☒
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ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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☐
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TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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Delaware
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38-1747023
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(State or other jurisdiction of
incorporation or organization)
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(I.R.S. Employer
Identification No.)
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2800 Executive Way
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Miramar
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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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Title of Each Class
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Trading Symbol
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Name of Each Exchange on Which Registered
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Voting Common Stock, $0.0001 par value
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SAVE
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New York Stock Exchange
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Non-Voting Common Stock, $0.0001 par value
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SAVE
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New York Stock Exchange
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Large accelerated filer
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☒
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Accelerated filer
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☐
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Non-accelerated filer
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☐
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Smaller reporting company
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☐
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(Do not check if a smaller reporting company)
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Emerging growth company
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☐
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Class
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Number of Shares
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Common Stock, $0.0001 par value per share
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68,455,011
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•
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Part I - Item 1A. Risk Factors
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•
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Part II - Item 7. Management's Discussion and Analysis of Financial Conditions and Results of Operations
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•
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Part II - Item 8. Financial Statements and Supplementary Data
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•
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Part II - Item 9A. Controls and Procedures
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•
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Part IV - Item 15. Exhibits and Financial Statement Schedules
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PART I
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Page
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PART II
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PART III
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PART IV
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•
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high aircraft utilization;
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•
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high-density seating configurations on our aircraft along with a simplified onboard product designed to lower costs;
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•
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minimal hub-and-spoke network inefficiencies;
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•
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highly productive workforce;
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•
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opportunistic outsourcing of operating functions;
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•
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operating a single-fleet type of Airbus A320-family aircraft that is one of the youngest and most fuel efficient in the United States and operated by common flight crews;
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•
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reduced sales, marketing and distribution costs through direct-to-consumer marketing;
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•
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efficient flight scheduling, including minimal ground times between flights; and
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•
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a company-wide business culture that is keenly focused on driving costs lower.
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•
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charging for checked and carry-on baggage;
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passing through all distribution-related expenses;
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•
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charging for premium seats and advance seat selection;
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maintaining consistent ticketing policies, including service charges for changes and cancellations;
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generating subscription revenue from our $9 Fare Club low-fare subscription service;
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deriving brand-based revenues from proprietary services, such as our FREE SPIRIT affinity credit card program;
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offering third-party travel products (travel packages), such as hotel rooms, ground transportation (rental and hotel shuttle products) and attractions (show or theme park tickets) packaged with air travel on our website; and
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selling third-party travel insurance through our website.
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keeping a consistent focus on maintaining low unit operating costs;
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ensuring our sourcing arrangements with key third parties are regularly benchmarked against the best industry standards;
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generating and maintaining an adequate level of liquidity to insulate against volatility in key cost inputs, such as fuel, and in passenger demand that may occur as a result of changing general economic conditions.
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Employee Groups
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Representative
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Amendable Date
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Pilots
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Air Line Pilots Association, International (ALPA)
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February 2023
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Flight Attendants
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Association of Flight Attendants (AFA-CWA)
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May 2021
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Dispatchers
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Professional Airline Flight Control Association (PAFCA)
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October 2023
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Ramp Service Agents
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International Association of Machinists and Aerospace Workers (IAMAW)
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June 2020
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Passenger Service Agents
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Transport Workers Union of America (TWU)
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NA
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•
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changes and volatility in general economic conditions, including the severity and duration of any downturn in the U.S. or global economy and financial markets;
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changes in consumer preferences, perceptions, spending patterns or demographic trends, including any increased preference for higher-fare carriers offering higher amenity levels, and reduced preferences for low-fare carriers offering more basic transportation;
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higher levels of unemployment and varying levels of disposable or discretionary income;
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•
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depressed housing and stock market prices; and
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lower levels of actual or perceived consumer confidence.
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substantial loss of revenue and flight disruption costs caused by the grounding of all commercial air traffic in or headed to the United States by the FAA for days after the terrorist attacks;
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increased security and insurance costs;
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increased concerns about future terrorist attacks;
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airport shutdowns and flight cancellations and delays due to security breaches and perceived safety threats; and
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significantly reduced passenger traffic and yields due to the subsequent dramatic drop in demand for air travel.
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require a substantial portion of cash flow from operations for operating lease and maintenance deposit payments, thereby reducing the availability of our cash flow to fund working capital, capital expenditures and other general corporate purposes;
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limit our ability to make required pre-delivery deposit payments, or PDPs, including those payable to our aircraft and engine manufacturers for our aircraft and spare engines on order;
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limit our ability to obtain additional financing to support our expansion plans and for working capital and other purposes on acceptable terms or at all;
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make it more difficult for us to pay our other obligations as they become due during adverse general economic and market industry conditions because any related decrease in revenues could cause us to not have sufficient cash flows from operations to make our scheduled payments;
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reduce our flexibility in planning for, or reacting to, changes in our business and the airline industry and, consequently, place us at a competitive disadvantage to our competitors with fewer fixed payment obligations; and
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cause us to lose access to one or more aircraft and forfeit our rent deposits if we are unable to make our required aircraft lease rental and debt payments and our lessors or lenders exercise their remedies under the lease and debt agreements, including cross default provisions in certain of our leases and mortgages.
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•
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maintain profitability;
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acquire delivery positions of and/or financing for new or used aircraft;
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access airports located in our targeted geographic markets where we can operate routes in a manner that is consistent with our cost strategy;
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acquire new and used aircraft in accordance with our intended delivery schedule, and obtain sufficient spare parts or related support services from our suppliers on a timely basis;
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gain access to international routes;
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access sufficient gates and other services at airports we currently serve or may seek to serve; and
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maintain efficient utilization and capacity of our existing aircraft.
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increases in airport rates and charges;
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limitations on take-off and landing slots, airport gate capacity or other use of airport facilities;
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termination of our airport use agreements, some of which can be terminated by airport authorities with little notice to us;
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increases in airport capacity that could facilitate increased competition;
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international travel regulations such as customs and immigration;
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increases in taxes;
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changes in the law that affect the services that can be offered by airlines in particular markets and at particular airports;
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restrictions on competitive practices;
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the adoption of statutes or regulations that impact customer service standards, including security standards; and
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the adoption of more restrictive locally-imposed noise regulations or curfews.
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Enhancing cash flow templates to facilitate the preparation and review of the related cash flows; and
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Enhancing roll forward reconciliation and management review controls of the capital expenditures amounts included in the statements of cash flows.
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announcements concerning our competitors, the airline industry or the economy in general;
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strategic actions by us or our competitors, such as acquisitions or restructurings;
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increased price competition;
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media reports and publications about the safety of our aircraft or the aircraft type we operate;
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new regulatory pronouncements and changes in regulatory guidelines;
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changes in the price of aircraft fuel;
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announcements concerning the availability of the type of aircraft we use;
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general and industry-specific economic conditions;
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changes in financial estimates or recommendations by securities analysts or failure to meet analysts’ performance expectations;
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sales of our common stock or other actions by investors with significant shareholdings;
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trading strategies related to changes in fuel or oil prices; and
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general market, political and economic conditions.
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our board of directors is divided into three classes, with each class serving for a staggered three-year term, which prevents stockholders from electing an entirely new board of directors at an annual meeting;
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actions to be taken by our stockholders may only be effected at an annual or special meeting of our stockholders and not by written consent;
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special meetings of our stockholders can be called only by the Chairman of the Board or by our corporate secretary at the direction of our board of directors;
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advance notice procedures that stockholders must comply with in order to nominate candidates to our board of directors and propose matters to be brought before an annual meeting of our stockholders may discourage or deter a potential acquirer from conducting a solicitation of proxies to elect the acquirer’s own slate of directors or otherwise attempting to obtain control of our company; and
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our board of directors may, without stockholder approval, issue series of preferred stock, or rights to acquire preferred stock, that could dilute the interest of, or impair the voting power of, holders of our common stock or could also be used as a method of discouraging, delaying or preventing a change of control.
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Aircraft Type
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Seats
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Average Age (years)
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Number of Aircraft
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Number Owned
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Number Leased
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A319
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145
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13.3
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31
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23
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8
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A320ceo
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174 - 182
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5.2
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64
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36
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28
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A320neo
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182
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1.2
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20
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2
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18
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A321
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228
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3.0
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30
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30
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—
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5.9
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145
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91
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54
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High
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Low
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Fiscal year ended December 31, 2018
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First Quarter
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$
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48.26
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$
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36.99
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Second Quarter
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39.61
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34.98
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Third Quarter
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49.27
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36.13
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Fourth Quarter
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64.59
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43.83
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Fiscal year ended December 31, 2019
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First Quarter
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$
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63.06
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$
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51.55
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Second Quarter
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58.30
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45.95
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Third Quarter
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55.05
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36.03
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Fourth Quarter
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41.37
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33.10
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ISSUER PURCHASES OF EQUITY SECURITIES
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Period
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Total Number of Shares Purchased
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Average Price Paid per Share
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Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs
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Approximate Dollar Value of Shares that May Yet be Purchased Under Plans or Programs
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October 1-31, 2019
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—
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$
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—
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—
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$
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—
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November 1-30, 2019
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2,004
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39.39
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—
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—
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December 1-31, 2019
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114
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38.48
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—
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—
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Total
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2,118
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$
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39.34
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—
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12/31/2014
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12/31/2015
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12/31/2016
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12/31/2017
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12/31/2018
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12/31/2019
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Spirit
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$
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100.00
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$
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52.73
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$
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76.55
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$
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59.34
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$
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76.63
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$
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53.33
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NYSE ARCA Airline Index
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$
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100.00
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$
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84.74
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$
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108.90
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$
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115.64
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$
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90.89
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$
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111.56
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NASDAQ Composite Index
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$
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100.00
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$
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107.11
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$
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116.72
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$
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151.41
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$
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147.16
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$
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201.22
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Year Ended December 31,
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2019
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2018
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2017
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2016
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2015
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(in thousands, except share and per-share data)
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Operating revenues:
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Passenger (1)
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$
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3,757,605
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$
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3,260,015
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$
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2,572,887
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$
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2,257,801
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$
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1,169,338
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Other (1)
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72,931
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63,019
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70,665
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62,220
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972,125
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|||||
Total operating revenue
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3,830,536
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3,323,034
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2,643,552
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2,320,021
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2,141,463
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Operating expenses:
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||||||||||
Aircraft fuel (2)
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993,478
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939,324
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615,581
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447,553
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461,447
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|||||
Salaries, wages and benefits
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865,019
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719,635
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527,959
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472,471
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377,508
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|||||
Landing fees and other rents
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256,275
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214,677
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180,655
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151,679
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131,077
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|||||
Depreciation and amortization
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225,264
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176,727
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140,152
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101,136
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73,908
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|||||
Aircraft rent
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182,609
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177,641
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205,852
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201,675
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211,531
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|||||
Distribution
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153,770
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137,001
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113,472
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96,895
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86,576
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|||||
Maintenance, materials and repairs
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143,575
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129,078
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110,439
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98,587
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80,448
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Loss on disposal of assets
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17,350
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9,580
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4,168
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4,187
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1,604
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|||||
Special charges (3)
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717
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88,921
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12,629
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37,189
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673
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|||||
Other operating
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491,432
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379,536
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347,820
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267,191
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207,569
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|||||
Total operating expenses
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3,329,489
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2,972,120
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2,258,727
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1,878,563
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1,632,341
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|||||
Operating income
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501,047
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|
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350,914
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|
|
384,825
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441,458
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509,122
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|||||
Other (income) expense:
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||||||||||
Interest expense (4)
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101,350
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83,777
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57,302
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41,654
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20,382
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|||||
Capitalized interest (5)
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(12,471
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)
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(9,841
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)
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(13,793
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)
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(12,705
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)
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(11,553
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)
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|||||
Interest income
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(25,133
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)
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(19,107
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)
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(8,736
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)
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(5,276
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)
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(2,125
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)
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|||||
Other expense
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875
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|
|
752
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|
|
366
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|
|
528
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15
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|||||
Special charges, non-operating (6)
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—
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90,357
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—
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|
|
—
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|
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—
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|
|||||
Total other expense (income)
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64,621
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|
|
145,938
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|
|
35,139
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|
|
24,201
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|
|
6,719
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|
|||||
Income before income taxes
|
436,426
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|
|
204,976
|
|
|
349,686
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|
|
417,257
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|
|
502,403
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|
|||||
Provision (benefit) for income taxes (7)
|
101,171
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|
|
49,227
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|
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(65,836
|
)
|
|
153,774
|
|
|
185,183
|
|
|||||
Net income
|
$
|
335,255
|
|
|
$
|
155,749
|
|
|
$
|
415,522
|
|
|
$
|
263,483
|
|
|
$
|
317,220
|
|
Earnings Per Share:
|
|
|
|
|
|
|
|
|
|
||||||||||
Basic
|
$
|
4.90
|
|
|
$
|
2.28
|
|
|
$
|
6.00
|
|
|
$
|
3.75
|
|
|
$
|
4.39
|
|
Diluted
|
$
|
4.89
|
|
|
$
|
2.28
|
|
|
$
|
5.99
|
|
|
$
|
3.74
|
|
|
$
|
4.38
|
|
Weighted average shares outstanding:
|
|
|
|
|
|
|
|
|
|
||||||||||
Basic
|
68,428,528
|
|
|
68,248,931
|
|
|
69,220,750
|
|
|
70,343,935
|
|
|
72,207,725
|
|
|||||
Diluted
|
68,558,629
|
|
|
68,430,832
|
|
|
69,376,930
|
|
|
70,507,596
|
|
|
72,426,060
|
|
(1)
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Amounts prior to 2016 do not reflect the adoption of ASU No. 2014-09 (ASU 2014-09), "Revenue from Contracts with Customers," completed in the first quarter of 2018.
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(2)
|
Aircraft fuel expense is the sum of (i) “into-plane fuel cost,” which includes the cost of jet fuel and certain other charges such as fuel taxes and oil, (ii) realized gains and losses related to fuel derivative contracts, if any, and (iii) unrealized gains and losses related to fuel derivative contracts, if any. The following table summarizes the components of aircraft fuel expense for the periods presented:
|
|
Year Ended December 31,
|
||||||||||||||||||
|
2019
|
|
2018
|
|
2017
|
|
2016
|
|
2015
|
||||||||||
|
(in thousands)
|
||||||||||||||||||
Into-plane fuel cost
|
$
|
993,478
|
|
|
$
|
939,324
|
|
|
$
|
615,581
|
|
|
$
|
447,533
|
|
|
$
|
454,747
|
|
Realized losses (gains) related to fuel derivatives contracts, net
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
10,580
|
|
|||||
Unrealized losses (gains) related to fuel derivative contracts, net
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(3,880
|
)
|
|||||
Aircraft fuel expense
|
$
|
993,478
|
|
|
$
|
939,324
|
|
|
$
|
615,581
|
|
|
$
|
447,533
|
|
|
$
|
461,447
|
|
(3)
|
Special charges include: (i) for 2015, $0.7 million related to restructuring charges for outsourcing of ramps and passenger services; (i) for 2016, $37.2 million related to lease termination charges recognized in connection with the purchase of 7 aircraft formerly financed under operating lease agreements; (iii) for 2017, $12.6 million related to lease termination charges recognized in connection with the purchase of one engine and one aircraft formerly financed under operating lease agreements; (iv) for 2018, $88.7 million related to the ratification incentive payment made in connection with the new collective bargaining agreement with our pilots; (v) for 2019, $0.7 million related to the write-off of aircraft related credits resulting from the exchange of credits negotiated under the new purchase agreement with Airbus. Please see "Notes to Financial Statements—4. Special Charges" for further discussion.
|
(4)
|
Interest expense in 2015, 2016, 2017, 2018 and 2019 primarily relates to interest related to financing of purchasing aircraft.
|
(5)
|
Interest attributable to funds used to finance the acquisition of new aircraft, including PDPs is capitalized as an additional cost of the related asset. In 2015, 2016, 2017, 2018, and 2019, capitalized interest primarily represents interest related to the financing of purchased aircraft.
|
(6)
|
In 2018, special charges, non-operating of $90.4 million represents interest related to an aircraft purchase agreement for the acquisition of 14 A319 aircraft previously operated under operating leases. The contract was deemed a lease modification which resulted in a change of classification from operating leases to finance leases. Please see "Notes to Financial Statements—4. Special Charges" for further discussion.
|
(7)
|
During the twelve months ended December 31, 2017, we recorded a non-recurring income tax benefit of $196.7 million ($2.84 and $2.84 per basic and diluted share, respectively) due to the enactment of the Tax Cuts and Jobs Act of 2017.
|
|
As of December 31,
|
||||||||||||||||||
|
2019
|
|
2018
|
|
2017
|
|
2016
|
|
2015
|
||||||||||
Balance Sheet Data:
|
(in thousands)
|
||||||||||||||||||
Cash and cash equivalents
|
$
|
978,957
|
|
|
$
|
1,004,733
|
|
|
$
|
800,849
|
|
|
$
|
700,900
|
|
|
$
|
803,632
|
|
Short-term investment securities
|
105,321
|
|
|
102,789
|
|
|
100,937
|
|
|
100,155
|
|
|
—
|
|
|||||
Total assets (8) (9) (10)
|
7,043,412
|
|
|
5,165,457
|
|
|
4,145,800
|
|
|
3,153,629
|
|
|
2,530,545
|
|
|||||
Long-term debt and finance leases, including current portion
|
2,219,305
|
|
|
2,188,331
|
|
|
1,502,928
|
|
|
981,713
|
|
|
646,330
|
|
|||||
Shareholders' equity (9)
|
2,261,332
|
|
|
1,928,504
|
|
|
1,762,574
|
|
|
1,385,184
|
|
|
1,225,310
|
|
(8)
|
Prior period amounts have been reclassified to conform to ASU No. 2015-17 (ASU 2015-17), "Income Taxes" issued in November 2015.
|
(9)
|
Amounts prior to 2016 do not reflect the adoption of ASU No. 2014-09 (ASU 2014-09), "Revenue from Contracts with Customers," completed in the first quarter of 2018.
|
(10)
|
Amounts prior to 2019 do not reflect the adoption of ASU No. 2016-02, "Leases (Topic 842)," completed in the first quarter of 2019.
|
|
Year Ended December 31,
|
|||||||||||||
|
2019
|
|
2018
|
|
2017
|
|
2016
|
|
2015
|
|||||
Operating Statistics (unaudited) (A)
|
|
|
|
|
|
|
|
|
|
|||||
Average aircraft
|
135.2
|
|
|
118.9
|
|
|
103.6
|
|
|
86.2
|
|
|
72.7
|
|
Aircraft at end of period
|
145
|
|
|
128
|
|
|
112
|
|
|
95
|
|
|
79
|
|
Average daily aircraft utilization (hours)
|
12.3
|
|
|
12.1
|
|
|
11.6
|
|
|
12.4
|
|
|
12.7
|
|
Average stage length (miles)
|
1,002
|
|
|
1,032
|
|
|
999
|
|
|
979
|
|
|
987
|
|
Block hours
|
607,055
|
|
|
526,343
|
|
|
438,728
|
|
|
389,914
|
|
|
337,956
|
|
Departures
|
227,041
|
|
|
192,845
|
|
|
165,449
|
|
|
149,514
|
|
|
128,902
|
|
Passenger flight segments (thousands)
|
34,537
|
|
|
29,312
|
|
|
24,183
|
|
|
21,618
|
|
|
17,921
|
|
Revenue passenger miles (RPMs) (thousands)
|
35,245,285
|
|
|
30,623,379
|
|
|
24,605,512
|
|
|
21,581,611
|
|
|
17,995,311
|
|
Available seat miles (ASMs) (thousands)
|
41,783,001
|
|
|
36,502,982
|
|
|
29,592,819
|
|
|
25,494,645
|
|
|
21,246,156
|
|
Load factor (%)
|
84.4
|
|
|
83.9
|
|
|
83.1
|
|
|
84.7
|
|
|
84.7
|
|
Fare revenue per passenger flight segment ($)
|
54.63
|
|
|
58.14
|
|
|
56.38
|
|
|
55.42
|
|
|
65.25
|
|
Non-ticket revenue per passenger flight segment ($)
|
56.28
|
|
|
55.23
|
|
|
52.94
|
|
|
51.90
|
|
|
54.24
|
|
Total revenue per passenger segment ($)
|
110.91
|
|
|
113.37
|
|
|
109.32
|
|
|
107.32
|
|
|
119.49
|
|
Average yield (cents)
|
10.87
|
|
|
10.85
|
|
|
10.74
|
|
|
10.75
|
|
|
11.90
|
|
Total operating revenue per ASM (TRASM) (cents)
|
9.17
|
|
|
9.10
|
|
|
8.93
|
|
|
9.10
|
|
|
10.08
|
|
CASM (cents)
|
7.97
|
|
|
8.14
|
|
|
7.63
|
|
|
7.37
|
|
|
7.68
|
|
Adjusted CASM (cents) (B)
|
7.93
|
|
|
7.87
|
|
|
7.59
|
|
|
7.21
|
|
|
7.69
|
|
Adjusted CASM ex fuel (cents) (C)
|
5.55
|
|
|
5.30
|
|
|
5.51
|
|
|
5.45
|
|
|
5.50
|
|
Fuel gallons consumed (thousands)
|
470,939
|
|
|
412,256
|
|
|
343,709
|
|
|
302,781
|
|
|
255,008
|
|
Average fuel cost per gallon ($)
|
2.11
|
|
|
2.28
|
|
|
1.79
|
|
|
1.48
|
|
|
1.81
|
|
(A)
|
See “Glossary of Airline Terms” elsewhere in this annual report for definitions of terms used in this table.
|
(B)
|
Reconciliation of CASM to Adjusted CASM:
|
|
Year Ended December 31,
|
|||||||||||||||||||||||||||||||||
2019
|
|
2018
|
|
2017
|
|
2016
|
|
2015
|
||||||||||||||||||||||||||
(in millions)
|
|
Per ASM
|
|
(in millions)
|
|
Per ASM
|
|
(in millions)
|
|
Per ASM
|
|
(in millions)
|
|
Per ASM
|
|
(in millions)
|
|
Per ASM
|
||||||||||||||||
CASM (cents)
|
|
|
7.97
|
|
|
|
|
8.14
|
|
|
|
|
7.63
|
|
|
|
|
7.37
|
|
|
|
|
7.68
|
|
||||||||||
Less:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
Unrealized losses (gains) related to fuel derivative contracts
|
$
|
—
|
|
|
—
|
|
|
$
|
—
|
|
|
—
|
|
|
$
|
—
|
|
|
—
|
|
|
$
|
—
|
|
|
—
|
|
|
$
|
(3.9
|
)
|
|
(0.02
|
)
|
Loss on disposal of assets
|
17.4
|
|
|
0.04
|
|
|
9.6
|
|
|
0.03
|
|
|
4.2
|
|
|
0.01
|
|
|
4.2
|
|
|
0.02
|
|
|
1.6
|
|
|
0.01
|
|
|||||
Special charges
|
0.7
|
|
|
—
|
|
|
88.9
|
|
|
0.24
|
|
|
12.6
|
|
|
0.04
|
|
|
37.2
|
|
|
0.15
|
|
|
0.7
|
|
|
—
|
|
|||||
Supplemental rent adjustments related to lease modifications
|
(0.5
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(4.1
|
)
|
|
(0.01
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Adjusted CASM (cents)
|
|
|
7.93
|
|
|
|
|
7.87
|
|
|
|
|
7.59
|
|
|
|
|
7.21
|
|
|
|
|
7.69
|
|
(C)
|
Excludes aircraft fuel expense, loss on disposal of assets, special charges and supplemental rent adjustments related to lease modifications.
|
|
Year Ended 2019
|
|
% change 2019 versus 2018
|
|
Year Ended 2018
|
||||
Operating revenues:
|
|
|
|
|
|
||||
Fare (thousands)
|
$
|
1,886,855
|
|
|
10.7%
|
|
$
|
1,704,107
|
|
Non-fare (thousands)
|
1,870,750
|
|
|
20.2%
|
|
1,555,908
|
|
||
Passenger (thousands)
|
3,757,605
|
|
|
15.3%
|
|
3,260,015
|
|
||
Other (thousands)
|
72,931
|
|
|
15.7%
|
|
63,019
|
|
||
Total operating revenue (thousands)
|
$
|
3,830,536
|
|
|
15.3%
|
|
$
|
3,323,034
|
|
Total operating revenue per ASM (TRASM) (cents)
|
9.17
|
|
|
0.8%
|
|
9.10
|
|
||
Fare revenue per passenger flight segment
|
$
|
54.63
|
|
|
(6.0)%
|
|
$
|
58.14
|
|
Non-ticket revenue per passenger flight segment
|
56.28
|
|
|
1.9%
|
|
55.23
|
|
||
Total revenue per passenger flight segment
|
$
|
110.91
|
|
|
(2.2)%
|
|
$
|
113.37
|
|
|
Year Ended 2019
|
|
Change 2019 versus 2018
|
|
Year Ended 2018
|
||
|
CASM
|
|
Per-ASM Change
|
|
Percent change
|
|
CASM
|
Operating expenses:
|
|
|
|
|
|
|
|
Aircraft fuel
|
2.38¢
|
|
(0.19)¢
|
|
(7.4)%
|
|
2.57¢
|
Salaries, wages and benefits
|
2.07
|
|
0.10
|
|
5.1
|
|
1.97
|
Landing fees and other rentals
|
0.61
|
|
0.02
|
|
3.4
|
|
0.59
|
Depreciation and amortization
|
0.54
|
|
0.06
|
|
12.5
|
|
0.48
|
Aircraft rent
|
0.44
|
|
(0.05)
|
|
(10.2)
|
|
0.49
|
Distribution
|
0.37
|
|
(0.01)
|
|
(2.6)
|
|
0.38
|
Maintenance, materials and repairs
|
0.34
|
|
(0.01)
|
|
(2.9)
|
|
0.35
|
Loss on disposal of assets
|
0.04
|
|
0.01
|
|
NM
|
|
0.03
|
Special charges
|
—
|
|
(0.24)
|
|
NM
|
|
0.24
|
Other operating expenses
|
1.18
|
|
0.14
|
|
13.5
|
|
1.04
|
Total operating expense
|
|
|
|
|
|
|
|
CASM
|
7.97
|
|
(0.17)
|
|
(2.1)
|
|
8.14
|
Adjusted CASM (1)
|
7.93
|
|
0.06
|
|
0.8
|
|
7.87
|
Adjusted CASM ex fuel (2)
|
5.55
|
|
0.25
|
|
4.7
|
|
5.30
|
|
Year Ended December 31,
|
||||||||||||
2019
|
|
2018
|
|||||||||||
(in millions)
|
|
Per ASM
|
|
(in millions)
|
|
Per ASM
|
|||||||
CASM (cents)
|
|
|
7.97
|
|
|
|
|
8.14
|
|
||||
Less:
|
|
|
|
|
|
|
|
||||||
Loss on disposal of assets
|
$
|
17.4
|
|
|
0.04
|
|
|
$
|
9.6
|
|
|
0.03
|
|
Special charges
|
0.7
|
|
|
—
|
|
|
88.9
|
|
|
0.24
|
|
||
Supplemental rent adjustments related to lease modifications
|
(0.5
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
||
Adjusted CASM (cents)
|
|
|
7.93
|
|
|
|
|
7.87
|
|
(2)
|
Excludes aircraft fuel expense, loss on disposal of assets, special charges and supplemental rent adjustments related to lease modifications.
|
|
Year Ended December 31,
|
|
|
|||||||
|
2019
|
|
2018
|
|
||||||
|
(in thousands, except per gallon amounts)
|
|
Percent Change
|
|||||||
Fuel gallons consumed
|
470,939
|
|
|
412,256
|
|
|
14.2
|
%
|
||
Into-plane fuel cost per gallon
|
$
|
2.11
|
|
|
$
|
2.28
|
|
|
(7.5
|
)%
|
Aircraft fuel expense (per statements of operations)
|
$
|
993,478
|
|
|
$
|
939,324
|
|
|
5.8
|
%
|
|
Year Ended December 31,
|
|
|
|||||
|
2019
|
|
2018
|
|
Change
|
|||
Website
|
66.6
|
%
|
|
67.1
|
%
|
|
(0.5
|
)
|
Third-party travel agents
|
26.8
|
|
|
27.1
|
|
|
(0.3
|
)
|
Call center
|
6.6
|
|
|
5.8
|
|
|
0.8
|
|
|
|
Three Months Ended
|
||||||||||||||||||||||||||||||
|
|
March 31, 2018
|
|
June 30, 2018
|
|
September 30, 2018
|
|
December 31, 2018
|
|
March 31, 2019
|
|
June 30, 2019
|
|
September 30, 2019
|
|
December 31, 2019
|
||||||||||||||||
|
|
(in thousands, except share and per-share amounts)
|
||||||||||||||||||||||||||||||
Operating revenues:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Fare
|
|
$
|
342,695
|
|
|
$
|
439,549
|
|
|
$
|
476,660
|
|
|
$
|
445,203
|
|
|
$
|
416,345
|
|
|
$
|
515,696
|
|
|
$
|
493,376
|
|
|
$
|
461,438
|
|
Non-fare
|
|
346,446
|
|
|
396,801
|
|
|
411,296
|
|
|
401,365
|
|
|
421,720
|
|
|
478,734
|
|
|
479,977
|
|
|
490,319
|
|
||||||||
Total passenger revenues
|
|
$
|
689,141
|
|
|
$
|
836,350
|
|
|
$
|
887,956
|
|
|
$
|
846,568
|
|
|
$
|
838,065
|
|
|
$
|
994,430
|
|
|
$
|
973,353
|
|
|
$
|
951,757
|
|
Other revenues
|
|
14,997
|
|
|
15,421
|
|
|
16,374
|
|
|
16,227
|
|
|
17,731
|
|
|
18,526
|
|
|
18,615
|
|
|
18,059
|
|
||||||||
Total operating revenues
|
|
$
|
704,138
|
|
|
$
|
851,771
|
|
|
$
|
904,330
|
|
|
$
|
862,795
|
|
|
$
|
855,796
|
|
|
$
|
1,012,956
|
|
|
$
|
991,968
|
|
|
$
|
969,816
|
|
Operating income (loss)
|
|
(38,797
|
)
|
|
108,521
|
|
|
145,125
|
|
|
136,065
|
|
|
87,804
|
|
|
163,938
|
|
|
124,681
|
|
|
124,624
|
|
||||||||
Net income (loss)
|
|
$
|
(44,922
|
)
|
|
$
|
11,254
|
|
|
$
|
97,480
|
|
|
$
|
91,937
|
|
|
$
|
56,076
|
|
|
$
|
114,501
|
|
|
$
|
83,464
|
|
|
$
|
81,214
|
|
Earnings (loss) per share:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Basic
|
|
$
|
(0.66
|
)
|
|
$
|
0.16
|
|
|
$
|
1.43
|
|
|
$
|
1.35
|
|
|
$
|
0.82
|
|
|
$
|
1.67
|
|
|
$
|
1.22
|
|
|
$
|
1.19
|
|
Diluted
|
|
$
|
(0.66
|
)
|
|
$
|
0.16
|
|
|
$
|
1.42
|
|
|
$
|
1.34
|
|
|
$
|
0.82
|
|
|
$
|
1.67
|
|
|
$
|
1.22
|
|
|
$
|
1.18
|
|
Weighted average shares outstanding:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Basic
|
|
68,222,396
|
|
|
68,251,241
|
|
|
68,254,165
|
|
|
68,267,372
|
|
|
68,379,707
|
|
|
68,439,261
|
|
|
68,441,899
|
|
|
68,452,317
|
|
||||||||
Diluted
|
|
68,222,396
|
|
|
68,310,287
|
|
|
68,502,822
|
|
|
68,687,272
|
|
|
68,515,454
|
|
|
68,620,330
|
|
|
68,544,690
|
|
|
68,553,114
|
|
|
|
Three Months Ended
|
||||||||||||||||||||||
|
|
March 31,
2018
|
|
June 30,
2018
|
|
September 30, 2018
|
|
December 31, 2018
|
|
March 31,
2019
|
|
June 30,
2019
|
|
September 30, 2019
|
|
December 31, 2019
|
||||||||
Other operating statistics
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Aircraft at end of period
|
|
118
|
|
|
119
|
|
|
121
|
|
|
128
|
|
|
133
|
|
|
135
|
|
|
136
|
|
|
145
|
|
Average daily Aircraft utilization (hours)
|
|
12.0
|
|
|
12.6
|
|
|
12.4
|
|
|
11.5
|
|
|
12.2
|
|
|
12.8
|
|
|
12.5
|
|
|
11.7
|
|
Average stage length (miles)
|
|
1,025
|
|
|
1,051
|
|
|
1,033
|
|
|
1,019
|
|
|
1,029
|
|
|
1,004
|
|
|
979
|
|
|
998
|
|
Departures
|
|
44,982
|
|
|
49,404
|
|
|
50,386
|
|
|
48,073
|
|
|
52,175
|
|
|
58,517
|
|
|
59,314
|
|
|
57,035
|
|
Passenger flight segments (thousands)
|
|
6,537
|
|
|
7,554
|
|
|
7,856
|
|
|
7,365
|
|
|
7,820
|
|
|
8,953
|
|
|
9,004
|
|
|
8,760
|
|
Revenue passenger miles (RPMs) (thousands)
|
|
6,813,519
|
|
|
7,961,128
|
|
|
8,241,771
|
|
|
7,606,962
|
|
|
8,133,030
|
|
|
9,157,488
|
|
|
9,057,574
|
|
|
8,897,193
|
|
Available seat miles (ASMs) (thousands)
|
|
8,408,764
|
|
|
9,515,842
|
|
|
9,579,448
|
|
|
8,998,928
|
|
|
9,829,044
|
|
|
10,775,878
|
|
|
10,686,246
|
|
|
10,491,833
|
|
Load factor (%)
|
|
81.0
|
|
|
83.7
|
|
|
86.0
|
|
|
84.5
|
|
|
82.7
|
|
|
85.0
|
|
|
84.8
|
|
|
84.8
|
|
Fare revenue per passenger flight segment ($)
|
|
52.42
|
|
|
58.19
|
|
|
60.67
|
|
|
60.45
|
|
|
53.24
|
|
|
57.60
|
|
|
54.80
|
|
|
52.68
|
|
Non-ticket revenue per passenger flight segment ($)
|
|
55.29
|
|
|
54.57
|
|
|
54.44
|
|
|
56.70
|
|
|
56.20
|
|
|
55.54
|
|
|
55.37
|
|
|
58.03
|
|
Total operating revenue per ASM (TRASM) (cents)
|
|
8.37
|
|
|
8.95
|
|
|
9.44
|
|
|
9.59
|
|
|
8.71
|
|
|
9.40
|
|
|
9.28
|
|
|
9.24
|
|
CASM (cents)
|
|
8.84
|
|
|
7.81
|
|
|
7.93
|
|
|
8.08
|
|
|
7.81
|
|
|
7.88
|
|
|
8.12
|
|
|
8.06
|
|
Adjusted CASM (cents) (1)
|
|
7.76
|
|
|
7.76
|
|
|
7.92
|
|
|
8.04
|
|
|
7.79
|
|
|
7.86
|
|
|
8.03
|
|
|
8.01
|
|
Adjusted CASM ex fuel (cents) (2)
|
|
5.33
|
|
|
5.17
|
|
|
5.22
|
|
|
5.49
|
|
|
5.46
|
|
|
5.41
|
|
|
5.66
|
|
|
5.67
|
|
Fuel gallons consumed (thousands)
|
|
95,003
|
|
|
106,144
|
|
|
109,515
|
|
|
101,595
|
|
|
109,828
|
|
|
122,447
|
|
|
122,072
|
|
|
116,591
|
|
Average fuel cost per gallon ($)
|
|
2.15
|
|
|
2.32
|
|
|
2.36
|
|
|
2.26
|
|
|
2.09
|
|
|
2.16
|
|
|
2.08
|
|
|
2.10
|
|
|
Three Months Ended
|
||||||||||||||||||||||||||||||||||||||
March 31,
2018
|
|
June 30,
2018
|
|
September 30,
2018
|
|
December 31,
2018
|
|
March 31,
2019
|
|
June 30,
2019
|
|
September 30,
2019
|
|
December 31,
2019
|
|||||||||||||||||||||||||
(in millions)
|
Per ASM
|
|
(in millions)
|
Per ASM
|
|
(in millions)
|
Per ASM
|
|
(in millions)
|
Per ASM
|
|
(in millions)
|
Per ASM
|
|
(in millions)
|
Per ASM
|
|
(in millions)
|
Per ASM
|
|
(in millions)
|
Per ASM
|
|||||||||||||||||
CASM (cents)
|
|
8.84
|
|
|
|
7.81
|
|
|
|
7.93
|
|
|
|
8.08
|
|
|
|
7.81
|
|
|
|
7.88
|
|
|
|
8.12
|
|
|
|
8.06
|
|
||||||||
Less:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Loss on disposal of assets
|
0.8
|
|
0.01
|
|
|
4.6
|
|
0.05
|
|
|
1.1
|
|
0.01
|
|
|
3.0
|
|
0.03
|
|
|
1.9
|
|
0.02
|
|
|
1.6
|
|
0.01
|
|
|
13.4
|
|
0.13
|
|
|
0.5
|
|
—
|
|
Special charges (credits)
|
89.2
|
|
1.06
|
|
|
0.2
|
|
—
|
|
|
(0.7
|
)
|
(0.01
|
)
|
|
0.3
|
|
—
|
|
|
|
|
|
|
—
|
|
|
|
|
|
0.7
|
|
0.01
|
|
|||||
Supplemental rent adjustments related to lease modifications
|
—
|
|
—
|
|
|
—
|
|
—
|
|
|
—
|
|
—
|
|
|
|
|
|
—
|
|
—
|
|
|
—
|
|
—
|
|
|
(4.3
|
)
|
(0.04
|
)
|
|
3.8
|
|
0.04
|
|
||
Adjusted CASM (cents)
|
|
7.76
|
|
|
|
7.76
|
|
|
|
7.92
|
|
|
|
8.04
|
|
|
|
7.79
|
|
|
|
7.86
|
|
|
|
8.03
|
|
|
|
8.01
|
|
|
|
Total
|
|
2020
|
|
2021 - 2022
|
|
2023 - 2024
|
|
2025 and beyond
|
||||||||||
Long-term debt (1)
|
|
$
|
2,214
|
|
|
$
|
222
|
|
|
$
|
442
|
|
|
$
|
506
|
|
|
$
|
1,044
|
|
Interest and fee commitments (2)
|
|
431
|
|
|
78
|
|
|
136
|
|
|
99
|
|
|
118
|
|
|||||
Finance and operating lease obligations
|
|
2,042
|
|
|
242
|
|
|
394
|
|
|
346
|
|
|
1,060
|
|
|||||
Flight equipment purchase obligations
|
|
6,955
|
|
|
988
|
|
|
868
|
|
|
1,494
|
|
|
3,605
|
|
|||||
Other (3)
|
|
134
|
|
|
22
|
|
|
34
|
|
|
28
|
|
|
50
|
|
|||||
Total future payments on contractual obligations
|
|
$
|
11,776
|
|
|
$
|
1,552
|
|
|
$
|
1,874
|
|
|
$
|
2,473
|
|
|
$
|
5,877
|
|
(1)
|
Includes principal only associated with senior term loans, fixed-rate 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 our revolving credit facility. Refer to “Notes to the Financial Statements—13. Debt and Other Obligations.”
|
(2)
|
Related to senior term loans, fixed-rate loans, and Class A, Class B, and Class C Series 2015-1 EETCs, and Class AA, Class A, Class B, and Class C Series 2017-1 EETCs. Includes interest accrued as of December 31, 2019 related to our variable-rate revolving credit facility.
|
(3)
|
Primarily related to our reservation system and other miscellaneous subscriptions and services. Refer to “Notes to the Financial Statements—18. Commitments and Contingencies.”
|
|
Year Ended December 31,
|
||||||||||
|
2019
|
|
2018
|
|
2017
|
||||||
|
|
|
|
|
|
||||||
Operating revenues:
|
|
|
|
|
|
||||||
Passenger
|
$
|
3,757,605
|
|
|
$
|
3,260,015
|
|
|
$
|
2,572,887
|
|
Other
|
72,931
|
|
|
63,019
|
|
|
70,665
|
|
|||
Total operating revenues
|
3,830,536
|
|
|
3,323,034
|
|
|
2,643,552
|
|
|||
Operating expenses:
|
|
|
|
|
|
||||||
Aircraft fuel
|
993,478
|
|
|
939,324
|
|
|
615,581
|
|
|||
Salaries, wages and benefits
|
865,019
|
|
|
719,635
|
|
|
527,959
|
|
|||
Landing fees and other rents
|
256,275
|
|
|
214,677
|
|
|
180,655
|
|
|||
Depreciation and amortization
|
225,264
|
|
|
176,727
|
|
|
140,152
|
|
|||
Aircraft rent
|
182,609
|
|
|
177,641
|
|
|
205,852
|
|
|||
Distribution
|
153,770
|
|
|
137,001
|
|
|
113,472
|
|
|||
Maintenance, materials and repairs
|
143,575
|
|
|
129,078
|
|
|
110,439
|
|
|||
Loss on disposal of assets
|
17,350
|
|
|
9,580
|
|
|
4,168
|
|
|||
Special charges
|
717
|
|
|
88,921
|
|
|
12,629
|
|
|||
Other operating
|
491,432
|
|
|
379,536
|
|
|
347,820
|
|
|||
Total operating expenses
|
3,329,489
|
|
|
2,972,120
|
|
|
2,258,727
|
|
|||
|
|
|
|
|
|
||||||
Operating income
|
501,047
|
|
|
350,914
|
|
|
384,825
|
|
|||
Other (income) expense:
|
|
|
|
|
|
||||||
Interest expense
|
101,350
|
|
|
83,777
|
|
|
57,302
|
|
|||
Capitalized interest
|
(12,471
|
)
|
|
(9,841
|
)
|
|
(13,793
|
)
|
|||
Interest income
|
(25,133
|
)
|
|
(19,107
|
)
|
|
(8,736
|
)
|
|||
Other expense
|
875
|
|
|
752
|
|
|
366
|
|
|||
Special charges, non-operating
|
—
|
|
|
90,357
|
|
|
—
|
|
|||
Total other (income) expense
|
64,621
|
|
|
145,938
|
|
|
35,139
|
|
|||
|
|
|
|
|
|
||||||
Income before income taxes
|
436,426
|
|
|
204,976
|
|
|
349,686
|
|
|||
Provision (benefit) for income taxes
|
101,171
|
|
|
49,227
|
|
|
(65,836
|
)
|
|||
|
|
|
|
|
|
||||||
Net income
|
$
|
335,255
|
|
|
$
|
155,749
|
|
|
$
|
415,522
|
|
Basic earnings per share
|
$
|
4.90
|
|
|
$
|
2.28
|
|
|
$
|
6.00
|
|
Diluted earnings per share
|
$
|
4.89
|
|
|
$
|
2.28
|
|
|
$
|
5.99
|
|
|
Year Ended December 31,
|
||||||||||
|
2019
|
|
2018
|
|
2017
|
||||||
Net income
|
$
|
335,255
|
|
|
$
|
155,749
|
|
|
$
|
415,522
|
|
Unrealized gain (loss) on short-term investment securities and cash and cash equivalents, net of deferred taxes of $38, $44, and ($41)
|
167
|
|
|
30
|
|
|
(82
|
)
|
|||
Interest rate derivative loss reclassified into earnings, net of taxes of $76, $75, and $372
|
239
|
|
|
241
|
|
|
(37
|
)
|
|||
Other comprehensive income (loss)
|
$
|
406
|
|
|
$
|
271
|
|
|
$
|
(119
|
)
|
Comprehensive income
|
$
|
335,661
|
|
|
$
|
156,020
|
|
|
$
|
415,403
|
|
|
December 31, 2019
|
|
December 31, 2018
|
||||
Assets
|
|
|
|
||||
Current assets:
|
|
|
|
||||
Cash and cash equivalents
|
$
|
978,957
|
|
|
$
|
1,004,733
|
|
Short-term investment securities
|
105,321
|
|
|
102,789
|
|
||
Accounts receivable, net
|
73,807
|
|
|
47,660
|
|
||
Aircraft maintenance deposits, net
|
102,906
|
|
|
106,901
|
|
||
Income tax receivable
|
21,013
|
|
|
—
|
|
||
Prepaid expenses and other current assets
|
103,439
|
|
|
83,383
|
|
||
Total current assets
|
1,385,443
|
|
|
1,345,466
|
|
||
|
|
|
|
||||
Property and equipment:
|
|
|
|
||||
Flight equipment
|
3,730,751
|
|
|
3,257,215
|
|
||
Ground property and equipment
|
291,998
|
|
|
191,661
|
|
||
Less accumulated depreciation
|
(492,447
|
)
|
|
(332,864
|
)
|
||
|
3,530,302
|
|
|
3,116,012
|
|
||
Operating lease right-of-use assets
|
1,369,555
|
|
|
—
|
|
||
Pre-delivery deposits on flight equipment
|
291,930
|
|
|
236,775
|
|
||
Long-term aircraft maintenance deposits
|
67,682
|
|
|
138,738
|
|
||
Deferred heavy maintenance, net
|
361,603
|
|
|
249,010
|
|
||
Other long-term assets
|
36,897
|
|
|
79,456
|
|
||
Total assets
|
$
|
7,043,412
|
|
|
$
|
5,165,457
|
|
|
|
|
|
||||
Liabilities and shareholders’ equity
|
|
|
|
||||
Current liabilities:
|
|
|
|
||||
Accounts payable
|
$
|
43,601
|
|
|
$
|
39,320
|
|
Air traffic liability
|
315,408
|
|
|
291,981
|
|
||
Current maturities of long-term debt and finance leases
|
258,852
|
|
|
163,557
|
|
||
Current maturities of operating leases
|
120,662
|
|
|
—
|
|
||
Other current liabilities
|
373,521
|
|
|
339,677
|
|
||
Total current liabilities
|
1,112,044
|
|
|
834,535
|
|
||
|
|
|
|
||||
Long-term debt and finance leases, less current maturities
|
1,960,453
|
|
|
2,024,774
|
|
||
Operating leases, less current maturities
|
1,218,014
|
|
|
—
|
|
||
Deferred income taxes
|
469,292
|
|
|
355,141
|
|
||
Deferred gains and other long-term liabilities
|
22,277
|
|
|
22,503
|
|
||
Shareholders’ equity:
|
|
|
|
||||
Common stock: Common stock, $0.0001 par value, 240,000,000 shares authorized at December 31, 2019 and 2018, respectively; 70,148,386 and 69,871,535 issued and 68,455,011 and 68,269,567 outstanding as of December 31, 2019 and 2018, respectively
|
7
|
|
|
7
|
|
||
Additional paid-in-capital
|
379,380
|
|
|
371,225
|
|
||
Treasury stock, at cost: 1,693,375 and 1,601,968 as of December 31, 2019 and 2018, respectively
|
(72,455
|
)
|
|
(67,016
|
)
|
||
Retained earnings
|
1,955,187
|
|
|
1,625,481
|
|
||
Accumulated other comprehensive income (loss)
|
(787
|
)
|
|
(1,193
|
)
|
||
Total shareholders’ equity
|
2,261,332
|
|
|
1,928,504
|
|
||
Total liabilities and shareholders’ equity
|
$
|
7,043,412
|
|
|
$
|
5,165,457
|
|
|
Year Ended December 31,
|
||||||||||
|
As Restated
|
|
2018
|
|
2017
|
||||||
|
2019
|
|
|
||||||||
Operating activities:
|
|
|
|
|
|
||||||
Net income
|
$
|
335,255
|
|
|
$
|
155,749
|
|
|
$
|
415,522
|
|
Adjustments to reconcile net income to net cash provided by operations:
|
|
|
|
|
|
||||||
Losses reclassified from other comprehensive income
|
315
|
|
|
315
|
|
|
335
|
|
|||
Share-based compensation
|
8,154
|
|
|
11,021
|
|
|
8,522
|
|
|||
Allowance for doubtful accounts (recoveries)
|
—
|
|
|
(11
|
)
|
|
(53
|
)
|
|||
Amortization of deferred gains, losses and debt issuance costs
|
8,654
|
|
|
8,819
|
|
|
7,944
|
|
|||
Depreciation and amortization
|
225,264
|
|
|
176,727
|
|
|
140,152
|
|
|||
Deferred income tax expense (benefit)
|
115,689
|
|
|
46,303
|
|
|
(492
|
)
|
|||
Loss on disposal of assets
|
17,350
|
|
|
9,580
|
|
|
4,168
|
|
|||
Lease termination costs
|
—
|
|
|
—
|
|
|
12,629
|
|
|||
Special charges, non-operating
|
—
|
|
|
90,357
|
|
|
—
|
|
|||
Changes in operating assets and liabilities:
|
|
|
|
|
|
||||||
Accounts receivable, net
|
(26,147
|
)
|
|
1,674
|
|
|
(8,134
|
)
|
|||
Aircraft maintenance deposits, net
|
22,453
|
|
|
14,019
|
|
|
(37,930
|
)
|
|||
Long-term deposits and other assets
|
14,999
|
|
|
(4,803
|
)
|
|
(50,951
|
)
|
|||
Deferred heavy maintenance, net
|
(175,957
|
)
|
|
(190,381
|
)
|
|
(78,237
|
)
|
|||
Income tax receivable
|
(21,013
|
)
|
|
69,844
|
|
|
(69,844
|
)
|
|||
Prepaid income taxes
|
1,431
|
|
|
—
|
|
|
—
|
|
|||
Accounts payable
|
569
|
|
|
15,317
|
|
|
6,030
|
|
|||
Air traffic liability
|
23,429
|
|
|
28,270
|
|
|
43,527
|
|
|||
Other liabilities
|
1,698
|
|
|
74,038
|
|
|
31,672
|
|
|||
Other
|
(822
|
)
|
|
(375
|
)
|
|
380
|
|
|||
Net cash provided by operating activities
|
551,321
|
|
|
506,463
|
|
|
425,240
|
|
|||
Investing activities:
|
|
|
|
|
|
||||||
Purchase of available-for-sale investment securities
|
(122,410
|
)
|
|
(124,430
|
)
|
|
(107,246
|
)
|
|||
Proceeds from the maturity and sale of available-for-sale investment securities
|
120,830
|
|
|
122,947
|
|
|
105,906
|
|
|||
Proceeds from sale of property and equipment
|
—
|
|
|
11,400
|
|
|
—
|
|
|||
Pre-delivery deposits on flight equipment, net of refunds
|
(102,102
|
)
|
|
(177,424
|
)
|
|
(149,477
|
)
|
|||
Capitalized interest
|
(10,774
|
)
|
|
(8,729
|
)
|
|
(12,305
|
)
|
|||
Assets under construction for others
|
(7,936
|
)
|
|
(501
|
)
|
|
—
|
|
|||
Purchase of property and equipment
|
(334,537
|
)
|
|
(606,971
|
)
|
|
(628,881
|
)
|
|||
Net cash used in investing activities
|
(456,929
|
)
|
|
(783,708
|
)
|
|
(792,003
|
)
|
|||
Financing activities:
|
|
|
|
|
|
||||||
Proceeds from issuance of long-term debt
|
225,891
|
|
|
832,099
|
|
|
629,725
|
|
|||
Proceeds from stock options exercised
|
1
|
|
|
51
|
|
|
45
|
|
|||
Payments on debt obligations
|
(246,783
|
)
|
|
(137,275
|
)
|
|
(102,313
|
)
|
|||
Payments on finance lease obligations
|
(96,547
|
)
|
|
(205,720
|
)
|
|
(425
|
)
|
|||
Reimbursement for assets under construction for others
|
5,618
|
|
|
501
|
|
|
—
|
|
|||
Repurchase of common stock
|
(5,439
|
)
|
|
(1,162
|
)
|
|
(46,580
|
)
|
|||
Debt issuance costs
|
(2,909
|
)
|
|
(7,365
|
)
|
|
(13,740
|
)
|
|||
Net cash (used in) provided by financing activities
|
(120,168
|
)
|
|
481,129
|
|
|
466,712
|
|
|||
Net increase (decrease) in cash and cash equivalents
|
(25,776
|
)
|
|
203,884
|
|
|
99,949
|
|
|||
Cash and cash equivalents at beginning of period
|
1,004,733
|
|
|
800,849
|
|
|
700,900
|
|
|||
Cash and cash equivalents at end of period
|
$
|
978,957
|
|
|
$
|
1,004,733
|
|
|
$
|
800,849
|
|
Supplemental disclosures
|
|
|
|
|
|
||||||
Cash payments for:
|
|
|
|
|
|
||||||
Interest, net of capitalized interest
|
$
|
80,254
|
|
|
$
|
65,123
|
|
|
$
|
37,902
|
|
Income taxes paid (received), net
|
$
|
5,843
|
|
|
$
|
(73,489
|
)
|
|
$
|
5,826
|
|
Cash paid for amounts included in the measurement of lease liabilities:
|
|
|
|
|
|
||||||
Operating cash flows for operating leases (1)
|
$
|
191,004
|
|
|
—
|
|
|
—
|
|
||
Financing cash flows for finance leases (1)
|
$
|
674
|
|
|
—
|
|
|
—
|
|
||
Non-cash transactions:
|
|
|
|
|
|
||||||
Capital expenditures funded by finance lease borrowings
|
$
|
45,608
|
|
|
$
|
987
|
|
|
$
|
1,370
|
|
Capital expenditures funded by operating lease borrowings (1)
|
$
|
569,948
|
|
|
—
|
|
|
—
|
|
|
Common Stock
|
|
Additional Paid-In Capital
|
|
Treasury Stock
|
|
Retained Earnings
|
|
Accumulated Other Comprehensive Income (Loss)
|
|
Total
|
||||||||||||
Balance at December 31, 2016
|
$
|
7
|
|
|
$
|
551,004
|
|
|
$
|
(218,692
|
)
|
|
$
|
1,054,210
|
|
|
$
|
(1,345
|
)
|
|
$
|
1,385,184
|
|
Share-based compensation
|
—
|
|
|
8,522
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
8,522
|
|
||||||
Repurchase of common stock
|
—
|
|
|
—
|
|
|
(46,580
|
)
|
|
—
|
|
|
—
|
|
|
(46,580
|
)
|
||||||
Proceeds from options exercised
|
—
|
|
|
45
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
45
|
|
||||||
Retirement of treasury stock
|
—
|
|
|
(199,418
|
)
|
|
199,418
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||
Changes in comprehensive income
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(119
|
)
|
|
(119
|
)
|
||||||
Net income
|
—
|
|
|
—
|
|
|
—
|
|
|
415,522
|
|
|
—
|
|
|
415,522
|
|
||||||
Balance at December 31, 2017
|
$
|
7
|
|
|
$
|
360,153
|
|
|
$
|
(65,854
|
)
|
|
$
|
1,469,732
|
|
|
$
|
(1,464
|
)
|
|
$
|
1,762,574
|
|
Share-based compensation
|
—
|
|
|
11,021
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
11,021
|
|
||||||
Repurchase of common stock
|
—
|
|
|
—
|
|
|
(1,162
|
)
|
|
—
|
|
|
—
|
|
|
(1,162
|
)
|
||||||
Proceeds from options exercised
|
—
|
|
|
51
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
51
|
|
||||||
Changes in comprehensive income
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
271
|
|
|
271
|
|
||||||
Net income
|
—
|
|
|
—
|
|
|
—
|
|
|
155,749
|
|
|
—
|
|
|
155,749
|
|
||||||
Balance at December 31, 2018
|
$
|
7
|
|
|
$
|
371,225
|
|
|
$
|
(67,016
|
)
|
|
$
|
1,625,481
|
|
|
$
|
(1,193
|
)
|
|
$
|
1,928,504
|
|
Effect of ASU No. 2016-02 implementation (refer to Note 2)
|
—
|
|
|
—
|
|
|
—
|
|
|
(5,549
|
)
|
|
—
|
|
|
(5,549
|
)
|
||||||
Share-based compensation
|
—
|
|
|
8,154
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
8,154
|
|
||||||
Repurchase of common stock
|
—
|
|
|
—
|
|
|
(5,439
|
)
|
|
—
|
|
|
—
|
|
|
(5,439
|
)
|
||||||
Proceeds from options exercised
|
—
|
|
|
1
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1
|
|
||||||
Changes in comprehensive income
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
406
|
|
|
406
|
|
||||||
Net income
|
—
|
|
|
—
|
|
|
—
|
|
|
335,255
|
|
|
—
|
|
|
335,255
|
|
||||||
Balance at December 31, 2019
|
$
|
7
|
|
|
$
|
379,380
|
|
|
$
|
(72,455
|
)
|
|
$
|
1,955,187
|
|
|
$
|
(787
|
)
|
|
$
|
2,261,332
|
|
1.
|
Summary of Significant Accounting Policies
|
|
Estimated Useful Life
|
Aircraft, engines and flight simulators
|
25 years
|
Spare rotables and flight assemblies
|
7 to 15 years
|
Other equipment and vehicles
|
5 to 7 years
|
Internal use software
|
3 to 10 years
|
Finance leases
|
Lease term or estimated useful life of the asset
|
Leasehold improvements
|
Lesser of lease term or estimated useful life of the improvement
|
Buildings
|
Lesser of lease term or 30 years
|
|
Year Ended December 31,
|
||||||||||
|
2019
|
|
2018
|
|
2017
|
||||||
|
(in thousands)
|
||||||||||
Depreciation
|
$
|
155,326
|
|
|
$
|
129,412
|
|
|
$
|
83,154
|
|
Amortization of heavy maintenance
|
63,364
|
|
|
41,286
|
|
|
53,855
|
|
|||
Amortization of capitalized software
|
6,574
|
|
|
6,029
|
|
|
3,143
|
|
|||
Total depreciation and amortization
|
$
|
225,264
|
|
|
$
|
176,727
|
|
|
$
|
140,152
|
|
|
|
Year Ended December 31,
|
||||||||||
Non-fare revenue
|
Recognition method
|
2019
|
|
2018
|
|
2017
|
||||||
|
|
(in thousands)
|
||||||||||
Baggage
|
Time of departure
|
$
|
734,243
|
|
|
$
|
620,154
|
|
|
$
|
488,434
|
|
Passenger usage fee
|
Time of departure
|
669,177
|
|
|
531,459
|
|
|
411,742
|
|
|||
Advance seat selection
|
Time of departure
|
228,876
|
|
|
180,012
|
|
|
131,821
|
|
|||
Other
|
|
238,454
|
|
|
224,283
|
|
|
177,495
|
|
|||
Non-fare revenue
|
|
$
|
1,870,750
|
|
|
$
|
1,555,908
|
|
|
$
|
1,209,492
|
|
|
Consideration received from credit card mile programs
|
|
Portion of proceeds recognized immediately as marketing component
|
||||
Year Ended
|
(in thousands)
|
||||||
December 31, 2019
|
$
|
48,136
|
|
|
$
|
37,151
|
|
December 31, 2018
|
39,194
|
|
|
30,353
|
|
||
December 31, 2017
|
49,453
|
|
|
37,960
|
|
|
Year Ended December 31,
|
||||||||||
|
2019
|
|
2018
|
|
2017
|
||||||
|
(in thousands)
|
||||||||||
Flight hour-based maintenance expense
|
$
|
78,253
|
|
|
$
|
68,039
|
|
|
$
|
54,802
|
|
Non-flight hour-based maintenance expense
|
65,322
|
|
|
61,039
|
|
|
55,637
|
|
|||
Total maintenance, materials and repairs
|
$
|
143,575
|
|
|
$
|
129,078
|
|
|
$
|
110,439
|
|
2.
|
Recent Accounting Developments
|
3.
|
Revenue Disaggregation
|
|
Twelve Months Ended December 31,
|
||||||||||
|
2019
|
|
2018
|
|
2017
|
||||||
|
(in thousands)
|
||||||||||
Operating revenues:
|
|
|
|
|
|
||||||
Fare
|
$
|
1,886,855
|
|
|
$
|
1,704,107
|
|
|
$
|
1,363,395
|
|
Non-fare
|
1,870,750
|
|
|
1,555,908
|
|
|
1,209,492
|
|
|||
Total passenger revenues
|
3,757,605
|
|
|
3,260,015
|
|
|
2,572,887
|
|
|||
Other
|
72,931
|
|
|
63,019
|
|
|
70,665
|
|
|||
Total operating revenues
|
$
|
3,830,536
|
|
|
$
|
3,323,034
|
|
|
$
|
2,643,552
|
|
4.
|
Special Charges
|
5.
|
Loss on Disposal of Assets
|
6.
|
Letters of Credit
|
7.
|
Credit Card Processing Arrangements
|
8.
|
Short-term Investment Securities
|
9.
|
Accrued Liabilities
|
|
As of December 31,
|
||||||
|
2019
|
|
2018
|
||||
|
(in thousands)
|
||||||
Salaries and wages
|
$
|
89,163
|
|
|
$
|
82,900
|
|
Airport obligations
|
80,134
|
|
|
52,029
|
|
||
Federal excise and other passenger taxes and fees payable
|
65,312
|
|
|
60,604
|
|
||
Aircraft maintenance
|
38,099
|
|
|
59,805
|
|
||
Fuel
|
28,510
|
|
|
25,368
|
|
||
Aircraft and facility lease obligations
|
20,656
|
|
|
15,149
|
|
||
Interest payable
|
16,941
|
|
|
18,086
|
|
||
Other
|
34,706
|
|
|
25,736
|
|
||
Other current liabilities
|
$
|
373,521
|
|
|
$
|
339,677
|
|
10.
|
Common Stock and Preferred Stock
|
11.
|
Stock-Based Compensation
|
|
Number of Shares
|
|
Weighted-Average
Grant Date Fair Value ($) |
||
Outstanding at December 31, 2018
|
297,797
|
|
|
47.95
|
|
Granted
|
148,120
|
|
|
53.41
|
|
Vested
|
(97,095
|
)
|
|
48.97
|
|
Forfeited
|
(15,856
|
)
|
|
53.00
|
|
Outstanding at December 31, 2019
|
332,966
|
|
|
49.84
|
|
|
Weighted-Average at Grant Date for Twelve Months Ended December 31, 2019
|
|
Weighted-Average at Grant Date for Twelve Months Ended December 31, 2018
|
|
||
Expected volatility factor
|
0.38
|
|
|
0.39
|
|
|
Risk free interest rate
|
2.50
|
|
%
|
2.11
|
|
%
|
Expected term (in years)
|
2.97
|
|
|
2.96
|
|
|
Expected dividend yield
|
—
|
|
%
|
—
|
|
%
|
|
Number of Awards
|
|
Weighted-Average Fair Value at Grant Date ($)
|
||
Outstanding at December 31, 2018
|
82,907
|
|
|
53.92
|
|
Granted
|
50,293
|
|
|
70.77
|
|
Vested
|
(29,293
|
)
|
|
56.84
|
|
Forfeited
|
(7,748
|
)
|
|
57.15
|
|
Outstanding at December 31, 2019
|
96,159
|
|
|
61.58
|
|
|
Number of Awards
|
|
Weighted-Average Fair Value at Grant Date ($)
|
||
Outstanding at December 31, 2018
|
41,454
|
|
|
49.81
|
|
Granted
|
24,861
|
|
|
60.11
|
|
Vested
|
(14,648
|
)
|
|
55.50
|
|
Forfeited
|
(3,873
|
)
|
|
52.10
|
|
Outstanding at December 31, 2019
|
47,794
|
|
|
53.24
|
|
12.
|
Earnings per Share
|
|
Year Ended December 31,
|
||||||||||
2019
|
|
2018
|
|
2017
|
|||||||
(in thousands, except per-share amounts)
|
|||||||||||
Numerator:
|
|
|
|
|
|
||||||
Net income (1)
|
$
|
335,255
|
|
|
$
|
155,749
|
|
|
$
|
415,522
|
|
Denominator:
|
|
|
|
|
|
||||||
Weighted-average shares outstanding, basic
|
68,429
|
|
|
68,249
|
|
|
69,221
|
|
|||
Effect of dilutive stock awards
|
130
|
|
|
182
|
|
|
156
|
|
|||
Adjusted weighted-average shares outstanding, diluted
|
68,559
|
|
|
68,431
|
|
|
69,377
|
|
|||
Earnings per Share:
|
|
|
|
|
|
||||||
Basic earnings per common share (1)
|
$
|
4.90
|
|
|
$
|
2.28
|
|
|
$
|
6.00
|
|
Diluted earnings per common share (1)
|
$
|
4.89
|
|
|
$
|
2.28
|
|
|
$
|
5.99
|
|
|
|
|
|
|
|
||||||
Anti-dilutive weighted-average shares
|
143
|
|
|
145
|
|
|
85
|
|
13.
|
Debt and Other Obligations
|
|
|
As of
|
||||||||||||
|
December 31, 2019
|
|
December 31, 2018
|
|
December 31, 2019
|
|
December 31, 2018
|
|||||||
|
|
(in millions)
|
|
(weighted-average interest rates)
|
||||||||||
Fixed-rate senior term loans due through 2027
|
|
$
|
296.1
|
|
|
$
|
382.4
|
|
|
4.02
|
%
|
|
4.10
|
%
|
Fixed-rate junior term loans due through 2022
|
|
—
|
|
|
31.1
|
|
|
N/A
|
|
|
6.90
|
%
|
||
Fixed-rate loans due through 2030
|
|
778.2
|
|
|
625.1
|
|
|
3.70
|
%
|
|
3.88
|
%
|
||
Fixed-rate class A 2015-1 EETC due through 2028
|
|
348.6
|
|
|
378.6
|
|
|
4.10
|
%
|
|
4.10
|
%
|
||
Fixed-rate class B 2015-1 EETC due through 2024
|
|
72.0
|
|
|
80.0
|
|
|
4.45
|
%
|
|
4.45
|
%
|
||
Fixed-rate class C 2015-1 EETC due through 2023
|
|
98.1
|
|
|
109.5
|
|
|
4.93
|
%
|
|
4.93
|
%
|
||
Fixed-rate class AA 2017-1 EETC due through 2030
|
|
228.4
|
|
|
242.5
|
|
|
3.38
|
%
|
|
3.38
|
%
|
||
Fixed-rate class A 2017-1 EETC due through 2030
|
|
76.1
|
|
|
80.8
|
|
|
3.65
|
%
|
|
3.65
|
%
|
||
Fixed-rate class B 2017-1 EETC due through 2026
|
|
70.6
|
|
|
83.7
|
|
|
3.80
|
%
|
|
3.80
|
%
|
||
Fixed-rate class C 2017-1 EETC due through 2023
|
|
85.5
|
|
|
85.5
|
|
|
5.11
|
%
|
|
5.11
|
%
|
||
Revolving credit facility due in 2021
|
|
160.0
|
|
|
135.3
|
|
|
3.12
|
%
|
|
3.72
|
%
|
||
Long-term debt
|
|
$
|
2,213.6
|
|
|
$
|
2,234.5
|
|
|
|
|
|
||
Less current maturities
|
|
214.0
|
|
|
162.8
|
|
|
|
|
|
||||
Less unamortized discount, net
|
|
40.4
|
|
|
47.7
|
|
|
|
|
|
||||
Total
|
|
$
|
1,959.2
|
|
|
$
|
2,024.0
|
|
|
|
|
|
|
|
December 31, 2019
|
||
|
|
(in millions)
|
||
2020
|
|
$
|
222.1
|
|
2021
|
|
273.8
|
|
|
2022
|
|
167.7
|
|
|
2023
|
|
310.1
|
|
|
2024
|
|
195.5
|
|
|
2025 and beyond
|
|
1,044.4
|
|
|
Total debt principal payments
|
|
$
|
2,213.6
|
|
|
Year Ended December 31,
|
||||||
2019
|
|
2018
|
|||||
|
(in thousands)
|
||||||
Fixed-rate senior term loans
|
$
|
15,225
|
|
|
$
|
16,869
|
|
Fixed-rate junior term loans
|
1,811
|
|
|
2,475
|
|
||
Fixed-rate term loans
|
25,828
|
|
|
19,615
|
|
||
Class A 2015-1 EETC
|
14,894
|
|
|
16,138
|
|
||
Class B 2015-1 EETC
|
3,377
|
|
|
3,781
|
|
||
Class C 2015-1 EETC
|
5,117
|
|
|
3,575
|
|
||
Class AA 2017-1 EETC
|
7,887
|
|
|
6,026
|
|
||
Class A 2017-1 EETC
|
2,843
|
|
|
2,172
|
|
||
Class B 2017-1 EETC
|
2,870
|
|
|
2,420
|
|
||
Class C 2017-1 EETC
|
4,367
|
|
|
2,478
|
|
||
Revolving credit facility
|
5,792
|
|
|
793
|
|
||
Finance leases
|
408
|
|
|
104
|
|
||
Commitment fees and other
|
2,217
|
|
|
262
|
|
||
Amortization of deferred financing costs
|
8,714
|
|
|
7,069
|
|
||
Total
|
$
|
101,350
|
|
|
$
|
83,777
|
|
14.
|
Leases and Aircraft Maintenance Deposits
|
|
|
Finance Leases
|
|
Operating Leases
|
|
Total Operating and Finance Lease Obligations
|
||||||||||||||
|
|
|
Aircraft and Spare Engine Leases
|
|
Property Facility Leases
|
|
Other
|
|
||||||||||||
|
|
(in thousands)
|
||||||||||||||||||
2020
|
|
$
|
44,980
|
|
|
$
|
192,937
|
|
|
$
|
3,544
|
|
|
$
|
517
|
|
|
$
|
241,978
|
|
2021
|
|
606
|
|
|
192,539
|
|
|
3,532
|
|
|
—
|
|
|
196,677
|
|
|||||
2022
|
|
578
|
|
|
193,616
|
|
|
3,221
|
|
|
—
|
|
|
197,415
|
|
|||||
2023
|
|
202
|
|
|
181,667
|
|
|
2,570
|
|
|
—
|
|
|
184,439
|
|
|||||
2024
|
|
—
|
|
|
159,668
|
|
|
2,046
|
|
|
—
|
|
|
161,714
|
|
|||||
2025 and thereafter
|
|
—
|
|
|
921,721
|
|
|
138,696
|
|
|
—
|
|
|
1,060,417
|
|
|||||
Total minimum lease payments
|
|
$
|
46,366
|
|
|
$
|
1,842,148
|
|
|
$
|
153,609
|
|
|
$
|
517
|
|
|
$
|
2,042,640
|
|
Less amount representing interest
|
|
285
|
|
|
526,760
|
|
|
130,825
|
|
|
13
|
|
|
657,883
|
|
|||||
Present value of minimum lease payments
|
|
$
|
46,081
|
|
|
$
|
1,315,388
|
|
|
$
|
22,784
|
|
|
$
|
504
|
|
|
$
|
1,384,757
|
|
Less current portion
|
|
44,796
|
|
|
117,861
|
|
|
2,297
|
|
|
504
|
|
|
165,458
|
|
|||||
Long-term portion
|
|
$
|
1,285
|
|
|
$
|
1,197,527
|
|
|
$
|
20,487
|
|
|
$
|
—
|
|
|
$
|
1,219,299
|
|
|
Year ended December 31. 2019
|
||
|
(in thousands)
|
||
Finance lease cost
|
|
||
Amortization of leased assets
|
$
|
998
|
|
Interest of lease liabilities
|
674
|
|
|
Operating lease cost
|
|
||
Operating lease cost (1)
|
179,959
|
|
|
Short-term lease cost (1)
|
5,144
|
|
|
Variable lease cost (1)
|
140,417
|
|
|
Total lease cost
|
$
|
327,192
|
|
|
December 31, 2019
|
|
Weighted-average remaining lease term
|
|
|
Operating leases
|
13.0 years
|
|
Finance leases
|
0.1 years
|
|
Weighted-average discount rate
|
|
|
Operating leases
|
5.86
|
%
|
Finance leases
|
2.46
|
%
|
15.
|
Financial Instruments and Risk Management
|
16.
|
Defined Contribution 401(k) Plan
|
17.
|
Income Taxes
|
|
Year Ended December 31,
|
||||||||||
|
2019
|
|
2018
|
|
2017
|
||||||
|
(in thousands)
|
||||||||||
Current:
|
|
|
|
|
|
||||||
Federal
|
$
|
(22,429
|
)
|
|
$
|
(2,178
|
)
|
|
$
|
(68,601
|
)
|
State and local
|
1,218
|
|
|
410
|
|
|
515
|
|
|||
Foreign
|
6,693
|
|
|
4,692
|
|
|
2,742
|
|
|||
Total current expense (benefit)
|
(14,518
|
)
|
|
2,924
|
|
|
(65,344
|
)
|
|||
Deferred:
|
|
|
|
|
|
||||||
Federal
|
106,703
|
|
|
42,246
|
|
|
(9,349
|
)
|
|||
State and local
|
8,986
|
|
|
4,057
|
|
|
8,857
|
|
|||
Total deferred expense (benefit)
|
115,689
|
|
|
46,303
|
|
|
(492
|
)
|
|||
Total income tax expense (benefit)
|
$
|
101,171
|
|
|
$
|
49,227
|
|
|
$
|
(65,836
|
)
|
|
Year Ended December 31,
|
|||||||
|
2019
|
|
2018
|
|
2017
|
|||
Expected provision at federal statutory tax rate
|
21.0
|
%
|
|
21.0
|
%
|
|
35.0
|
%
|
State tax expense, net of federal benefit
|
1.8
|
%
|
|
1.7
|
%
|
|
1.7
|
%
|
Revaluation of deferred taxes
|
(2.1
|
)%
|
|
—
|
%
|
|
(56.3
|
)%
|
Other
|
2.5
|
%
|
|
1.3
|
%
|
|
0.7
|
%
|
Total income tax expense (benefit)
|
23.2
|
%
|
|
24.0
|
%
|
|
(18.9
|
)%
|
|
December 31,
|
||||||
|
2019
|
|
2018
|
||||
|
(in thousands)
|
||||||
Deferred tax assets:
|
|
|
|
||||
Income tax credits
|
$
|
9,632
|
|
|
$
|
10,004
|
|
Net operating losses
|
13,604
|
|
|
155,670
|
|
||
Deferred revenue
|
8,824
|
|
|
6,824
|
|
||
Nondeductible accruals
|
14,133
|
|
|
14,691
|
|
||
Deferred manufacturing credits
|
2,813
|
|
|
—
|
|
||
Accrued maintenance
|
1,668
|
|
|
2,168
|
|
||
Equity compensation
|
2,851
|
|
|
2,592
|
|
||
Operating lease liability
|
305,161
|
|
|
—
|
|
||
Other
|
482
|
|
|
5,262
|
|
||
Valuation allowance
|
(1,746
|
)
|
|
(254
|
)
|
||
Deferred tax assets
|
357,422
|
|
|
196,957
|
|
||
Deferred tax liabilities:
|
|
|
|
||||
Deferred gain (loss) on leases, net
|
—
|
|
|
1,672
|
|
||
Accrued rent
|
—
|
|
|
6,068
|
|
||
Prepaid expenses
|
1,120
|
|
|
793
|
|
||
Property, plant and equipment
|
430,523
|
|
|
481,847
|
|
||
Deferred financing costs
|
154
|
|
|
189
|
|
||
Accrued aircraft and engine maintenance
|
84,479
|
|
|
61,529
|
|
||
Right-of-use asset
|
310,438
|
|
|
—
|
|
||
Deferred tax liabilities
|
826,714
|
|
|
552,098
|
|
||
Net deferred tax assets (liabilities)
|
$
|
(469,292
|
)
|
|
$
|
(355,141
|
)
|
18.
|
Commitments and Contingencies
|
Employee Groups
|
|
Representative
|
|
Amendable Date
|
|
Percentage of Workforce
|
Pilots
|
|
Air Line Pilots Association, International (ALPA)
|
|
February 2023
|
|
27%
|
Flight Attendants
|
|
Association of Flight Attendants (AFA-CWA)
|
|
May 2021
|
|
47%
|
Dispatchers
|
|
Professional Airline Flight Control Association (PAFCA)
|
|
October 2023
|
|
1%
|
Ramp Service Agents
|
|
International Association of Machinists and Aerospace Workers (IAMAW)
|
|
June 2020
|
|
3%
|
Passenger Service Agents
|
|
Transport Workers Union of America (TWU)
|
|
NA
|
|
3%
|
19.
|
Fair Value Measurements
|
|
As of December 31,
|
|
|
||||||||||||||
|
2019
|
|
2018
|
|
|
||||||||||||
|
Carrying Value
|
|
Estimated Fair Value
|
|
Carrying Value
|
|
Estimated Fair Value
|
|
Fair value level hierarchy
|
||||||||
|
(in millions)
|
|
|
||||||||||||||
Fixed-rate senior term loans
|
$
|
296.1
|
|
|
$
|
296.4
|
|
|
$
|
382.4
|
|
|
$
|
373.6
|
|
|
Level 3
|
Fixed-rate junior term loans
|
—
|
|
|
—
|
|
|
31.1
|
|
|
31.1
|
|
|
Level 3
|
||||
Fixed-rate term loans
|
778.2
|
|
|
823.6
|
|
|
625.1
|
|
|
600.1
|
|
|
Level 3
|
||||
2015-1 EETC Class A
|
348.6
|
|
|
372.2
|
|
|
378.6
|
|
|
374.8
|
|
|
Level 2
|
||||
2015-1 EETC Class B
|
72.0
|
|
|
74.5
|
|
|
80.0
|
|
|
78.1
|
|
|
Level 2
|
||||
2015-1 EETC Class C
|
98.1
|
|
|
100.5
|
|
|
109.5
|
|
|
107.9
|
|
|
Level 2
|
||||
2017-1 EETC Class AA
|
228.4
|
|
|
237.0
|
|
|
242.5
|
|
|
228.8
|
|
|
Level 2
|
||||
2017-1 EETC Class A
|
76.1
|
|
|
78.8
|
|
|
80.8
|
|
|
76.6
|
|
|
Level 2
|
||||
2017-1 EETC Class B
|
70.6
|
|
|
72.0
|
|
|
83.7
|
|
|
79.1
|
|
|
Level 2
|
||||
2017-1 EETC Class C
|
85.5
|
|
|
88.0
|
|
|
85.5
|
|
|
84.2
|
|
|
Level 2
|
||||
Revolving credit facility
|
160.0
|
|
|
160.0
|
|
|
135.3
|
|
|
135.3
|
|
|
Level 3
|
||||
Total long-term debt
|
$
|
2,213.6
|
|
|
$
|
2,303.0
|
|
|
$
|
2,234.5
|
|
|
$
|
2,169.6
|
|
|
|
|
Fair Value Measurements as of December 31, 2019
|
||||||||||||||
|
Total
|
|
Level
1 |
|
Level
2 |
|
Level
3 |
||||||||
|
(in millions)
|
||||||||||||||
Cash and cash equivalents
|
$
|
979.0
|
|
|
$
|
979.0
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Short-term investment securities
|
105.3
|
|
|
105.3
|
|
|
—
|
|
|
—
|
|
||||
Assets held for sale
|
2.3
|
|
|
—
|
|
|
—
|
|
|
2.3
|
|
||||
Total assets
|
$
|
1,086.6
|
|
|
$
|
1,084.3
|
|
|
$
|
—
|
|
|
$
|
2.3
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Total liabilities
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
Fair Value Measurements as of December 31, 2018
|
||||||||||||||
|
Total
|
|
Level
1 |
|
Level
2 |
|
Level
3 |
||||||||
|
(in millions)
|
||||||||||||||
Cash and cash equivalents
|
$
|
1,004.7
|
|
|
$
|
1,004.7
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Short-term investment securities
|
102.8
|
|
|
102.8
|
|
|
—
|
|
|
—
|
|
||||
Total assets
|
$
|
1,107.5
|
|
|
$
|
1,107.5
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Total liabilities
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
Assets Held for Sale Activity for the Twelve Months Ended December 31, 2019
|
||
|
(in millions)
|
||
Balance at December 31, 2018
|
$
|
—
|
|
Purchases
|
5.4
|
|
|
Sales
|
—
|
|
|
Total realized or unrealized gains (losses) included in earnings, net
|
(3.1
|
)
|
|
Balance at December 31, 2019
|
$
|
2.3
|
|
20.
|
Operating Segments and Related Disclosures
|
|
2019
|
|
2018
|
|
2017
|
||||||
|
(in millions)
|
||||||||||
DOT—Domestic
|
$
|
3,462.8
|
|
|
$
|
2,990.7
|
|
|
$
|
2,432.1
|
|
DOT—Latin America and Caribbean
|
367.7
|
|
|
332.3
|
|
|
211.5
|
|
|||
Total
|
$
|
3,830.5
|
|
|
$
|
3,323.0
|
|
|
$
|
2,643.6
|
|
21.
|
Quarterly Financial Data (Unaudited)
|
|
|
Three Months Ended
|
||||||||||||||
|
|
March 31
|
|
June 30
|
|
September 30
|
|
December 31
|
||||||||
|
|
(in thousands, except per-share amounts)
|
||||||||||||||
2019
|
|
|
|
|
|
|
|
|
||||||||
Operating revenue
|
|
$
|
855,796
|
|
|
$
|
1,012,956
|
|
|
$
|
991,968
|
|
|
$
|
969,816
|
|
Operating income
|
|
87,804
|
|
|
163,938
|
|
|
124,681
|
|
|
124,624
|
|
||||
Net income
|
|
56,076
|
|
|
114,501
|
|
|
83,464
|
|
|
81,214
|
|
||||
Basic earnings per share
|
|
0.82
|
|
|
1.67
|
|
|
1.22
|
|
|
1.19
|
|
||||
Diluted earnings per share
|
|
0.82
|
|
|
1.67
|
|
|
1.22
|
|
|
1.18
|
|
||||
|
|
|
|
|
|
|
|
|
||||||||
2018
|
|
|
|
|
|
|
|
|
||||||||
Operating revenue
|
|
$
|
704,138
|
|
|
$
|
851,771
|
|
|
$
|
904,330
|
|
|
$
|
862,795
|
|
Operating income (loss)
|
|
(38,797
|
)
|
|
108,521
|
|
|
145,125
|
|
|
136,065
|
|
||||
Net income (loss)
|
|
(44,922
|
)
|
|
11,254
|
|
|
97,480
|
|
|
91,937
|
|
||||
Basic earnings (loss) per share
|
|
(0.66
|
)
|
|
0.16
|
|
|
1.43
|
|
|
1.35
|
|
||||
Diluted earnings (loss) per share
|
|
(0.66
|
)
|
|
0.16
|
|
|
1.42
|
|
|
1.34
|
|
22.
|
Restatement of Statements of Cash Flows
|
|
Year Ended December 31, 2019
|
|||||||
|
(in thousands)
|
|||||||
|
As Previously Reported
|
|
Correction
|
|
As Restated
|
|||
Statements of Cash Flows
|
|
|
|
|
|
|||
Operating activities:
|
|
|
|
|
|
|||
Other liabilities
|
(140,402
|
)
|
|
142,100
|
|
|
1,698
|
|
Net cash provided by operating activities
|
409,221
|
|
|
142,100
|
|
|
551,321
|
|
Investing activities:
|
|
|
|
|
|
|||
Purchase of property and equipment
|
(192,437
|
)
|
|
(142,100
|
)
|
|
(334,537
|
)
|
Net cash used in investing activities
|
(314,829
|
)
|
|
(142,100
|
)
|
|
(456,929
|
)
|
23.
|
Subsequent Events
|
•
|
Pursuing additional financing secured by the Company's unencumbered assets, including the Revolving Credit Facility (defined below);
|
•
|
Suspending $50 million to $75 million of planned capital spending related to certain non-aircraft capital projects;
|
•
|
Reducing planned non-fuel operating costs by $20 million to $30 million, excluding savings related to reduced capacity;
|
•
|
Freezing hiring across the Company except to fill essential roles;
|
•
|
Engaging in discussions with the Company's significant stakeholders and vendors regarding financial support or contract adjustments during this transition period;
|
•
|
Evaluating the additional support in the CARES Act, approved on March 27, 2020, to protect the U.S. airline industry, its employees and many other stakeholders. The Company has applied for the payroll protection support and expects to receive approximately $330 million.
|
|
|
Recoverability of aircraft maintenance deposits and accrual of lease return costs
|
Description of the Matter
|
|
At December 31, 2019, the Company recorded $170.6 million of aircraft maintenance deposits. As explained in Notes 1 and 14 to the financial statements, some of the Company’s aircraft and engine master lease agreements require the payment of maintenance reserves to aircraft lessors to be held as collateral in advance of performance of major maintenance activities. These lease agreements generally provide that maintenance reserves are reimbursable to the Company upon completion of the maintenance event. Maintenance reserve payments that are substantively and contractually related to the maintenance of the leased asset are accounted for as aircraft maintenance deposits to the extent they are expected to be recoverable. These lease agreements also often contain provisions that require the Company to return aircraft airframes, engines and other aircraft components to the lessor in a certain condition or pay an amount to the lessor based on the actual return condition. Management assesses the need to accrue lease return costs throughout the year or whenever facts and circumstances warrant an assessment. For the year ended December 31, 2019, the Company recorded $4.8 million of supplemental rent, which is made up of maintenance reserves paid to aircraft lessors that are not probable of being reimbursed, and probable and estimable lease return costs.
Auditing the recoverability of maintenance deposits and the estimate of lease return costs was complex because of the significant judgment involved in determining the timing of future maintenance events.
|
How We Addressed the Matter in Our Audit
|
|
We obtained an understanding, evaluated the design and tested the operating effectiveness of the Company's controls that address the risks of material misstatement relating to the measurement of maintenance deposits and lease return costs. For example, we tested controls over management's review of the estimated timing of future maintenance events.
To test the recoverability of maintenance deposits and the estimate of lease return costs, our audit procedures included, among others, testing the assumptions used and the accuracy and completeness of the underlying data used in the calculations. For example, to test the assumptions related to the timing of future maintenance events, we compared projected event timing to the time interval between recently completed maintenance events, regulatory requirements for aircraft and engine maintenance, current and projected utilization metrics for the aircraft, and changes to the fleet plan. We also tested the historical accuracy of management’s forecasts of maintenance events by comparing when recent maintenance events occurred to management’s initial projections.
|
•
|
Enhancing cash flow templates to facilitate the preparation and review of the related cash flows; and
|
•
|
Enhancing roll forward reconciliation and management review controls of the capital expenditures amounts included in the statements of cash flows.
|
Exhibit No.
|
|
Description of Exhibit
|
3.1
|
|
|
|
|
|
3.2
|
|
|
|
|
|
4.1
|
|
|
|
|
|
4.2
|
|
|
|
|
|
4.3
|
|
|
|
|
|
4.4
|
|
|
|
|
|
4.5
|
|
|
|
|
|
4.6
|
|
|
|
|
|
4.7
|
|
|
|
|
|
4.8
|
|
|
|
|
|
4.9
|
|
|
|
|
|
4.10
|
|
|
|
|
|
4.11
|
|
|
|
|
|
4.12
|
|
|
|
|
|
4.13
|
|
|
|
|
|
4.14
|
|
|
|
|
|
4.15
|
|
|
|
|
|
4.16
|
|
|
|
|
|
4.17
|
|
|
|
|
|
4.18
|
|
|
|
|
|
4.19
|
|
|
|
|
|
4.20
|
|
|
|
|
|
4.21
|
|
|
|
|
|
4.22
|
|
|
|
|
|
4.23
|
|
|
|
|
|
4.24
|
|
|
|
|
|
4.25
|
|
|
|
|
|
4.26
|
|
|
|
|
|
4.27
|
|
|
|
|
|
4.28
|
|
|
|
|
|
4.29
|
|
|
|
|
|
4.30
|
|
|
|
|
|
4.31
|
|
|
|
|
|
4.32
|
|
|
|
|
|
4.33
|
|
|
|
|
|
4.34
|
|
|
|
|
|
4.35
|
|
|
|
|
|
4.36
|
|
|
|
|
|
4.37
|
|
|
|
|
|
4.38
|
|
|
|
|
|
4.39
|
|
|
|
|
|
4.40
|
|
|
|
|
|
4.41
|
|
|
|
|
|
4.42
|
|
|
|
|
|
4.43
|
|
|
|
|
|
4.44
|
|
|
|
|
|
4.45
|
|
|
|
|
|
4.46
|
|
|
|
|
|
4.47
|
|
|
|
|
|
4.48
|
|
|
|
|
|
4.49
|
|
|
|
|
|
4.50
|
|
|
|
|
|
4.51**
|
|
|
|
|
10.1**
|
|
|
|
|
|
10.2+
|
|
|
|
|
|
10.3+
|
|
|
|
|
|
10.4†
|
|
|
|
|
|
10.5†
|
|
|
|
|
|
10.6†
|
|
|
|
|
|
10.7†
|
|
|
|
|
|
10.8†
|
|
|
|
|
|
10.9†
|
|
|
|
|
|
10.10†
|
|
|
|
|
|
10.11†
|
|
|
|
|
|
10.12
|
|
|
|
|
|
10.13†
|
|
|
|
|
|
10.14†
|
|
|
|
|
|
10.15†
|
|
|
|
|
|
10.25†
|
|
|
|
|
|
10.26+
|
|
|
|
|
|
10.27+
|
|
|
|
|
|
10.28
|
|
|
|
|
|
10.29
|
|
|
|
|
|
10.30
|
|
|
|
|
|
10.31
|
|
|
|
|
|
10.32
|
|
|
|
|
|
10.33
|
|
|
|
|
|
10.34+
|
|
|
|
|
|
10.35+
|
|
|
|
|
|
|
|
|
10.36
|
|
|
|
|
|
10.37
|
|
|
|
|
|
10.38
|
|
|
|
|
|
10.39
|
|
|
|
|
|
10.40+
|
|
|
|
|
|
10.41
|
|
|
|
|
|
10.42
|
|
|
|
|
|
10.43+
|
|
|
|
|
|
10.44+
|
|
|
|
|
|
10.45+
|
|
|
|
|
|
10.46+
|
|
|
|
|
|
23.1
|
|
|
|
|
|
31.1
|
|
|
|
|
|
31.2
|
|
|
|
|
|
32.1*
|
|
|
|
|
|
101.INS
|
|
XBRL 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.SCH
|
|
XBRL Taxonomy Extension Schema
|
|
|
|
101.CAL
|
|
XBRL Taxonomy Extension Calculation Linkbase
|
|
|
|
101.DEF
|
|
XBRL Taxonomy Extension Definition Linkbase Document.
|
|
|
|
101.LAB
|
|
XBRL Taxonomy Extension Label Linkbase
|
|
|
|
101.PRE
|
|
XBRL Taxonomy Extension Presentation Linkbase
|
†
|
Confidential treatment granted for certain portions of this Exhibit pursuant to Rule 406 under the Securities Act or Rule 24b-2 under the Exchange Act, which portions are omitted and filed separately with the Securities and Exchange Commission.
|
+
|
Indicates a management contract or compensatory plan or arrangement.
|
*
|
Exhibits 32.1 is 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.
|
**
|
Previously filed with the Company's Annual Report on Form 10-K filed on February 5, 2020.
|
|
SPIRIT AIRLINES, INC.
|
||
Date: April 16, 2020
|
By:
|
/s/ Scott M. Haralson
|
|
|
|
Scott M. Haralson
|
|
|
|
Senior Vice President and Chief Financial Officer
|
(1)
|
Registration Statement (Form S-3 No. 333-223127) of Spirit Airlines, Inc. and the related Prospectus
|
(2)
|
Registration Statement (Form S-8 No. 333-206350) pertaining to the 2015 Incentive Award Plan
|
(3)
|
Registration Statement (Form S-8 No. 333-174812) pertaining to the Amended and Restated 2005 Incentive Stock Plan and the 2011 Equity Incentive Award Plan of Spirit Airlines, Inc.
|
Date: April 16, 2020
|
/s/ Edward M. Christie
|
|
Edward M. Christie
|
|
President and Chief Executive Officer
|
Date: April 16, 2020
|
/s/ Scott M. Haralson
|
|
Scott M. Haralson
|
|
Senior Vice President and Chief Financial Officer
|
(i.)
|
the Annual Report on Form 10-K/A of the Company for the year ended December 31, 2019 (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 presents, in all material respects, the financial condition and results of operations of the Company.
|
Date: April 16, 2020
|
/s/ Edward M. Christie
|
|
Edward M. Christie
|
|
President and Chief Executive Officer
|
|
|
Date: April 16, 2020
|
/s/ Scott M. Haralson
|
|
Scott M. Haralson
|
|
Senior Vice President and Chief Financial Officer
|