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SPIRIT AIRLINES, INC.
FORM 10-K
(Annual Report)
Filed 02/23/12 for the Period Ending 12/31/11
Address 2800 EXECUTIVE WAY
MIRAMAR, FL 33025
Telephone 954-447-7920
CIK 0001498710
Symbol SAVE
SIC Code 4512 - Air Transportation, Scheduled
Industry Airline
Sector Transportation
Fiscal Year 12/31
http://www.edgar-online.com
© Copyright 2012, EDGAR Online, Inc. All Rights Reserved.
Distribution and use of this document restricted under EDGAR Online, Inc. Terms of Use.

Table of contents

  • Page 1
    ...FORM 10-K (Annual Report) Filed 02/23/12 for the Period Ending 12/31/11 Address Telephone CIK Symbol SIC Code Industry Sector Fiscal Year 2800 EXECUTIVE WAY MIRAMAR, FL 33025 954-447-7920 0001498710 SAVE 4512 - Air Transportation, Scheduled Airline Transportation 12/31 http://www.edgar-online.com...

  • Page 2
    ... or organization) 38-1747023 (I.R.S. Employer Identification No.) 2800 Executive Way Miramar, Florida (Address of principal executive offices) 33025 (Zip Code) (954) 447-7920 (Registrant's telephone number, including area code) Securities registered pursuant to Section 12(b) of the Act: Title...

  • Page 3
    ... computed by reference to the closing sale price of the common stock on the NASDAQ Global Select Market on June 30, 2011, the last trading day of the registrant's most recently completed second fiscal quarter. Shares held by each executive officer, director and by certain persons that own 10 percent...

  • Page 4
    ... Disclosures About Market Risk Item 8. Financial Statements and Supplementary Data Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure Item 9A. Controls and Procedures Item 9B. Other Information PART III Item 10. Directors, Executive Officers and Corporate...

  • Page 5
    ...results or changes in our expectations. ITEM 1. Overview Spirit Airlines is an ultra low-cost, low-fare airline based in Miramar, Florida that provides affordable travel opportunities principally throughout the domestic United States, the Caribbean and Latin America. Our targeted growth markets have...

  • Page 6
    ... for price-sensitive travelers. Many domestic markets are currently underserved by low-cost, low-fare carriers and we believe we can successfully grow these markets by increasing frequencies and aircraft capacity on routes we currently serve or by introducing service to cities we do not serve. Both...

  • Page 7
    ...for all customers whether they carry bags or not, we charge a low base fare to cover air transportation and charge additional fees for frills to only those customers that choose to purchase extra products or services. We are focused on price-sensitive travelers who pay for their own travel costs. We...

  • Page 8
    ... operating a modern single fleet type of Airbus A320-family aircraft, with associated lower maintenance costs and common flight crews across the fleet; minimizing sales, marketing and distribution costs through direct-to-consumer marketing; efficient flight scheduling, including minimal ground times...

  • Page 9
    ...targeted Caribbean and Latin American growth markets, profitable U.S. domestic niche markets and high-volume routes flown by price sensitive travelers. In the United States, we provide service in the markets from which a significant majority of passengers traveling to the Caribbean and Latin America...

  • Page 10
    ...markets currently underserved by low-cost carriers by increasing frequency and aircraft capacity on our existing routes, as well as by starting new routes to cities we do not yet serve. We believe we can accomplish this by: • using our knowledge of local U.S. domestic, Caribbean and Latin American...

  • Page 11
    8

  • Page 12
    ... The carryon bag fee for all customers if purchased at an airport ticket counter or kiosk is $40, or $45 if purchased at the airport gate. Passengers paying for an additional bag receive priority boarding to allow more time to stow extra luggage. Corresponding with this carry-on baggage policy, many...

  • Page 13
    ...2011, our route network included 98 markets served by 48 airports throughout North America, the Caribbean and Latin America. The majority of our routes operate to or from our South Florida gateway at Fort Lauderdale-Hollywood International Airport, or FLL Airport. As measured by available seat miles...

  • Page 14
    ...competitive. The principal competitive factors in the airline industry are fare pricing, total price, flight schedules, aircraft type, passenger amenities, number of routes served from a city, customer service, safety record and reputation, code-sharing relationships, and frequent flier programs and...

  • Page 15
    ... website each month was 4.0 million and 3.5 million, respectively. The $9 Fare Club is an annual subscription-based service that allows members exclusive access to the lowest fares on offer and discounted baggage fees. Much like that of Sam's Club or Costco, where members pay an annual fee in order...

  • Page 16
    ... of our international traffic but the majority of our domestic customers. This segment responds well to demand stimulation based on low fares, and South Florida, Myrtle Beach, Atlantic City and Las Vegas all provide among the best values among leisure destinations in the United States. Leisure...

  • Page 17
    ... acquired under operating leases. Our current fleet plan calls for growth to 68 aircraft by the end of 2015. As of December 31, 2011, firm aircraft orders with Airbus consisted of 106 A320 aircraft (61 classic A320s and 45 A320 NEOs). Thirtyone aircraft are scheduled for delivery from 2012 through...

  • Page 18
    ...insurance policies we believe are of types customary in the airline industry and as required by the DOT. The policies principally provide liability coverage for public and passenger injury; damage to property; loss of or damage to flight equipment; fire and extended coverage; directors' and officers...

  • Page 19
    .... We currently operate international service to Aruba, the Bahamas, Colombia, Costa Rica, Dominican Republic, El Salvador, Guatemala, Haiti, Honduras, Jamaica, Mexico, Nicaragua, Panama, Peru and St. Maarten, as well as Puerto Rico and the U.S. Virgin Islands. If we decide to increase our routes to...

  • Page 20
    ... aircraft operational procedures during takeoff and initial climb, and limiting the overall number of flights at an airport. None of the airports we serve currently restricts the number of flights or hours of operation, although it is possible one or more of such airports may do so in the future...

  • Page 21
    ... to unbundle services by charging separate fees for services such as baggage and advance seat selection. This unbundling and other cost reducing measures could enable competitor airlines to reduce fares on routes that we serve. In addition, airlines increase or decrease capacity in markets based on...

  • Page 22
    ...on board the aircraft. The final rules require airlines to publish a full fare for a flight, including mandatory taxes and fees, and to enhance disclosure of the cost of optional products and services, including baggage charges. The rules restrict airlines from increasing ticket prices post-purchase...

  • Page 23
    ...rates, a constrained credit market, housing-related pressures and increased focus on reducing business operating costs can reduce spending for price-sensitive and business travel. For many travelers, in particular the price-sensitive travelers we serve, air transportation is a discretionary purchase...

  • Page 24
    clothes on a Northwest Airlines flight on Christmas Day in 2009, 20

  • Page 25
    ... of government restrictions in service and could have a material adverse impact on the airline industry. Increased travel taxes, such as the Travel Promotion Act, enacted March 10, 2010, which charges visitors from certain countries a $10 fee every two years to travel into the United States to...

  • Page 26
    ...31, 2011, we had future operating lease obligations of approximately $1.2 billion. In addition, we have significant obligations for aircraft and spare engines that that we have ordered from Airbus and International Aero Engines AG, or IAE, (or any other engine manufacturer for future deliveries) for...

  • Page 27
    ... our aircraft lessors to fund reserves in cash in advance for scheduled maintenance, and a portion of our cash is therefore unavailable until after we have completed the scheduled maintenance in accordance with the terms of the operating leases. Based on the age of our fleet and our growth strategy...

  • Page 28
    ...-Aircraft Maintenance, Materials and Repair Costs and Heavy Maintenance Amortization" and "- Maintenance Reserves." Our lack of marketing alliances could harm our business. Many airlines, including the domestic traditional network airlines (American, Delta, United and US Airways) have marketing...

  • Page 29
    ... on our business. On August 3, 2010, the Airline Baggage Transparency and Accountability Act was introduced in the United States Senate. This legislation, if enacted, would increase disclosure regarding fees for airline ticket sales, impose federal taxes on charges for carry-on and checked baggage...

  • Page 30
    ... financing to acquire new aircraft; access airports located in our targeted geographic markets where we can operate routes in a manner that is consistent with our cost strategy; gain access to international routes; and access sufficient gates and other services at airports we currently serve or may...

  • Page 31
    ... fares in order to stimulate demand for air travel. Please see "-Restrictions on or increased taxes applicable to fees or other charges for ancillary products and services paid by airline passengers and burdensome consumer protection regulations or laws could harm our business, results of operations...

  • Page 32

  • Page 33
    ... high number of customer complaints related to, among other things, our customer service, reservations and ticketing systems and baggage handling. In particular, we generally experience a higher volume of complaints when we make changes to our unbundling policies, such as charging for baggage. In...

  • Page 34
    ...customer service or if we are perceived by our customers to provide poor customer service. We depend on a limited number of suppliers for our aircraft and engines. One of the elements of our business strategy is to save costs by operating a single-family aircraft fleet - currently Airbus A320-family...

  • Page 35
    ... and regulations can require significant expenditures and any future regulatory developments in the United States and abroad could adversely affect operations and increase operating costs in the airline industry. For example, climate change legislation was previously introduced in Congress and such...

  • Page 36
    ... from realizing a premium over the market price for their common stock. The requirements of being a public company may strain our resources, divert management's attention and affect our ability to attract and retain qualified board members. As a public company, we incur significant legal, accounting...

  • Page 37
    ...; media reports and publications about the safety of our aircraft or the aircraft type we operate; new regulatory pronouncements and changes in regulatory guidelines; changes in the price of aircraft fuel; announcements concerning the availability of the type of aircraft we use; general...

  • Page 38
    32

  • Page 39
    .... The restrictions imposed by federal law currently require that no more than 25% of our stock be voted, directly or indirectly, by persons who are not U.S. citizens, and that our president and at least two-thirds of the members of our board of directors and senior management be U.S. citizens...

  • Page 40
    ...Type A319 A320 A321 Seats 145 178 218 Average Age (years) 5.5 1.0 6.4 4.5 Number of Aircraft 26 9 2 37 PROPERTIES As of December 31, 2011, firm aircraft orders with Airbus consisted of 106 A320 family aircraft (61 of the existing aircraft model and 45 A320 NEOs). Aircraft are scheduled for delivery...

  • Page 41
    ...one week or more prior to a flight's departure, (iii) a prohibition on post-purchase price increases for products and services not purchased at the time of the initial booking, (iv) a requirement to deliver to passengers a list of all baggage allowances and pricing on any eticket or other electronic...

  • Page 42
    ... Part of Publicly Announced Plans or Programs - - - - Approximate Dollar Value of Shares that May Yet be Purchased Under Plans or Programs. - - - - Period October 1-31, 2011 November 1-30, 2011 December 1-31, 2011 Total Total Number of Shares Purchased - - 8,215 8,215 Average Price Paid per Share...

  • Page 43
    ...26, 2011 stock price used for our stock is the initial public offering price. Stock price performance, presented for the period from May 26, 2011 to December 31, 2011, is not necessarily indicative of future results. SAVE NASDAQ Composite Index NYSE ARCA Airline Index 37 5/26/2011 12/31/2011 $ 100...

  • Page 44
    ... to be expected in the future. Year Ended December 31, 2011 Operating revenues: Passenger Non-ticket Total operating revenue Operating expenses: Aircraft fuel (2) Salaries, wages and benefits Aircraft rent Landing fees and other rents Distribution Maintenance, materials and repairs Depreciation and...

  • Page 45
    38

  • Page 46
    ...our Detroit, Michigan maintenance operations to Fort Lauderdale, Florida; and (v) termination costs in connection with the IPO during the three months ended June 30, 2011 comprised of amounts paid to Indigo Partners, LLC to terminate its professional services agreement with us and fees paid to three...

  • Page 47
    ...2011 Operating Statistics (unaudited) (A) Average aircraft Aircraft at end of period Airports served in the period Average daily Aircraft utilization (hours) Average stage length (miles) Block hours Passenger flight segments (thousands) Revenue passenger miles (RPMs) (thousands) Available seat miles...

  • Page 48
    ... one passenger pays to fly one mile, calculated as total revenue divided by RPMs. "Block hours" means the number of hours during which the aircraft is in revenue service, measured from the time of gate departure before take-off until the time of gate arrival at the destination. "CASM" or "unit costs...

  • Page 49
    ... Travel Agent (e.g., Orbitz and Travelocity). "Passenger flight segments" means the total number of passengers flown on all flight segments. "PDP" means pre-delivery deposit payment. "Revenue passenger miles" or "RPMs" means the number of miles flown by passengers. "RLA" means the United States...

  • Page 50
    ... our ULCC business model in 2007. Spirit Airlines is an ultra lowcost, low-fare airline based in Fort Lauderdale, Florida that provides affordable travel opportunities principally to and from South Florida, the Caribbean and Latin America. Our targeted growth markets have historically been...

  • Page 51
    ... from air travel-related fees paid by the ticketed passenger for baggage, bookings through our distribution channels, advance seat selection, itinerary changes, hotel travel packages, and loyalty programs such as our FREE SPIRIT affinity credit card program and $9 Fare Club. Non-ticket revenues also...

  • Page 52
    .... Other operating expenses include airport operations expense and fees charged by third-party vendors for ground handling services and commissary expenses, the cost of passenger liability and aircraft hull insurance, all other insurance policies except for employee health insurance, travel and...

  • Page 53
    ...competitive. The principal competitive factors in the airline industry are fare pricing, total price, flight schedules, aircraft type, passenger amenities, number of routes served from a city, customer service, safety record and reputation, code-sharing relationships, and frequent flier programs and...

  • Page 54
    ... 31, 2011, we purchased all of our aircraft fuel under a single fuel service contract. The cost and future availability of jet fuel cannot be predicted with any degree of certainty. Labor . The airline industry is heavily unionized. The wages, benefits and work rules of unionized airline industry...

  • Page 55
    ... members with an insufficient number of mileage credits to earn an award, under our FREE SPIRIT program based on the estimated incremental cost of providing free travel for credits that are expected to be redeemed. Incremental costs include fuel, insurance, security, ticketing and facility charges...

  • Page 56
    ...cost of fare, number of miles to redeem awards, marketing plan, and approval rate of credit cards) could result in changes in the estimated selling prices. Determining the frequency to reassess selling price for individual deliverables requires significant judgment. During 2011 , the Company changed...

  • Page 57
    ... growth rates, and estimated costs as well as appropriate discount rates. These estimates are consistent with the plans and estimates that management uses to manage the Company's business. The fair value of share option awards is estimated on the date of grant using the Black-Scholes valuation model...

  • Page 58
    ... of five additional aircraft to the fleet resulting in the increased capacity. We improved our liquidity position with the completion of an IPO in June 2011, whereby we retained $150.0 million of net of proceeds, after paying off debt, fees and costs associated with the offering. Net income for...

  • Page 59
    ... increase in passenger flight segments and price enhancements on non-ticket services. During the first quarter of 2011, we reduced the weight threshold for overweight baggage from 50 pounds to 40 pounds and increased the change fee charged to customers for modifying or canceling their reservations...

  • Page 60
    52

  • Page 61
    ...our Big Front Seat ® as a separate fare but instead charged a premium seat upgrade fee, which shifted revenue from passenger revenue to non-ticket revenues. In August 2010, we introduced a fee for carry-on bags, resulting in a significant reduction in the number of carry-on bags checked at the gate...

  • Page 62
    ... that fuel prices are currently having on our business because it most closely approximates the net cash outflow associated with purchasing fuel for our operations. Accordingly, many industry analysts evaluate airline results using this measure and it is used in our internal management reporting. 54

  • Page 63
    ... travel and lodging cost partly due to increased flights and the changes in route mix. These increases in cost were offset by a decrease in costs incurred to accommodate displaced passengers due to the aggressive management of cost and strict adherence to our accommodation policy. Special charges...

  • Page 64
    ... by a 27.0% increase in the average price of aircraft fuel and an 8.3% increase in fuel volume compared to the prior year, increased labor costs primarily due to increased pilot wages and benefits due to implementation of the CBA and the inclusion of $2.3 million in pilot return-to-work payments...

  • Page 65
    ... of service time to complete the maintenance will increase in absolute terms. The increase in other operating expenses in 2010 is primarily due to increases in ground handling costs, and aviation insurance resulting from a period-over-period increase in the number of flights operated and fleet size...

  • Page 66
    ... Airports served Average daily Aircraft utilization (hours) Average stage length (miles) Passenger flight segments (thousands) Revenue passenger miles (RPMs) (thousands) Available seat miles (ASMs) (thousands) Load factor (%) Average ticket revenue per passenger flight segment ($) Average non-ticket...

  • Page 67
    ... 31, 2011. These amounts are excluded from all calculations of Adjusted CASM provided in this annual report. Please see "Management's Discussion and Analysis of Financial Condition and Results of Operations-Our Operating Expenses-Special Charges." (2) Excludes unrealized mark-to-market (gains...

  • Page 68
    ... maintenance deposits. Net Cash Flows Used In Investing Activities. During 2011 , investing activities used $67.2 million , compared to $30.5 million used for 2010 . The increase is mainly related to higher PDPs made period over period due to timing of the delivery schedule for future aircraft...

  • Page 69
    ... leasing companies. As of December 31, 2011, firm aircraft orders consisted of 106 A320 family aircraft (61 of the existing aircraft model A320s and 45 A320 NEOs) with Airbus and five spare V2500 IAE International Aero Engines AG engines. Aircraft are scheduled for delivery in the period of 2012...

  • Page 70
    .... Based on our annual fuel consumption, a 10% increase in the average price per gallon of aircraft fuel would have increased into-plane aircraft fuel cost for 2011 by approximately $ 39.2 million . To attempt to manage fuel price risk, from time to time we use jet fuel option contracts or swap...

  • Page 71
    ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA Page 64 65 66 67 68 69 63 Report of Independent Registered Public Accounting Firm Statements of Operations Balance Sheets Statements of Cash Flows Statements of Shareholders' Equity (Deficit) Notes to Financial Statements

  • Page 72
    REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM The Board of Directors and Stockholders of Spirit Airlines, Inc. We have audited the accompanying balance sheets of Spirit Airlines, Inc. as of December 31, 2011 and 2010, and the related statements of operations, shareholders' equity (deficit...

  • Page 73
    Spirit Airlines, Inc. Statements of Operations (In thousands, except per share data) Years Ended December 31, 2011 2010 2009 Operating revenues: Passenger Non-ticket Total operating revenue Operating expenses: Aircraft fuel Salaries, wages and benefits Aircraft rent Landing fees and other rents ...

  • Page 74
    Spirit Airlines, Inc. Balance Sheets (In thousands, except share data) December 31, 2011 Assets Current assets: Cash and cash equivalents Restricted cash Accounts receivable, net Deferred income taxes Other current assets Total current assets Property and equipment: Flight equipment Ground and other...

  • Page 75
    66

  • Page 76
    ... costs Depreciation and amortization Deferred income tax benefit (loss) Loss on disposal of assets Interest and dividends incurred but not paid Capitalized interest Changes in operating assets and liabilities: Restricted cash Accounts receivable Prepaid maintenance reserves Long-term deposits...

  • Page 77
    $ Liability and equity related to tax receivable agreement $ 81,747 36,488 $ $ - - $ $ - - See accompanying Notes to Financial Statements. 67

  • Page 78
    Spirit Airlines, Inc. Statements of Shareholders' Equity (Deficit) (In thousands) NonVoting ... Proceeds from initial public offering, net Conversion of debt to common stock Conversion of preferred stock to common stock Record liability under Tax Receivable Agreement Share-based compensation Repurchase...

  • Page 79
    ...Inc. (Spirit or the Company) headquartered in Miramar, Florida, is an ultra low-cost, low-fare airline based in Fort Lauderdale, Florida that provides affordable travel opportunities principally throughout the domestic United States, the Caribbean and Latin America. The Company manages operations on...

  • Page 80
    ... use or is ready for service. Manufacturer's Credits Spirit periodically receives incentives in connection with the acquisition of aircraft and engines. The price of the aircraft or engine is allocated to the aircraft and purchase incentives on a relative fair value basis at the time of delivery...

  • Page 81
    ... members with an insufficient number of mileage credits to earn an award, under its FREE SPIRIT program based on the estimated incremental cost of providing free travel for credits that are expected to be redeemed. Incremental costs include fuel, insurance, security, ticketing, and facility charges...

  • Page 82
    ...baggage, bookings through the Company's call center or third-party vendors, advance seat selection, itinerary changes and loyalty programs. Non-ticket revenues also consist of services not directly related to providing transportation such as the FREE SPIRIT affinity credit card program, $9 Fare Club...

  • Page 83
    ... or travel agents, pet fees, and unaccompanied minor fees, among others. Non-air related charges primarily consist of revenues from advertising on the Company's aircraft and website, the Company's $9 Fare Club subscription-based membership program, and the Company's FREE SPIRIT affinity credit card...

  • Page 84
    ... growth rates, and estimated costs as well as appropriate discount rates. These estimates are consistent with the plans and estimates that management uses to manage the Company's business. The fair value of share option awards is estimated on the date of grant using the Black-Scholes valuation model...

  • Page 85
    ... New Affinity Card Program disclosures in Note 1. 3. Special Charges Special charges in the Company's Statement of Operations for the years ended 2011 and 2010 were $3.2 million and $0.6 million , respectively, which was primarily made up of termination, restructuring and secondary offering costs...

  • Page 86
    ... the Company's overall credit card sales that its credit card processors hold to cover refunds to customers if the Company fails to fulfill its flight obligations. As of December 31, 2010 , the Company had advance ticket sales and $9 Fare Club memberships purchased with credit cards of approximately...

  • Page 87
    76

  • Page 88
    ..., if any, as may be declared from time to time by the Company's board of directors out of legally available funds ratably with shares of the Company's non-voting common stock, subject to preferences that may be applicable to any then outstanding preferred stock and limitations under Delaware law...

  • Page 89
    ...stock were held by other non-controlling shareholders. The remaining 870,000 authorized shares could have been designated and issued from time to time in one or more series, as decided by the Board of Directors. The dividend rates for the Class A and Class B preferred stock are per annum and applied...

  • Page 90
    ...Preferred Stock to Spirit Liquidation Value per Share Outstanding Shares Liquidation Value * (in thousands except share and per share amounts) Oaktree... of December 31, 2009, the net cost related to the disposal of MD-80 aircraft exceeded the $20.7 million target threshold by $16.7 million and as ...

  • Page 91
    ... number of shares remaining available for future awards under the Company's 2005 Stock Plan. The number of shares reserved for issuance or transfer pursuant to awards under the 2011 Plan will be increased by the number of shares represented by awards outstanding under the Company's 2005 Stock Plan...

  • Page 92
    ...by assumed market growth rates, and estimated costs as well as appropriate discount rates. These estimates are consistent with the plans and estimates management uses to manage the Company's business. Share-based compensation cost is included within salaries, wages and benefits in operating expenses...

  • Page 93
    ... amounts) Numerator Net income Denominator Weighted-average shares outstanding, basic Effect of dilutive stock awards Adjusted weighted-average shares outstanding, diluted Net Income per Share Basic earnings per common share Diluted earnings per common share $ 76,448 53,240,898 274,450 53,515...

  • Page 94
    ... serves to reduce the cash collateral the Company was required to maintain with credit card processors. The Company was obligated to pay to the guarantors a commitment fee on the amount of this guarantee, at a rate of 17% per annum, which became due upon the expiration of the LC on April 30, 2011...

  • Page 95
    ...such as flight hours or cycles, and are used solely to collateralize the lessor for maintenance time run off the aircraft until the completion of the maintenance of the aircraft. At lease inception and at each balance sheet date, the Company assesses whether the maintenance reserve payments required...

  • Page 96
    ...determined using standard option valuation models. Management chose not to elect hedge accounting on any of the derivative instruments purchased through the end of 2011, 2010, and 2009 and, as a result, changes in the fair value of these fuel hedge contracts are recorded each period in aircraft fuel...

  • Page 97
    ...2011 anticipated fuel consumption at a weighted-average ceiling and floor price of $2.30 and $2.13 per gallon, respectively. 15. Defined Contribution 401(k) Plan The Company sponsors two defined contribution 401(k) plans, Spirit Airlines, Inc. Employee Retirement Savings Plan (first plan) and Spirit...

  • Page 98
    ...December 31, 2011 2010 (in thousands) 2009 Expected provision at federal statutory tax rate State and foreign tax expense, net of federal benefit Interest and dividend on preferred stock Change in valuation allowance Meals and entertainment Fines and penalties Federal credits Adjustment to deferred...

  • Page 99
    ... could be used to offset future state taxable income. State net operating losses begin to expire in 2013. The Company's NOL carryforwards as of December 31, 2011, include approximately $3.7 million that are attributed to the exercise of nonqualified stock options and the vesting of restricted stock...

  • Page 100
    ... aircraft leasing companies. As of December 31, 2011, firm aircraft orders with Airbus consisted of 106 A320 family aircraft (61 of the existing aircraft model and 45 A320 NEOs) and five spare V2500 IAE International Aero Engines AG engines. Aircraft are scheduled for delivery in the period of 2012...

  • Page 101
    ... measurement date. Spirit utilizes several valuation techniques in order to assess the fair value of the Company's financial assets and liabilities. The Company's fuel derivative contracts, which primarily consist of costless collar contracts, are valued using energy and commodity market data, which...

  • Page 102
    ... debt is not publicly traded. Management determined the enterprise value of the Company using a discounted cash flow analysis and market multiples. The fair values of certain debt instruments were estimated under a contingent claims analysis, in which a BlackScholes option pricing model was applied...

  • Page 103
    ... Disclosures The Company is managed as a single business unit that provides air transportation for passengers. Operating revenues by geographic region as defined by the Department of Transportation (DOT) area are summarized below: 2011 2010 (in millions) 2009 DOT-domestic DOT-Latin America Total...

  • Page 104
    ..., including affiliates of Oaktree Capital Management and Indigo Partners and certain members of the Company's executive team. The Company did not receive any proceeds from the secondary offering. On January 31, 2012, the Company's Board of Directors approved the effectiveness of Amendment No. 1. to...

  • Page 105
    ... firm due to a transition period established by rules of the Securities and Exchange Commission for newly public companies. Changes in Internal Control over Financial Reporting There were no changes in our internal control over financial reporting during 2011 that have materially affected, or are...

  • Page 106
    ... 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE The information under the captions, "Election of Directors," "Corporate Governance," "Committee and Meetings of the Board of Directors," "Executive Officers," "Code of Ethics" and "Section 16(a) Beneficial Ownership Reporting Compliance...

  • Page 107
    ... this annual report, since the required information is included in the Consolidated Financial Statements, including the notes thereto, or the circumstances requiring inclusion of such schedules are not present. 3. Exhibits: The exhibits filed as part of this Annual Report on Form 10-K are listed on...

  • Page 108
    ... 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. SPIRIT AIRLINES, INC. By: Date: February 22, 2012 /s/ B. Ben Baldanza B. Ben Baldanza President and Chief Executive Officer 97

  • Page 109
    ... B. Ben Baldanza President and Chief Executive Officer (principal executive officer) Chief Financial Officer (principal financial and accounting officer) Director (Chairman of the Board) Director Director Director Director Director Director Director February 22, 2012 February 22, 2012 February 22...

  • Page 110
    ...the Company's Current Report on Form 8-K dated June 1, 2011, is hereby incorporated by reference. Fourth Amendment to Second Amended and Restated Investor Rights Agreement, dated as of January 13, 2012, by and among Spirit Airlines, Inc., Indigo Florida, L.P., Indigo Miramar LLC, OCM Spirit Holdings...

  • Page 111
    filed as Exhibit 10.3 to the Company's Amendment No. 4 to Form S-1 Registration Statement (No. 333-169474), is hereby incorporated by reference. 99

  • Page 112
    ... as Exhibit 10.1 to the Company's Current Report on Form 8-K dated June 1, 2011, is hereby incorporated by reference. Letter Agreement, dated as of December 12, 2008, made by Spirit Airlines, Inc. in favor of Indigo Pacific Partners L.P., Long Bar Miramar LLC, OCM Principal Opportunities Fund II...

  • Page 113
    100

  • Page 114
    ...officers, filed as Exhibit 10.24 to the Company's Amendment No. 3 to Form S-1 Registration Statement (No. 333-169474), is hereby incorporated by reference. Reimbursement Agreement, dated as of July 12, 2005, among Spirit Airlines, Inc., Spirit Aviation Services, LLC and Goldman Sachs Credit Partners...

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    101

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    ... reference. Side Letter No. 6 to the Fleet Hour Agreement, dated March 10, 2011 (as amended by Amendment No. 1 to Side Letter No. 6, effective as of January 31, 2012), by and between Spirit Airlines, Inc. and IAE International Aero Engines AG. Code of Business Conduct and Ethics, filed as Exhibit 14...

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    ...of any omitted schedule to the Securities and Exchange Commission upon request. Indicates a management contract or compensatory plan or arrangement.... Act, except as otherwise specifically stated in such filing. XBRL (Extensible Business Reporting Language) information is furnished and not filed or...

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    ..., CT 06108 USA March 10, 2011 Mr. David Bradford Vice President and Controller Spirit Airlines 2800 Executive Way Miramar, FL 33025 Subject: Side Letter Agreement No. 6 to the V2500-A5 Fleet Hour Agreement between IAE International Aero Engines AG and Spirit Airlines, Inc. dated April 11, 2005...

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    .... Agreed to and accepted on behalf of Spirit Airlines, Inc. /s/ David Bradford _ Name VP Treasurer _____ Title 3/23/11 _____ Date 2.2 2.3 Very truly yours, IAE International Aero Engines AG /s/ Debarshi Mandal _____ Name Commercial Manager _____ Title 3/24/11 _____ Date *****Confidential...

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    IAE PROPRIETARY INFORMATION Appendix A Reconciliation Shop Visits ESN V11929 Invoice Dates* Invoice Number 26-Jan-2009 FHAI ...IN000000248 V12070 15-Nov-2010 15-Nov-2010 FHAI IN000001163 TBD TBD V12442 04-Feb-2011 02-Feb-2011 FHAI IN000001449 TBD TBD * Per Side Letter No. 5 to the Contract, Contract ...

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    ... 06033 USA December 21, 2011 Mr. David Lancelot Chief Financial Officer Spirit Airlines 2800 Executive Way Miramar, FL 33025 Subject: Amendment No. 1 to Side Letter Agreement No. 6 to the V2500-A5 Fleet Hour Agreement between IAE International Aero Engines AG and Spirit Airlines, Inc. dated April 11...

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    ... and accepted on behalf of Spirit Airlines, Inc. /s/ B. Ben Baldanza _____ Name President & CEO _____ Title 12-22-11 _____ Date 5.2 5.3 Very truly yours, IAE International Aero Engines AG /s/ William Gorton _____ Name Commercial Director _____ Title December 22, 2011 _____ Date *****Confidential...

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    ... 15-Nov-2010 13-Apr-2011 04-Feb-2011 02-Feb-2011 14-Jun-2011 04-Jul-2011 15-Nov-2010 30-Jun-2011 09-Jun-2011 02-Feb-2011 31-Aug-2011 12-Aug-2011 15-Nov-2010 Contract Amount New FHA Amount V11942 15-Aug-2011 02-Feb-2011 ***** ***** ***** Total ***** *****Confidential portions of the...

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    Exhibit 21.1 Subsidiary of Spirit Airlines, Inc. Spirit Aviation Services LLC, a Michigan limited liability company

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    ... Plan of Spirit Airlines, Inc. of our report dated February 22, 2012, with respect to the financial statements of Spirit Airlines, Inc. included in this Annual Report (Form 10-K) for the year ended December 31, 2011. /s/Ernst & Young LLP Certified Public Accountants Miami, Florida February 22, 2012

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    ...CERTIFICATION I, B. Ben Baldanza, President and Chief Executive Officer of Spirit Airlines, Inc., certify that: 1. I have reviewed this annual report on Form 10-K for the year ended December 31, 2011, of Spirit Airlines, Inc. (the "Registrant"); 2. Based on my knowledge, this report does not contain...

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    Exhibit 31.2 CERTIFICATION I, David Lancelot, Senior Vice President and Chief Financial Officer of Spirit Airlines, Inc., certify that: 1. I have reviewed this annual report on Form 10-K for the year ended December 31, 2011, of Spirit Airlines, Inc. (the "Registrant"); 2. Based on my knowledge, this...

  • Page 130
    ...-Oxley Act of 2002, the undersigned officer of Spirit Airlines, Inc. (the "Company") hereby certifies, to such officer's knowledge, that: (i.) (ii.) the Yearly Report on Form 10-K of the Company for the year ended December 31, 2011 (the "Report") full complies with the requirements of Section...