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Spirit Airlines Reports 3Q 2012 Financial Results  
User currently offlineROSWELL41 From United States of America, joined Aug 2001, 803 posts, RR: 1
Posted (2 years 1 month 2 weeks 5 days 18 hours ago) and read 6710 times:

http://ir.spirit.com/releasedetail.cfm?ReleaseID=717279

Spirit has reported a net profit of $25.2 million dollars for the 3rd quarter 2012. Additional highlights state that company has an 11.8% operating margin. Spirit ends the quarter with $399.1 million dollars in unrestricted cash and no debt on its balance sheet.

Of additional interest is a note that Spirit has signed a Letter of Intent with ILFC for 3 additional used A319s and five A320 NEOs. The first used A319 will show up in December 2012. I guess this may mean growth faster than planned.

48 replies: All unread, showing first 25:
 
User currently offlineDFWHeavy From United States of America, joined Jul 2011, 560 posts, RR: 0
Reply 1, posted (2 years 1 month 2 weeks 5 days 17 hours ago) and read 6715 times:

No Debt.....I love it. Way to go Spirit.


Christopher W Slovacek
User currently offlinewilliam From United States of America, joined Jun 1999, 1347 posts, RR: 0
Reply 2, posted (2 years 1 month 2 weeks 5 days 16 hours ago) and read 6485 times:

No debt and having a strong cash positiion used to be how the majors ran their operations.

Congrats to Spirit. Do they have profit sharing with their employees?


User currently offlinejetfixr757 From Jamaica, joined Jan 2006, 154 posts, RR: 0
Reply 3, posted (2 years 1 month 2 weeks 5 days 16 hours ago) and read 6444 times:

Before you start cheering and popping corks run the registration of random aircraft, I just ran 2 and they belong to leasing companies, that means DEBT, the jets and ground equipment is all on a NOTE, incase you don't know what that means its just like having a huge car loan...Sorry to pop your cherry!
Jet


User currently offlineMaverickM11 From United States of America, joined Apr 2000, 17823 posts, RR: 46
Reply 4, posted (2 years 1 month 2 weeks 5 days 16 hours ago) and read 6441 times:

Compared to AS it's a bit underwhelming; even G4 had a stronger quarter. It's not a bad quarter for NK, I was just expecting better.


E pur si muove -Galileo
User currently offlineRDH3E From United States of America, joined Mar 2011, 1820 posts, RR: 3
Reply 5, posted (2 years 1 month 2 weeks 5 days 16 hours ago) and read 6435 times:

Quoting jetfixr757 (Reply 3):
Before you start cheering and popping corks run the registration of random aircraft, I just ran 2 and they belong to leasing companies, that means DEBT, the jets and ground equipment is all on a NOTE, incase you don't know what that means its just like having a huge car loan...Sorry to pop your cherry!
Jet

I believe a lease is not classified as a LOAN because you are not purchasing the asset. They do have future cash liabilities, but it is non-interest bearing whereas a loan would incur interest.


User currently offlineROSWELL41 From United States of America, joined Aug 2001, 803 posts, RR: 1
Reply 6, posted (2 years 1 month 2 weeks 5 days 16 hours ago) and read 6410 times:

Quoting jetfixr757 (Reply 3):
Before you start cheering and popping corks run the registration of random aircraft, I just ran 2 and they belong to leasing companies, that means DEBT, the jets and ground equipment is all on a NOTE, incase you don't know what that means its just like having a huge car loan...Sorry to pop your cherry!
Jet

No, its not debt according to the accounting laws in the USA.


User currently offlineLAXintl From United States of America, joined May 2000, 26137 posts, RR: 50
Reply 7, posted (2 years 1 month 2 weeks 5 days 15 hours ago) and read 6327 times:

Spirit utilizes operating leases, not capital leases, so no its not considered debt.

Anyhow kudos to Spirit for yet another strong quarter. Love or hate them, their business model seems to work extremely well.

I'll have some notes after the earnings call.



From the desert to the sea, to all of Southern California
User currently offlinejetfixr757 From Jamaica, joined Jan 2006, 154 posts, RR: 0
Reply 8, posted (2 years 1 month 2 weeks 5 days 15 hours ago) and read 6326 times:

Well not saying hooray for them, if you make a payment on a rivet its debt, you DON'T own it, however what the laws say at the end of the day you don't own the asset just stop paying on it and watch It vanish, I have repoed big and small before so again, 3 cheers for them it's a tough industry!
Jet


User currently offlinedtw9 From United States of America, joined Sep 2003, 1173 posts, RR: 2
Reply 9, posted (2 years 1 month 2 weeks 5 days 15 hours ago) and read 6287 times:

Quoting LAXintl (Reply 7):
Spirit utilizes operating leases, not capital leases, so no its not considered debt.

Because Spirit uses operating leases it does not show up on the balance sheet as debt. However it is still "off balance sheet debt". By doing this it makes your debt to equity ratio look better to investors and also helps your borrowing power.


User currently offlineCoronado From United States of America, joined Jun 1999, 1213 posts, RR: 2
Reply 10, posted (2 years 1 month 2 weeks 5 days 15 hours ago) and read 6202 times:
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Lease payments whether operating or capital leases absolutely do include a significant internal calculation for interest within the monthly payment. The fact that it is not broken out does not mean it was not included in the payment. The contrast between lease payments when prevailing interest rates are low (as is generally in the current time frame) compared to when interest rate scenarios are high is quite dramatic.

If you add the your lease payments out over the length of the lease, you will be surprised how much more you paid for ''renting'' that asset than the asset is worth at the beginning of the lease.



The Original Coronado: First CV jet flights RG CV 990 July 1965; DL CV 880 July 1965; Spantax CV990 Feb 1973
User currently offlinehatbutton From United States of America, joined Mar 2005, 1500 posts, RR: 14
Reply 11, posted (2 years 1 month 2 weeks 5 days 15 hours ago) and read 6151 times:

Quoting jetfixr757 (Reply 8):
Well not saying hooray for them, if you make a payment on a rivet its debt, you DON'T own it, however what the laws say at the end of the day you don't own the asset just stop paying on it and watch It vanish, I have repoed big and small before so again, 3 cheers for them it's a tough industry!

Well an operating lease doesn't come with interest payments attached to it. So the lease is part of the normal operating expenses. And their credit rating isn't as negatively affected by the lease like long term debt would be. So as a result their interest expense is almost nothing which is a huge expense for most carriers that goes straight to the bottom line.


User currently offlineusflyguy From United States of America, joined Jan 2012, 1074 posts, RR: 0
Reply 12, posted (2 years 1 month 2 weeks 5 days 14 hours ago) and read 6128 times:

With such good results, maybe they'll sit down with their flight attendant union and negotiate in good faith. Working under a contract signed 10 years ago that became amendable in 2007 is somewhat ridiculous.


My post is my ideas and my opinions only, I do not represent the ideas or opinions of anyone else or company.
User currently offlinesanti319 From Mexico, joined Dec 2005, 405 posts, RR: 0
Reply 13, posted (2 years 1 month 2 weeks 5 days 14 hours ago) and read 6075 times:

Quoting usflyguy (Reply 12):
With such good results, maybe they'll sit down with their flight attendant union and negotiate in good faith. Working under a contract signed 10 years ago that became amendable in 2007 is somewhat ridiculous.

And you know what happened last time when they didn't want to negotiate...


User currently offlineLAXintl From United States of America, joined May 2000, 26137 posts, RR: 50
Reply 14, posted (2 years 1 month 2 weeks 5 days 14 hours ago) and read 5973 times:

Some notes from the earnings call.


FINANCIAL

o Net income $25.2mil
o EBITAR margin 23.9%
o Revenue $342.3mil up 18.6%
o Cost $292.6mil up 19.9% primarily driven by fuel, unusually high network disruptions during summer, and aircraft overhaul bubble.
o ex fuel CASM 6.02 cents. Expect growth will help keep down/lower unit cost into 2013 and beyond. Widening cost advantage to much of industry.
o Average revenue per pax $121.65
o $49.80 of average is non ticket revenue - up 11.5%
o Goal continues to be to continue dropping ticket revenue and increase non-ticket
o Fuel remains unpredictable - about 20% fuel hedged in Q4.
o Very strong cash position - $339.1mil unrestricted at end of Qtr.


TRAFFIC / NETWORK

o Passenger segments up 23.2% year over year
o Load factor 85.9%
o Move from DCA to BWI will offer more schedule flexibility while still keeping foot in DC market.
o Excited about Houston
o Now serve 80% of population of largest 25 metro areas
o Expect to see more "connecting the dots" in the next year as NK becomes established in these metros
o Seeing nice network stimulative effect as they grown nationwide.
o Domestic marketplace offers lots of opportunities especially now due mergers and carrier consolidation.
o Vegas - Mesa example NK will eliminate routes that don't make money. Wont sit around and nurse markets.
o See stable bookings demand for the holidays. Not much visibility into 2013.
o DFW crew base opens December


FLEET

o 42 planes on property at end of quarter.
o 2 A320s due in Q4, 9 more in 2013. 8% unit cost cheaper than A319.
o "Opportunity" to pick up 3 A319s from ILFC - 1 due in December, other 2 in January on short 40-month leases.
o Will add 5 A320NEOs also from ILFC to previously announced NEO orders.
o Seat retrofit program continues in Q4
o Expect higher fleet downtime in 2013 as overahaul checks peak.


OTHER

o "very satisfied" with $9 Fare Club - loyal, smart, value oriented customers
o Looking towards 2013, expect 18-22% growth
o Target 24-26% Ebitar margin for 2013.
o Expect to continue offer customers ever more optional fees. Simple principle - they pay for only what they utilize.
o $100 bag fee is incentive for customers to pay for fee before they get to the gate, to speed boarding process. This is an operation issue, not revenue source. Expect less then 1% of customers to pay. Want to ensure quick boarding, less gate hassles leading to shorter turn times.

=



From the desert to the sea, to all of Southern California
User currently offlineflashmeister From United States of America, joined Apr 2000, 2903 posts, RR: 6
Reply 15, posted (2 years 1 month 2 weeks 5 days 13 hours ago) and read 5855 times:
Support Airliners.net - become a First Class Member!

Quoting LAXintl (Reply 14):
Expect to continue offer customers ever more optional fees. Simple principle - they pay for only what they utilize.

What optional fee could they possibly offer that they don't now?


User currently offlineRDH3E From United States of America, joined Mar 2011, 1820 posts, RR: 3
Reply 16, posted (2 years 1 month 2 weeks 5 days 13 hours ago) and read 5808 times:

Quoting flashmeister (Reply 15):
What optional fee could they possibly offer that they don't now?

Bathroom?


User currently offlinergreenftm From United States of America, joined Jan 2008, 299 posts, RR: 0
Reply 17, posted (2 years 1 month 2 weeks 5 days 12 hours ago) and read 5727 times:

Quoting RDH3E (Reply 16):
What optional fee could they possibly offer that they don't now?

Reading light fee?  


User currently offlineinfiniti329 From United States of America, joined Jul 2012, 821 posts, RR: 0
Reply 18, posted (2 years 1 month 2 weeks 5 days 12 hours ago) and read 5695 times:

Quoting rgreenftm (Reply 17):
Quoting RDH3E (Reply 16):
What optional fee could they possibly offer that they don't now?

A window shade fee?  


User currently offlineLAXintl From United States of America, joined May 2000, 26137 posts, RR: 50
Reply 19, posted (2 years 1 month 2 weeks 5 days 10 hours ago) and read 5534 times:

As Ryanair has stated prior, Spirit similarly want to continue reducing the ticket price to a point where its a rather trivial cost, and let the consumers in ala-catre fashion add in whatever travel options they wish to utilize.

In the last year the average ticket price at Spirit has dropped some $10.



From the desert to the sea, to all of Southern California
User currently offlineAWACSooner From United States of America, joined Jan 2008, 1972 posts, RR: 1
Reply 20, posted (2 years 1 month 2 weeks 5 days 10 hours ago) and read 5478 times:

Wonder how much of this profit was due to ancillary fees?

User currently offlineLAXintl From United States of America, joined May 2000, 26137 posts, RR: 50
Reply 21, posted (2 years 1 month 2 weeks 5 days 10 hours ago) and read 5445 times:

About 40% of earnings are non-ticket revenue.

As I stated earlier, their goal is to reduce their ticket prices so they earn bulk of their money from non ticket price sources.



From the desert to the sea, to all of Southern California
User currently offlineyellowtail From United States of America, joined Jun 2005, 6347 posts, RR: 2
Reply 22, posted (2 years 1 month 2 weeks 5 days 9 hours ago) and read 5354 times:

Quoting LAXintl (Reply 14):
o Excited about Houston

i.e.....IAH-Mexico/LatAmerica here we come!



When in doubt, hold on to your altitude. No-one has ever collided with the sky.
User currently offlineflyboynk From United States of America, joined Jun 2008, 74 posts, RR: 0
Reply 23, posted (2 years 1 month 2 weeks 5 days 8 hours ago) and read 5279 times:

Quoting yellowtail (Reply 22):
Quoting LAXintl (Reply 14):
o Excited about Houston

i.e.....IAH-Mexico/LatAmerica here we come!

You see more growth out of DFW first before IAH.. such as a few more places in Mexico, Central America and Caribbean possible South America.... maybe new destinations such as Belize :P



Flyboynk
User currently offlinerojo From Spain, joined Sep 2000, 2482 posts, RR: 9
Reply 24, posted (2 years 1 month 2 weeks 5 days 8 hours ago) and read 5269 times:

Quoting AWACSooner (Reply 20):
Wonder how much of this profit was due to ancillary fees?

You can do the Math yourserlf:

o Average revenue per pax $121.65
o $49.80 of average is non ticket revenue - up 11.5%

49.80 / 121.65 = 41%


25 flyboynk : What's interesting about the webcast today about earnings etc.. was the leasing of 3 additional A319 aircraft (which the 3 are from the 7 previously r
26 Braniff747SP : No debt? For an airline, it is impressive. Glad to see some are still making money.
27 RCS763AV : Strong numbers by NK! It's good to see the only ULCC in the americas doing great. Now, has anyone heard anything about the proposed and heavily mediat
28 airbuske : forthcoming deliveries between now and January: new A320s : N616NK(MSN5370), N617NK(MSN5387), N618NK(MSN5458) used A319s from ILFC (all ex-Windjet) :
29 AA767LOVER : Folks, sorry to burst your bubbles, yes they have strong showing, but more than they deserve. They also got bad publicity from irrationally delaying p
30 OB1504 : I'm surprised that Spirit will be adding A319s to the fleet, considering that several have already left. Kudos to Spirit for growing so successfully.
31 airbuske : Spirit begins retrofitting it's in service aircraft with FTIS beginning February next year which means a lot of airplanes are going to be down for ex
32 MaverickM11 : They're probably losing money on the ticketed fare, and making it all on the ancillary revenue. The profit is likely almost entirely from the ancilla
33 yellowtail : Now that is doubtful. Simply not enough O&D between DFW and BZE. Would need to rely heavily on Connecting. Except that the average fare at IAH is
34 LAXintl : We'll off course take away 40% of the revenue and they would be losing money. But that is not the point. Spirit would like to eventually whittle down
35 MaverickM11 : The original question was how much of the profit was due to ancillary fees, and arguably the answer is all of it. They've been pulling it back quite
36 drerx7 : NK is in a position to mix things up at IAH...would they monkey wrench the US-MEX route authorities?
37 LAXintl : Well most US-Mexico markets outside of Mexico City allow 3-carrier designations, so even if Spirit secured a designation, should still be room for So
38 ROSWELL41 : I have been wondering the same thing. NK spent a lot of time to gain the necessary approvals for these routes and yet nothing has been announced.
39 silentbob : The original question implies that they follow a more traditional business model. The Spirit model is one that derives much, much more of its revenue
40 Post contains images OB1504 : Pardon my ignorance, but what is FTIS? ...yes. That's their business model. I can't imagine they've made any money off of my constant $20-$60 excursi
41 lightsaber : Has Spirit bought the NEO yet? (Or committed to leases?) Your forgetting opportunity cost. By leasing, Spirit is able to expand faster. By using opera
42 Post contains links LAXintl : Fuel Tank Inerting System Yes 45 from Airbus, and now 5 additional on lease from ILFC http://www.airbus.com/presscentre/pr...family-order-including-4
43 MaverickM11 : I think NK has migrated away from the original FLL hub model. I think it's mostly done, hence the silence on the issue. There's no 'perceived pull-do
44 Post contains images slcdeltarumd11 : Wow someone is trying to ruin the party . Spirit has no debt that is totally true and they have a large amount of cash. They are very strong and coul
45 LAXintl : It was response to analyst question as to why the route got dropped. They simply said it failed to perform, and that they have no problem dropping la
46 CIDFlyer : good to see NK doing good, their future expansion intrigues me. Its crazy to see how they have grown. What does the future hold for them? Will they on
47 OB1504 : Some of their new destinations, like AZA/IWA, CRW, IAG, and PBG would indicate that they're borrowing from G4's playbook as well.
48 LAXintl : I don't think NK cares much if they operate from a major market or small town. While a large city might provide more individual spoke opportunities, N
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