—
|
|
|
—
|
|
|
$
|
(1.9
|
)
|
|
(0.01
|
)
|
Loss on disposal of assets
|
1.2
|
|
0.01
|
|
1.3
|
|
0.01
|
||||||
Special charges (credits)
|
31.6
|
|
0.17
|
|
0.7
|
|
—
|
|
|||||
Adjusted CASM (cents)
|
|
|
7.15
|
|
|
|
7.93
|
(2)
|
Excludes aircraft fuel expense, loss on disposal of assets and special charges and credits.
|
|
|
Remainder of 2016
|
|
2017 - 2018
|
|
2019 - 2020
|
|
2021 and beyond
|
|
Total
|
||||||||||
Long-term debt (1)
|
|
$
|
35
|
|
|
$
|
165
|
|
|
$
|
156
|
|
|
$
|
652
|
|
|
$
|
1,008
|
|
Interest commitments (2)
|
|
16
|
|
|
77
|
|
|
63
|
|
|
118
|
|
|
274
|
|
|||||
Operating lease obligations
|
|
62
|
|
|
442
|
|
|
359
|
|
|
581
|
|
|
1,444
|
|
|||||
Flight equipment purchase obligations
|
|
104
|
|
|
1,309
|
|
|
1,503
|
|
|
803
|
|
|
3,719
|
|
|||||
Other (3)
|
|
6
|
|
|
18
|
|
|
1
|
|
|
—
|
|
|
25
|
|
|||||
Total future payments on contractual obligations
|
|
$
|
223
|
|
|
$
|
2,011
|
|
|
$
|
2,082
|
|
|
$
|
2,154
|
|
|
$
|
6,470
|
|
|
|
Airbus
|
|
Third-Party Lessor
|
|
|
|||||||||
|
|
A320ceo
|
|
A320neo
|
|
A321ceo
|
|
A320neo
|
|
Total
|
|||||
remainder of 2016
|
|
—
|
|
|
—
|
|
|
1
|
|
|
5
|
|
|
6
|
|
2017
|
|
4
|
|
|
—
|
|
|
11
|
|
|
—
|
|
|
15
|
|
2018
|
|
5
|
|
|
4
|
|
|
5
|
|
|
—
|
|
|
14
|
|
2019
|
|
1
|
|
|
12
|
|
|
—
|
|
|
—
|
|
|
13
|
|
2020
|
|
—
|
|
|
16
|
|
|
—
|
|
|
—
|
|
|
16
|
|
2021
|
|
—
|
|
|
18
|
|
|
—
|
|
|
—
|
|
|
18
|
|
|
|
10
|
|
|
50
|
|
|
17
|
|
|
5
|
|
|
82
|
|
ITEM 3.
|
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
|
ITEM 4.
|
CONTROLS AND PROCEDURES
|
ITEM 1.
|
LEGAL PROCEEDINGS
|
ITEM 1A.
|
RISK FACTORS
|
ITEM 2.
|
UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
|
ISSUER PURCHASES OF EQUITY SECURITIES
|
||||||||||||||
Period
|
|
Total Number of Shares Purchased
|
|
Average Price Paid per Share
|
|
Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs
|
|
Approximate Dollar Value of Shares that May Yet be Purchased Under Plans or Programs
|
||||||
July 1-31, 2016
|
|
283,204
|
|
|
$
|
44.75
|
|
|
283,204
|
|
|
$
|
25,000,056
|
|
August 1-31, 2016
|
|
461,008
|
|
|
$
|
40.06
|
|
|
457,562
|
|
|
$
|
6,660,071
|
|
September 1-30, 2016
|
|
167,900
|
|
|
$
|
39.65
|
|
|
167,900
|
|
|
$
|
74
|
|
Total
|
|
912,112
|
|
|
$
|
41.44
|
|
|
908,666
|
|
|
|
ITEM 3.
|
DEFAULTS UPON SENIOR SECURITIES
|
ITEM 4.
|
MINE SAFETY DISCLOSURES
|
ITEM 5.
|
OTHER INFORMATION
|
ITEM 6.
|
EXHIBITS
|
Exhibit Number
|
|
Description of Exhibits
|
|
|
|
10.1
|
|
Theodore Botimer Severance and Release Agreement
|
|
|
|
31.1
|
|
Certification of the Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
|
|
|
|
31.2
|
|
Certification of the Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
|
|
|
|
32.1*
|
|
Certification of the Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
|
|
|
|
32.2*
|
|
Certification of the Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
|
|
|
|
101.INS
|
|
XBRL Instance Document
|
|
|
|
101.SCH
|
|
XBRL Taxonomy Extension Schema
|
|
|
|
101.CAL
|
|
XBRL Taxonomy Extension Calculation Linkbase
|
|
|
|
101.LAB
|
|
XBRL Taxonomy Extension Label Linkbase
|
|
|
|
101.PRE
|
|
XBRL Taxonomy Extension Presentation Linkbase
|
*
|
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.
|
|
SPIRIT AIRLINES, INC.
|
|
|
|
|
Date: October 25, 2016
|
By:
|
/s/ Edward Christie
|
|
|
Edward Christie
|
|
|
Senior Vice President and
Chief Financial Officer
|
A.
TERMINATION OF EMPLOYMENT RELATIONSHIP, SEVERANCE BENEFITS AND OBLIGATIONS
|
B.
COOPERATON
|
C.
NON-ADMISSION
|
D.
NON-SOLICITATION OF COMPANY EMPLOYEES
|
E.
NON-DISPARAGEMENT
|
F.
NON-COMPETITION
|
G.
VOLUNTARY AGREEMENT; ADVICE OF COUNSEL; 45-DAY PERIOD
|
(a)
|
You have read this Agreement and understand its legal and binding effect. You are acting voluntarily and of your own free will in executing this Agreement.
|
(b)
|
The consideration for this Agreement is in addition to anything of value to which you already are entitled.
|
(c)
|
You have had the opportunity to seek, and you are advised in writing by this Agreement to seek, legal counsel prior to signing this Agreement.
|
(d)
|
You have been given at least 45 days from the date you received this Agreement and any attached information to consider the terms of this Agreement before signing it. In the event you choose to sign this Agreement prior to the expiration of the 45-day consideration period, you represent that you are knowingly and voluntarily waiving the remainder of the 45-day consideration period. You understand that having waived some portion of the 45-day consideration period, the Company may expedite the processing of benefits provided to you in exchange for signing this Agreement.
|
(e)
|
You agree with the Company that changes, whether material or immaterial, do not restart the running of the 45-day consideration period.
|
(f)
|
If you are age 40 or over and your termination is part of an employment termination program, you acknowledge that the Company made available to you : (i) the class, unit or group of individuals covered by the employment termination program; the eligibility factors for the program; and applicable time limits; and (ii) the job titles and ages of all individuals eligible or selected for the program as well as those in the same job classification or organizational unit who are not eligible or selected.
|
H.
REVOCATION
|
I.
BINDING AGREEMENT AND PROMISE NOT TO SUE
|
J. COMPANY PROPERTY; CONFIDENTIALITY
|
K. EXCEPTIONS AND NO INTERFERENCE WITH RIGHTS
|
L. APPLICABLE LAW, NOTICES AND GENERAL PROVISIONS
|
I have read and understand the Agreement set forth above. I accept the consideration stated above and knowingly and voluntarily agree to be bound by the terms of this Agreement.
|
|||||
Dated:
|
9/26/16
|
Signature:
|
/s/ Ted Botimer
|
Name Printed:
Ted Botimer
________
|
|
|
|
|
|
|
|
|
|
|
Date: October 25, 2016
|
/s/ Robert L. Fornaro
|
|
Robert L. Fornaro
|
|
President and Chief Executive Officer
|
Date: October 25, 2016
|
/s/ Edward M. Christie
|
|
Edward M. Christie
|
|
Senior Vice President and
|
|
Chief Financial Officer
|
(i.)
|
the Quarterly Report on Form 10-Q of the Company for the quarter ended
September 30, 2016
(the "Report") fully complies with the requirements of Section 13(a) or Section 15(d), as applicable, of the Securities Exchange Act of 1934, as amended; and
|
(ii.)
|
the information contained in the Report fairly present, in all material respects, the financial condition and results of operations of the Company.
|
Date: October 25, 2016
|
/s/ Robert L. Fornaro
|
|
Robert L. Fornaro
|
|
President and Chief Executive Officer
|
(i.)
|
the Quarterly Report on Form 10-Q of the Company for the quarter ended
September 30, 2016
(the "Report") fully complies with the requirements of Section 13(a) or Section 15(d), as applicable, of the Securities Exchange Act of 1934, as amended; and
|
(ii.)
|
the information contained in the Report fairly present, in all material respects, the financial condition and results of operations of the Company.
|
Date: October 25, 2016
|
/s/ Edward M. Christie
|
|
Edward M. Christie
|
|
Senior Vice President and
|
|
Chief Financial Officer
|