Spirit Airlines 2015 Annual Report Download - page 22

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We may not be able to implement our growth strategy.
Our growth strategy includes acquiring additional aircraft, increasing the frequency of flights and size of aircraft used in
markets we currently serve, and expanding the number of markets we serve where our low cost structure would likely be
successful. Effectively implementing our growth strategy is critical for our business to achieve economies of scale and to
sustain or increase our profitability. We face numerous challenges in implementing our growth strategy, including our ability to:
• maintain profitability;
• obtain 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 seek to serve.
Our growth is dependent upon our ability to maintain a safe and secure operation and requires additional personnel,
equipment and facilities. An inability to hire and retain personnel, timely secure the required equipment and facilities in a cost-
effective manner, efficiently operate our expanded facilities or obtain the necessary regulatory approvals may adversely affect
our ability to achieve our growth strategy, which could harm our business. In addition, expansion to new markets may have
other risks due to factors specific to those markets. We may be unable to foresee all of the existing risks upon entering certain
new markets or respond adequately to these risks, and our growth strategy and our business may suffer as a result. In addition,
our competitors may reduce their fares and/or offer special promotions to deter our entry into a new market or to stop our
growth into existing markets or new markets. We cannot assure you that we will be able to profitably expand our existing
markets or establish new markets.
Some of our target growth markets in the Caribbean and Latin America include countries with less developed economies
that may be vulnerable to unstable economic and political conditions, such as significant fluctuations in gross domestic product,
interest and currency exchange rates, high inflation, civil disturbances, government instability, nationalization and
expropriation of private assets and the imposition of taxes or other charges by governments. The occurrence of any of these
events in markets served by us and the resulting instability may adversely affect our ability to implement our growth strategy.
In 2008, in response to record high fuel prices and rapidly deteriorating economic conditions, we modified our growth
plans by terminating our leases for seven aircraft. We incurred significant expenses relating to our lease terminations, and have
incurred additional expenses to acquire new aircraft in place of those under the terminated leases as we expanded our network.
We may in the future determine to reduce further our future growth plans from previously announced levels, which may impact
our business strategy and future profitability.
We rely heavily on technology and automated systems to operate our business and any failure of these technologies or
systems or failure by their operators could harm our business.
We are highly dependent on technology and automated systems to operate our business and achieve low operating costs.
These technologies and systems include our computerized airline reservation system, flight operations system, financial
planning, management and accounting system, telecommunications systems, website, maintenance systems and check-in
kiosks. The performance and reliability of our technology are critical to our ability to operate and compete effectively. Our
Board of Directors recently approved a significant technology upgrade initiative meant to address our aging IT infrastructure.
This initiative will upgrade, replace, and enhance multiple older and outdated legacy systems and hardware. The execution of
our strategic plans could be negatively affected by (i) our ability to timely and effectively implement, transition, and maintain
related information technology systems and infrastructure; (ii) our ability to effectively balance its investment of incremental
operating expenses and capital expenditures related to its strategies against the need to effectively control cost; and (iii) our
dependence on third parties with respect to its ability to implement its strategic plans. We cannot assure you that our security
measures, change control procedures, and disaster recovery plans will be adequate to prevent disruptions or delays. Disruption
in or changes to these systems could result in an interruption to our operations or loss of important data. Any of the foregoing
could result in a material adverse effect on our business, reputation, results of operations and financial condition.
In order for our operations to work efficiently, our website and reservation system must be able to accommodate a high
volume of traffic, maintain secure information and deliver flight information with a high degree of reliability. Substantially all
of our tickets are issued to passengers as electronic tickets. We depend on our reservation system, which is hosted and
maintained under a long-term contract by a third-party service provider, to be able to issue, track and accept these electronic