Air management

SPIRIT AIRLINES, INC. MANAGEMENT REPORT AND ANALYSIS OF FINANCIAL POSITION AND OPERATING RESULTS (Form 10-Q)

We evaluate our financial performance utilizing various accounting principles
generally accepted in the United States of America ("GAAP") and non-GAAP
financial measures, including Adjusted CASM and Adjusted CASM ex-fuel. These
non-GAAP financial measures are provided as supplemental information to the
financial information presented in this quarterly report that is calculated and
presented in accordance with GAAP and these non-GAAP financial measures are
presented because management believes that they supplement or enhance
management's, analysts' and investors' overall understanding of our underlying
financial performance and trends and facilitate comparisons among current, past
and future periods.

Because the non-GAAP financial measures are not calculated in accordance with
GAAP, they should not be considered superior to and are not intended to be
considered in isolation or as a substitute for the related GAAP financial
measures presented in this quarterly report and may not be the same as or
comparable to similarly titled measures presented by other companies due to
possible differences in the method of calculation and in the items being
adjusted. We encourage investors to review our financial statements and other
filings with the Securities and Exchange Commission in their entirety and not to
rely on any single financial measure.

The information below provides an explanation of certain adjustments reflected
in the non-GAAP financial measures and shows a reconciliation of non-GAAP
financial measures reported in this quarterly report to the most directly
comparable GAAP financial measures. Within the financial tables presented,
certain columns and rows may not add due to the use of rounded numbers. Per unit
amounts presented are calculated from the underlying amounts.

Operating expenses per available seat mile ("CASM") is a common metric used in
the airline industry to measure an airline's cost structure and efficiency. We
exclude loss on disposal of assets, special charges (credits) and accelerated
depreciation to determine Adjusted CASM. We believe that also excluding aircraft
fuel and related taxes ("Adjusted CASM ex-fuel") from certain measures is useful
to investors because it provides an additional measure of management's
performance excluding the effects of a significant cost item over which
management has limited influence and increases comparability with other airlines
that also provide a similar metric. In prior periods, we excluded supplemental
rent adjustments related to the modification of aircraft or engine leases from
Adjusted CASM and Adjusted CASM ex-fuel. However, we no longer exclude
supplemental rent adjustments from our non-GAAP measures. Therefore, 2021
non-GAAP measures have been revised to reflect this change and no longer exclude
previously reported supplemental rent adjustments.

Forward-looking statements

This Quarterly Report on Form 10-Q contains forward-looking statements within
the meaning of Section 27A of the Securities Act of 1933, as amended (the
"Securities Act"), and Section 21E of the Securities Exchange Act of 1934, as
amended (the "Exchange Act"), which are subject to the "safe harbor" created by
those sections. Forward-looking statements are based on our management's beliefs
and assumptions and on information currently available to our management. All
statements other than statements of historical factors are "forward-looking
statements" for purposes of these provisions. In some cases, you can identify
forward-looking statements by terms such as "may," "will," "should," "could,"
"would," "expect," "plan," "anticipate," "believe," "estimate," "project,"
"predict," "potential," and similar expressions intended to identify
forward-looking statements. Such forward-looking statements are subject to
risks, uncertainties and other important factors that could cause actual results
and the timing of certain events to differ materially from future results
expressed or implied by such forward-looking statements. Factors that could
cause or contribute to such differences include, but are not limited to, those
identified below, and those discussed in the section titled "Risk Factors" in
this report and in Item 1A "Risk Factors" in our Annual Report on Form 10-K for
the year ended December 31, 2021 and subsequent Quarterly Reports on Form 10-Q
or Current Reports on Form 8-K. Furthermore, such forward-looking statements
speak only as of the date of this report. Except as required by law, we
undertake no obligation to update any forward-looking statements to reflect
events or circumstances after the date of such statements.

Insight

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

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

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

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


Comparative operating statistics:

The following tables present our operating statistics for the three-month periods ended March 31, 2022 and 2021:


                                                                     Three Months Ended March 31,
                                                                  2022                          2021                 Percent Change
Operating Statistics (unaudited) (A):
Average aircraft                                                        174.9                        157.3                   11.2  %
Aircraft at end of period                                                 176                          159                   10.7  %

Average daily aircraft utilization (hours)                               10.8                          7.6                   42.1  %
Average stage length (miles)                                            1,048                        1,040                    0.8  %

Departures                                                             60,958                       40,002                   52.4  %
Passenger flight segments (PFSs) (thousands)                            8,506                        5,474                   55.4  %
Revenue passenger miles (RPMs) (thousands)                          9,050,034                    5,747,555                   57.5  %
Available seat miles (ASMs) (thousands)                            11,718,896                    7,976,158                   46.9  %
Load factor (%)                                                          77.2  %                      72.1  %                5.1 pts
Fare revenue per passenger flight segment ($)                           49.19                        31.84                   54.5  %
Non-ticket revenue per passenger flight segment ($)                     64.53                        52.43                   23.1  %
Total revenue per passenger flight segment ($)                         113.72                        84.27                   34.9  %
Average yield (cents)                                                   10.69                         8.03                   33.1  %
TRASM (cents)                                                            8.25                         5.78                   42.7  %
CASM (cents)                                                            10.06                         7.07                   42.3  %
Adjusted CASM (cents)                                                    9.83                         9.25                    6.3  %
Adjusted CASM ex-fuel (cents)                                            6.68                         7.46                  (10.5) %
Fuel gallons consumed (thousands)                                     124,916                       80,546                   55.1  %
Average economic fuel cost per gallon ($)                                2.95                         1.77                   66.7  %



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

Summary

As a result of the COVID-19 pandemic, we experienced sharp declines in passenger
demand and bookings beginning in March 2020 that lasted throughout 2020, and to
a lesser extent throughout 2021. During the first quarter of 2022, we have seen
continued improvement in our passenger demand and bookings, which we expect to
continue throughout the remainder of 2022. However, during the first quarter of
2022 and ongoing, the airline industry has experienced a number of adverse
weather events, which combined with increases in Air Traffic Control (ATC)
programs and restrictions, have led to a significant number
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of flight delays and cancellations. We will continue to monitor the impact of
these operational challenges and to adjust our mitigation and operational
strategies accordingly. The situation continues to be fluid and demand and our
resulting capacity may be different than what we currently expect.

Load factor for the first quarter of 2022 was 77.2% as compared to 72.1% for the
same period in the prior year. We experienced an increase in capacity of 46.9%,
period over period, as air travel demand continued to increase compared to the
same period in the prior year. As the COVID-19 pandemic continues to evolve, our
financial and operational outlook remains subject to change.

Merger announcement

On February 5, 2022, Spirit Airlines entered into a Merger Agreement with
Frontier Group Holdings, Inc., a Delaware corporation, and Top Gun Acquisition
Corp., a Delaware corporation and a direct, wholly owned subsidiary of Frontier,
pursuant to which and subject to the terms and conditions therein, Merger Sub
will merge with and into Spirit Airlines, with Spirit Airlines continuing as the
surviving entity. As a result of the Merger, each existing share of Spirit
Airlines' common stock will be converted into the right to receive (i) $2.13 in
cash, without interest and (ii) 1.9126 shares of Frontier Common Stock, par
value $0.001 per share. Upon consummation of the Merger, existing shareholders
of Spirit Airlines will own approximately 48.5% of the outstanding shares of
Frontier on a fully diluted basis.

Completion of the Merger is subject to the satisfaction or waiver of certain
closing conditions, including, among other things, (1) approval of the Merger
Agreement by Spirit Airlines' stockholders, (2) receipt of applicable regulatory
approvals, including approvals from the FCC, FAA and the DOT and the expiration
or early termination of the statutory waiting period under the Hart-Scott-Rodino
Antitrust Improvements Act of 1976, as amended, and other required regulatory
approvals; (3) the absence of any law or order prohibiting the consummation of
the transactions; (4) the effectiveness of the registration statement to be
filed by Frontier and Spirit Airlines with the SEC pursuant to the Merger
Agreement; (5) the authorization and approval for listing on NASDAQ of the
shares of Frontier Common Stock to be issued to holders of Spirit Airlines'
common stock in the Merger; and (6) the absence of any material adverse effect
(as defined in the Merger Agreement) on either Spirit Airlines or Frontier.

The Merger Agreement contains certain customary termination rights for Spirit
Airlines and Frontier, including, without limitation, a right for either party
to terminate if the Merger is not consummated on or before February 5, 2023,
subject to certain extensions if needed to obtain regulatory approvals. Upon the
termination of the Merger Agreement under specified circumstances, Spirit
Airlines will be required to pay Frontier a breakup fee of $94.2 million. The
Merger Agreement also provides the methodology by which certain expenses will be
borne.

On April 5, 2022, we announced that we received an unsolicited proposal from
JetBlue to acquire all of the outstanding shares of Spirit Airlines's common
stock in an all-cash transaction for $33.00 per share. After consulting with
financial and legal advisors, our Board of Directors determined that JetBlue's
proposal could reasonably be likely to lead to a "Superior Proposal" as defined
in our merger agreement with Frontier and evaluated the proposal in accordance
with the terms of the merger agreement.

On May 2, 2022, we announced that our Board of Directors, in consultation with
outside financial and legal advisors, unanimously determined that the
unsolicited proposal received from JetBlue does not constitute a "Superior
Proposal" due to an unacceptable level of deal completion risk. We will continue
to advance toward completing the transaction with Frontier, which is expected to
close in the second half of 2022. The transaction is subject to customary
closing conditions, including completion of the ongoing regulatory review
process and approval of our stockholders.

Summary of results

For the first quarter of 2022, we had a negative operating margin of 21.9%, an
increase of 0.3 percentage points compared to a negative operating margin of
22.2% in the prior year period. We generated a pre-tax loss of $244.0 million
and a net loss of $194.7 million on operating revenues of $967.3 million. For
the first quarter of 2021, we generated a pre-tax loss of $138.2 million and a
net loss of $112.3 million on operating revenues of $461.3 million.

Our Adjusted CASM ex-fuel for the first quarter of 2022 was 6.68 cents compared
to 7.46 cents in the same period in the prior year. The decrease on a per-ASM
basis was primarily due to improved air travel demand, as compared to the prior
year period, which drove a significant increase of 46.9% in ASMs, period over
period. This increase in ASMs drove a decrease in operating expenses on a
per-ASM basis with the greatest impact noted on primarily fixed costs such as
salaries, wages, and benefits expense, depreciation and amortization expense,
landing fees and other rents expense and aircraft rent expense.
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As of March 31, 2022, we had 176 Airbus A320-family aircraft in our fleet
comprised of 31 A319s, 64 A320s, 30 A321s, and 51 A320neos. With the scheduled
delivery of 21 aircraft during the remainder of 2022, we expect to end 2022 with
197 aircraft in our fleet.

Comparison of three months ended March 31, 2022 at three months ended March 31, 2021

Operating Revenues

Operating revenues increased $506.0 million, or 109.7%, to $967.3 million for
the first quarter of 2022, as compared to the first quarter of 2021, primarily
due to an increase in traffic of 57.5%, an increase in average yield of 33.1%
and an increase in load factor of 5.1 pts, year over year, driven by increased
air travel demand as compared to prior year period.

Total revenue per passenger flight segment increased 34.9%, year over year. The
increase in total revenue per passenger flight segment was primarily driven by a
33.1% increase in average yield, period over period. Fare revenue per passenger
flight segment increased 54.5% and non-ticket revenue per passenger flight
segment increased 23.1%. The increase in non-ticket revenue per passenger flight
segment was primarily attributable to increases in change fee revenue, passenger
usage fee, boost-it and bundle-it revenue, seat revenue and bag revenue per
passenger flight segment, as compared to the prior year.

Functionnary costs

Operating expenses increased $615.0 million, or 109.1%, to $1,178.8 million for
the first quarter of 2022 compared to $563.8 million for the first quarter of
2021, primarily due to an increase in operations as reflected by a 57.5%
increase in traffic and 46.9% increase in capacity. We also had a 66.7% increase
in average economic fuel cost per gallon and a 55.1% increase in fuel gallons
consumed, both of which contributed to a $225.7 million increase in aircraft
fuel expense, period over period. In addition, we had $15.6 million in special
charges in the first quarter of 2022 compared to $176.9 million in special
credits during the first quarter of 2021. For additional information, refer to
"Notes to Condensed Consolidated Financial Statements-5. Special Charges
(Credits)."

Aircraft fuel expense includes into-plane fuel expense (defined below) and
realized and unrealized gains and losses associated with our fuel derivative
contracts, if any. Into-plane fuel expense is defined as the price that we
generally pay at the airport, including taxes and fees. Into-plane fuel prices
are affected by the global oil market, refining costs, taxes and fees, which can
vary by region in the United States and other countries where we operate.
Into-plane fuel expense approximates cash paid to the supplier and does not
reflect the effect of any fuel derivatives. We had no activity related to fuel
derivative instruments during the three months ended March 31, 2022 and 2021.

Aircraft fuel expense increased by $225.7 million, or 157.9%, from $142.9
million in the first quarter of 2021 to $368.6 million in the first quarter of
2022. This higher fuel expense, period over period, was due to a 66.7% increase
in average economic fuel cost per gallon and a 55.1% increase in fuel gallons
consumed.

The elements of the evolution of aircraft fuel costs are illustrated in the following table:

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