10-Q 1 save-20220930.htm 10-Q save-20220930
false2022Q3000149871012/31http://fasb.org/us-gaap/2022#AccountingStandardsUpdate202006Memberhttp://fasb.org/us-gaap/2022#LongTermDebtAndCapitalLeaseObligationsIncludingCurrentMaturitieshttp://fasb.org/us-gaap/2022#LongTermDebtAndCapitalLeaseObligationsIncludingCurrentMaturitieshttp://fasb.org/us-gaap/2022#LongTermDebtAndCapitalLeaseObligationsCurrenthttp://fasb.org/us-gaap/2022#LongTermDebtAndCapitalLeaseObligationsCurrenthttp://fasb.org/us-gaap/2022#LongTermDebtAndCapitalLeaseObligationshttp://fasb.org/us-gaap/2022#LongTermDebtAndCapitalLeaseObligations00014987102022-01-012022-09-3000014987102022-10-20xbrli:shares0001498710save:ProductsAndServicesPassengerMember2022-07-012022-09-30iso4217:USD0001498710save:ProductsAndServicesPassengerMember2021-07-012021-09-300001498710save:ProductsAndServicesPassengerMember2022-01-012022-09-300001498710save:ProductsAndServicesPassengerMember2021-01-012021-09-300001498710us-gaap:ProductAndServiceOtherMember2022-07-012022-09-300001498710us-gaap:ProductAndServiceOtherMember2021-07-012021-09-300001498710us-gaap:ProductAndServiceOtherMember2022-01-012022-09-300001498710us-gaap:ProductAndServiceOtherMember2021-01-012021-09-3000014987102022-07-012022-09-3000014987102021-07-012021-09-3000014987102021-01-012021-09-30iso4217:USDxbrli:shares00014987102022-09-3000014987102021-12-310001498710save:EightPointZeroZeroPercentSeniorSecuredNotesDueTwoThousandTwentyFiveMemberus-gaap:SecuredDebtMember2022-09-30xbrli:pure00014987102020-12-3100014987102021-09-300001498710us-gaap:CommonStockMember2020-12-310001498710us-gaap:AdditionalPaidInCapitalMember2020-12-310001498710us-gaap:TreasuryStockCommonMember2020-12-310001498710us-gaap:RetainedEarningsMember2020-12-310001498710us-gaap:AccumulatedOtherComprehensiveIncomeMember2020-12-3100014987102020-01-012020-12-310001498710srt:CumulativeEffectPeriodOfAdoptionAdjustmentMemberus-gaap:AdditionalPaidInCapitalMember2020-12-310001498710srt:CumulativeEffectPeriodOfAdoptionAdjustmentMemberus-gaap:RetainedEarningsMember2020-12-310001498710srt:CumulativeEffectPeriodOfAdoptionAdjustmentMember2020-12-310001498710us-gaap:AdditionalPaidInCapitalMember2021-01-012021-03-3100014987102021-01-012021-03-310001498710us-gaap:TreasuryStockCommonMember2021-01-012021-03-310001498710us-gaap:AccumulatedOtherComprehensiveIncomeMember2021-01-012021-03-310001498710us-gaap:RetainedEarningsMember2021-01-012021-03-310001498710us-gaap:CommonStockMember2021-03-310001498710us-gaap:AdditionalPaidInCapitalMember2021-03-310001498710us-gaap:TreasuryStockCommonMember2021-03-310001498710us-gaap:RetainedEarningsMember2021-03-310001498710us-gaap:AccumulatedOtherComprehensiveIncomeMember2021-03-3100014987102021-03-310001498710us-gaap:CommonStockMember2021-04-012021-06-300001498710us-gaap:AdditionalPaidInCapitalMember2021-04-012021-06-3000014987102021-04-012021-06-300001498710us-gaap:TreasuryStockCommonMember2021-04-012021-06-300001498710us-gaap:AccumulatedOtherComprehensiveIncomeMember2021-04-012021-06-300001498710us-gaap:RetainedEarningsMember2021-04-012021-06-300001498710us-gaap:CommonStockMember2021-06-300001498710us-gaap:AdditionalPaidInCapitalMember2021-06-300001498710us-gaap:TreasuryStockCommonMember2021-06-300001498710us-gaap:RetainedEarningsMember2021-06-300001498710us-gaap:AccumulatedOtherComprehensiveIncomeMember2021-06-3000014987102021-06-300001498710us-gaap:AdditionalPaidInCapitalMember2021-07-012021-09-300001498710us-gaap:TreasuryStockCommonMember2021-07-012021-09-300001498710us-gaap:AccumulatedOtherComprehensiveIncomeMember2021-07-012021-09-300001498710us-gaap:RetainedEarningsMember2021-07-012021-09-300001498710us-gaap:CommonStockMember2021-09-300001498710us-gaap:AdditionalPaidInCapitalMember2021-09-300001498710us-gaap:TreasuryStockCommonMember2021-09-300001498710us-gaap:RetainedEarningsMember2021-09-300001498710us-gaap:AccumulatedOtherComprehensiveIncomeMember2021-09-300001498710us-gaap:CommonStockMember2021-12-310001498710us-gaap:AdditionalPaidInCapitalMember2021-12-310001498710us-gaap:TreasuryStockCommonMember2021-12-310001498710us-gaap:RetainedEarningsMember2021-12-310001498710us-gaap:AccumulatedOtherComprehensiveIncomeMember2021-12-310001498710us-gaap:AdditionalPaidInCapitalMember2022-01-012022-03-3100014987102022-01-012022-03-310001498710us-gaap:TreasuryStockCommonMember2022-01-012022-03-310001498710us-gaap:AccumulatedOtherComprehensiveIncomeMember2022-01-012022-03-310001498710us-gaap:RetainedEarningsMember2022-01-012022-03-310001498710us-gaap:CommonStockMember2022-03-310001498710us-gaap:AdditionalPaidInCapitalMember2022-03-310001498710us-gaap:TreasuryStockCommonMember2022-03-310001498710us-gaap:RetainedEarningsMember2022-03-310001498710us-gaap:AccumulatedOtherComprehensiveIncomeMember2022-03-3100014987102022-03-310001498710us-gaap:CommonStockMember2022-04-012022-06-300001498710us-gaap:AdditionalPaidInCapitalMember2022-04-012022-06-3000014987102022-04-012022-06-300001498710us-gaap:TreasuryStockCommonMember2022-04-012022-06-300001498710us-gaap:AccumulatedOtherComprehensiveIncomeMember2022-04-012022-06-300001498710us-gaap:RetainedEarningsMember2022-04-012022-06-300001498710us-gaap:CommonStockMember2022-06-300001498710us-gaap:AdditionalPaidInCapitalMember2022-06-300001498710us-gaap:TreasuryStockCommonMember2022-06-300001498710us-gaap:RetainedEarningsMember2022-06-300001498710us-gaap:AccumulatedOtherComprehensiveIncomeMember2022-06-3000014987102022-06-300001498710us-gaap:AdditionalPaidInCapitalMember2022-07-012022-09-300001498710us-gaap:TreasuryStockCommonMember2022-07-012022-09-300001498710us-gaap:AccumulatedOtherComprehensiveIncomeMember2022-07-012022-09-300001498710us-gaap:RetainedEarningsMember2022-07-012022-09-300001498710us-gaap:CommonStockMember2022-09-300001498710us-gaap:AdditionalPaidInCapitalMember2022-09-300001498710us-gaap:TreasuryStockCommonMember2022-09-300001498710us-gaap:RetainedEarningsMember2022-09-300001498710us-gaap:AccumulatedOtherComprehensiveIncomeMember2022-09-300001498710save:FrontierMergerAgreementMember2022-07-272022-07-270001498710save:JetBlueAirwaysMember2022-07-280001498710save:JetBlueMergerAgreementMembersave:JetBlueAirwaysMember2022-07-272022-07-270001498710us-gaap:SubsequentEventMembersave:JetBlueAirwaysMember2022-10-260001498710save:JetBlueAirwaysMember2022-07-282022-07-280001498710save:ProductsAndServicesFareMember2022-07-012022-09-300001498710save:ProductsAndServicesFareMember2021-07-012021-09-300001498710save:ProductsAndServicesFareMember2022-01-012022-09-300001498710save:ProductsAndServicesFareMember2021-01-012021-09-300001498710save:ProductsAndServicesNonFareMember2022-07-012022-09-300001498710save:ProductsAndServicesNonFareMember2021-07-012021-09-300001498710save:ProductsAndServicesNonFareMember2022-01-012022-09-300001498710save:ProductsAndServicesNonFareMember2021-01-012021-09-300001498710us-gaap:DomesticDestinationMember2022-07-012022-09-300001498710us-gaap:DomesticDestinationMember2021-07-012021-09-300001498710us-gaap:DomesticDestinationMember2022-01-012022-09-300001498710us-gaap:DomesticDestinationMember2021-01-012021-09-300001498710us-gaap:LatinAmericaDestinationMember2022-07-012022-09-300001498710us-gaap:LatinAmericaDestinationMember2021-07-012021-09-300001498710us-gaap:LatinAmericaDestinationMember2022-01-012022-09-300001498710us-gaap:LatinAmericaDestinationMember2021-01-012021-09-30save:aircraftsave:aircraft_engine0001498710save:AuxiliaryPowerUnitsMember2021-01-012021-09-3000014987102022-04-012022-09-300001498710save:FrontierMergerAgreementAndJetblueUnsolicitedProposalMember2022-07-012022-09-300001498710save:FrontierMergerAgreementAndJetblueUnsolicitedProposalMember2022-01-012022-09-300001498710save:FrontierMergerAgreementMember2022-07-270001498710save:JetBlueMergerAgreementMember2022-09-300001498710save:PayrollSupportProgramTwoAndThreeGrantCARESActMember2021-07-012021-09-300001498710save:PayrollSupportProgramTwoAndThreeGrantCARESActMember2021-01-012021-09-300001498710save:CARESActEmployeeRetentionCreditMember2021-01-012021-06-300001498710save:PayrollSupportProgram2And3Member2021-07-012021-09-300001498710save:PayrollSupportProgram2And3Member2021-01-012021-09-300001498710save:DebtSecuritiesAvailableForSaleMember2022-09-300001498710save:DebtSecuritiesAvailableForSaleMember2021-12-310001498710save:DebtSecuritiesAvailableForSaleMember2022-01-012022-09-300001498710save:DebtSecuritiesAvailableForSaleMember2022-07-012022-09-300001498710save:DebtSecuritiesAvailableForSaleMember2021-07-012021-09-300001498710save:DebtSecuritiesAvailableForSaleMember2021-01-012021-09-300001498710srt:MinimumMembersave:AircraftMember2022-09-300001498710srt:MaximumMembersave:AircraftMember2022-09-300001498710srt:MaximumMembersave:OtherLeasedEquipmentAndPropertyMember2022-09-300001498710save:AircraftMember2022-01-012022-09-300001498710save:SpareEnginesMember2022-01-012022-09-300001498710save:A320FamilyMembersave:AircraftMember2022-09-300001498710save:A320FamilyMembersave:AircraftMember2022-09-300001498710save:AircraftMember2022-09-300001498710save:SpareEnginesMember2022-09-30save:agreement0001498710save:LeasedComputerAndOfficeEquipmentMembersrt:MinimumMember2022-09-300001498710save:LeasedComputerAndOfficeEquipmentMembersrt:MaximumMember2022-09-3000014987102019-12-31utr:acre0001498710srt:MaximumMembersave:OtherLeasedEquipmentAndPropertyMember2019-12-310001498710save:OtherLeasedEquipmentAndPropertyMember2019-12-31save:residential_building_unit0001498710save:AircraftAndSpareEngineLeasesMember2022-09-300001498710save:PropertyFacilityLeasesMember2022-09-300001498710save:OtherLeasedEquipmentAndPropertyMember2022-09-300001498710save:AirbusMember2022-09-300001498710save:AirbusMembersave:RemainderOf2022DeliveriesMember2022-09-300001498710save:A20222027DeliveryYearsMembersave:AirbusMember2022-09-300001498710save:PurePowerPW1100GJMEngineMember2022-09-300001498710us-gaap:CapitalAdditionsMember2022-09-300001498710save:A320andA321Membersave:A2022Through2024Membersave:ThirdPartyLessorMember2022-09-300001498710save:A320FamilyMembersave:ThirdPartyLessorMember2022-09-300001498710save:A320andA321Member2022-09-300001498710save:AircraftRelatedSecuredDebtMember2022-09-300001498710save:NonAircraftRelatedSecuredDebtUnsecuredDebtAndConvertibleDebtMember2022-09-300001498710save:NonaircraftRelatedCommitmentsMember2022-09-3000014987102022-07-190001498710save:CreditCardHoldbacksMember2021-12-310001498710save:CreditCardHoldbacksMember2022-09-300001498710us-gaap:UnionizedEmployeesConcentrationRiskMemberus-gaap:NumberOfEmployeesTotalMember2022-09-30save:employeeGroup0001498710us-gaap:UnionizedEmployeesConcentrationRiskMemberus-gaap:NumberOfEmployeesTotalMember2022-01-012022-09-300001498710us-gaap:UnionizedEmployeesConcentrationRiskMemberus-gaap:NumberOfEmployeesTotalMembersave:AirLinePilotsAssociationInternationalMember2022-01-012022-09-300001498710us-gaap:UnionizedEmployeesConcentrationRiskMembersave:AssociationOfFlightAttendantsMemberus-gaap:NumberOfEmployeesTotalMember2022-01-012022-09-300001498710us-gaap:UnionizedEmployeesConcentrationRiskMemberus-gaap:NumberOfEmployeesTotalMembersave:ProfessionalAirlineFlightControlAssociationMember2022-01-012022-09-300001498710us-gaap:UnionizedEmployeesConcentrationRiskMemberus-gaap:NumberOfEmployeesTotalMembersave:InternationalAssociationOfMachinistsAndAerospaceWorkersMember2022-01-012022-09-300001498710us-gaap:UnionizedEmployeesConcentrationRiskMemberus-gaap:NumberOfEmployeesTotalMembersave:TransportWorkersUnionMember2022-01-012022-09-300001498710save:TransportWorkersUnionMember2022-02-212022-02-21save:employee0001498710save:EightPointZeroZeroPercentSeniorSecuredNotesDueTwoThousandTwentyFiveMemberus-gaap:SecuredDebtMember2021-12-310001498710save:EightPointZeroZeroPercentSeniorSecuredNotesDueTwoThousandTwentyFiveMemberus-gaap:EstimateOfFairValueFairValueDisclosureMemberus-gaap:SecuredDebtMemberus-gaap:FairValueInputsLevel3Member2022-09-300001498710save:EightPointZeroZeroPercentSeniorSecuredNotesDueTwoThousandTwentyFiveMemberus-gaap:EstimateOfFairValueFairValueDisclosureMemberus-gaap:SecuredDebtMemberus-gaap:FairValueInputsLevel3Member2021-12-310001498710save:FixedRateLoanMember2022-09-300001498710save:FixedRateLoanMemberus-gaap:EstimateOfFairValueFairValueDisclosureMemberus-gaap:FairValueInputsLevel3Member2022-09-300001498710save:FixedRateLoanMember2021-12-310001498710save:FixedRateLoanMemberus-gaap:EstimateOfFairValueFairValueDisclosureMemberus-gaap:FairValueInputsLevel3Member2021-12-310001498710save:PayrollSupportProgramCARESActMemberus-gaap:UnsecuredDebtMember2022-09-300001498710save:PayrollSupportProgramCARESActMemberus-gaap:UnsecuredDebtMemberus-gaap:EstimateOfFairValueFairValueDisclosureMemberus-gaap:FairValueInputsLevel3Member2022-09-300001498710save:PayrollSupportProgramCARESActMemberus-gaap:UnsecuredDebtMember2021-12-310001498710save:PayrollSupportProgramCARESActMemberus-gaap:UnsecuredDebtMemberus-gaap:EstimateOfFairValueFairValueDisclosureMemberus-gaap:FairValueInputsLevel3Member2021-12-310001498710save:EquipmentNotesSeriesA20151Member2022-09-300001498710us-gaap:EstimateOfFairValueFairValueDisclosureMembersave:EquipmentNotesSeriesA20151Memberus-gaap:FairValueInputsLevel2Member2022-09-300001498710save:EquipmentNotesSeriesA20151Member2021-12-310001498710us-gaap:EstimateOfFairValueFairValueDisclosureMembersave:EquipmentNotesSeriesA20151Memberus-gaap:FairValueInputsLevel2Member2021-12-310001498710save:EquipmentNotesSeriesB20151Member2022-09-300001498710us-gaap:EstimateOfFairValueFairValueDisclosureMembersave:EquipmentNotesSeriesB20151Memberus-gaap:FairValueInputsLevel2Member2022-09-300001498710save:EquipmentNotesSeriesB20151Member2021-12-310001498710us-gaap:EstimateOfFairValueFairValueDisclosureMembersave:EquipmentNotesSeriesB20151Memberus-gaap:FairValueInputsLevel2Member2021-12-310001498710save:EquipmentNotesSeriesC20151Member2022-09-300001498710us-gaap:EstimateOfFairValueFairValueDisclosureMemberus-gaap:FairValueInputsLevel2Membersave:EquipmentNotesSeriesC20151Member2022-09-300001498710save:EquipmentNotesSeriesC20151Member2021-12-310001498710us-gaap:EstimateOfFairValueFairValueDisclosureMemberus-gaap:FairValueInputsLevel2Membersave:EquipmentNotesSeriesC20151Member2021-12-310001498710save:EquipmentNotesSeriesAA20171Member2022-09-300001498710us-gaap:EstimateOfFairValueFairValueDisclosureMembersave:EquipmentNotesSeriesAA20171Memberus-gaap:FairValueInputsLevel2Member2022-09-300001498710save:EquipmentNotesSeriesAA20171Member2021-12-310001498710us-gaap:EstimateOfFairValueFairValueDisclosureMembersave:EquipmentNotesSeriesAA20171Memberus-gaap:FairValueInputsLevel2Member2021-12-310001498710save:EquipmentNotesSeriesA20171Member2022-09-300001498710us-gaap:EstimateOfFairValueFairValueDisclosureMembersave:EquipmentNotesSeriesA20171Memberus-gaap:FairValueInputsLevel2Member2022-09-300001498710save:EquipmentNotesSeriesA20171Member2021-12-310001498710us-gaap:EstimateOfFairValueFairValueDisclosureMembersave:EquipmentNotesSeriesA20171Memberus-gaap:FairValueInputsLevel2Member2021-12-310001498710save:EquipmentNotesSeriesB20171Member2022-09-300001498710save:EquipmentNotesSeriesB20171Memberus-gaap:EstimateOfFairValueFairValueDisclosureMemberus-gaap:FairValueInputsLevel2Member2022-09-300001498710save:EquipmentNotesSeriesB20171Member2021-12-310001498710save:EquipmentNotesSeriesB20171Memberus-gaap:EstimateOfFairValueFairValueDisclosureMemberus-gaap:FairValueInputsLevel2Member2021-12-310001498710save:EquipmentNotesSeriesC20171Member2022-09-300001498710us-gaap:EstimateOfFairValueFairValueDisclosureMembersave:EquipmentNotesSeriesC20171Memberus-gaap:FairValueInputsLevel2Member2022-09-300001498710save:EquipmentNotesSeriesC20171Member2021-12-310001498710us-gaap:EstimateOfFairValueFairValueDisclosureMembersave:EquipmentNotesSeriesC20171Memberus-gaap:FairValueInputsLevel2Member2021-12-310001498710save:FourPointSevenFivePercentConvertibleSeniorNotesMemberus-gaap:ConvertibleDebtMember2021-12-310001498710save:FourPointSevenFivePercentConvertibleSeniorNotesMemberus-gaap:ConvertibleDebtMember2022-09-300001498710save:FourPointSevenFivePercentConvertibleSeniorNotesMemberus-gaap:EstimateOfFairValueFairValueDisclosureMemberus-gaap:ConvertibleDebtMemberus-gaap:FairValueInputsLevel2Member2022-09-300001498710save:FourPointSevenFivePercentConvertibleSeniorNotesMemberus-gaap:EstimateOfFairValueFairValueDisclosureMemberus-gaap:ConvertibleDebtMemberus-gaap:FairValueInputsLevel2Member2021-12-310001498710us-gaap:ConvertibleDebtMembersave:OnePointZeroZeroPercentConvertibleNotesDueTwoThousandTwentySixMember2022-09-300001498710us-gaap:ConvertibleDebtMembersave:OnePointZeroZeroPercentConvertibleNotesDueTwoThousandTwentySixMember2021-12-310001498710us-gaap:EstimateOfFairValueFairValueDisclosureMemberus-gaap:ConvertibleDebtMembersave:OnePointZeroZeroPercentConvertibleNotesDueTwoThousandTwentySixMemberus-gaap:FairValueInputsLevel2Member2022-09-300001498710us-gaap:EstimateOfFairValueFairValueDisclosureMemberus-gaap:ConvertibleDebtMembersave:OnePointZeroZeroPercentConvertibleNotesDueTwoThousandTwentySixMemberus-gaap:FairValueInputsLevel2Member2021-12-310001498710us-gaap:EstimateOfFairValueFairValueDisclosureMember2022-09-300001498710us-gaap:EstimateOfFairValueFairValueDisclosureMember2021-12-310001498710us-gaap:StandbyLettersOfCreditMemberus-gaap:SecuredDebtMember2022-09-300001498710save:ControlAgreementsForInterestAndFeePaymentsMember2022-09-300001498710us-gaap:ConvertibleDebtMembersave:OnePointZeroZeroPercentConvertibleNotesDueTwoThousandTwentySixMember2022-02-050001498710us-gaap:ConvertibleDebtMembersave:OnePointZeroZeroPercentConvertibleNotesDueTwoThousandTwentySixMemberus-gaap:FairValueInputsLevel2Member2022-07-012022-09-300001498710us-gaap:ConvertibleDebtMembersave:OnePointZeroZeroPercentConvertibleNotesDueTwoThousandTwentySixMemberus-gaap:FairValueInputsLevel2Member2022-01-012022-09-300001498710us-gaap:FairValueMeasurementsRecurringMember2022-09-300001498710us-gaap:FairValueMeasurementsRecurringMemberus-gaap:FairValueInputsLevel1Member2022-09-300001498710us-gaap:FairValueMeasurementsRecurringMemberus-gaap:FairValueInputsLevel2Member2022-09-300001498710us-gaap:FairValueMeasurementsRecurringMemberus-gaap:FairValueInputsLevel3Member2022-09-300001498710us-gaap:FairValueMeasurementsRecurringMember2021-12-310001498710us-gaap:FairValueMeasurementsRecurringMemberus-gaap:FairValueInputsLevel1Member2021-12-310001498710us-gaap:FairValueMeasurementsRecurringMemberus-gaap:FairValueInputsLevel2Member2021-12-310001498710us-gaap:FairValueMeasurementsRecurringMemberus-gaap:FairValueInputsLevel3Member2021-12-310001498710save:RevolvingCreditFacilityDueTwoThousandTwentyFourMemberus-gaap:RevolvingCreditFacilityMemberus-gaap:LineOfCreditMember2021-12-310001498710save:RevolvingCreditFacilityDueTwoThousandTwentyFourMemberus-gaap:RevolvingCreditFacilityMemberus-gaap:LineOfCreditMember2022-09-300001498710save:FourPointSevenFivePercentConvertibleSeniorNotesMemberus-gaap:ConvertibleDebtMember2020-05-120001498710save:FourPointSevenFivePercentConvertibleSeniorNotesMemberus-gaap:ConvertibleDebtMember2020-05-122020-05-12save:day0001498710save:FourPointSevenFivePercentConvertibleSeniorNotesMemberus-gaap:ConvertibleDebtMember2022-04-012022-06-300001498710save:FourPointSevenFivePercentConvertibleSeniorNotesMemberus-gaap:ConvertibleDebtMember2022-09-302022-09-300001498710save:FourPointSevenFivePercentConvertibleSeniorNotesMemberus-gaap:ConvertibleDebtMember2022-07-012022-09-300001498710save:FourPointSevenFivePercentConvertibleSeniorNotesMemberus-gaap:ConvertibleDebtMember2022-01-012022-09-300001498710us-gaap:ConvertibleDebtMembersave:OnePointZeroZeroPercentConvertibleNotesDueTwoThousandTwentySixMember2021-04-300001498710us-gaap:ConvertibleDebtMembersave:OnePointZeroZeroPercentConvertibleNotesDueTwoThousandTwentySixMember2021-04-302021-04-300001498710save:EightPointZeroZeroPercentSeniorSecuredNotesDueTwoThousandTwentyFiveMemberus-gaap:SecuredDebtMember2022-07-012022-09-300001498710save:EightPointZeroZeroPercentSeniorSecuredNotesDueTwoThousandTwentyFiveMemberus-gaap:SecuredDebtMember2021-07-012021-09-300001498710save:EightPointZeroZeroPercentSeniorSecuredNotesDueTwoThousandTwentyFiveMemberus-gaap:SecuredDebtMember2022-01-012022-09-300001498710save:EightPointZeroZeroPercentSeniorSecuredNotesDueTwoThousandTwentyFiveMemberus-gaap:SecuredDebtMember2021-01-012021-09-300001498710save:FixedRateLoanMember2022-07-012022-09-300001498710save:FixedRateLoanMember2021-07-012021-09-300001498710save:FixedRateLoanMember2022-01-012022-09-300001498710save:FixedRateLoanMember2021-01-012021-09-300001498710save:PayrollSupportProgramCARESActMemberus-gaap:UnsecuredDebtMember2022-07-012022-09-300001498710save:PayrollSupportProgramCARESActMemberus-gaap:UnsecuredDebtMember2021-07-012021-09-300001498710save:PayrollSupportProgramCARESActMemberus-gaap:UnsecuredDebtMember2022-01-012022-09-300001498710save:PayrollSupportProgramCARESActMemberus-gaap:UnsecuredDebtMember2021-01-012021-09-300001498710save:EquipmentNotesSeriesA20151Member2022-07-012022-09-300001498710save:EquipmentNotesSeriesA20151Member2021-07-012021-09-300001498710save:EquipmentNotesSeriesA20151Member2022-01-012022-09-300001498710save:EquipmentNotesSeriesA20151Member2021-01-012021-09-300001498710save:EquipmentNotesSeriesB20151Member2022-07-012022-09-300001498710save:EquipmentNotesSeriesB20151Member2021-07-012021-09-300001498710save:EquipmentNotesSeriesB20151Member2022-01-012022-09-300001498710save:EquipmentNotesSeriesB20151Member2021-01-012021-09-300001498710save:EquipmentNotesSeriesC20151Member2022-07-012022-09-300001498710save:EquipmentNotesSeriesC20151Member2021-07-012021-09-300001498710save:EquipmentNotesSeriesC20151Member2022-01-012022-09-300001498710save:EquipmentNotesSeriesC20151Member2021-01-012021-09-300001498710save:EquipmentNotesSeriesAA20171Member2022-07-012022-09-300001498710save:EquipmentNotesSeriesAA20171Member2021-07-012021-09-300001498710save:EquipmentNotesSeriesAA20171Member2022-01-012022-09-300001498710save:EquipmentNotesSeriesAA20171Member2021-01-012021-09-300001498710save:EquipmentNotesSeriesA20171Member2022-07-012022-09-300001498710save:EquipmentNotesSeriesA20171Member2021-07-012021-09-300001498710save:EquipmentNotesSeriesA20171Member2022-01-012022-09-300001498710save:EquipmentNotesSeriesA20171Member2021-01-012021-09-300001498710save:EquipmentNotesSeriesB20171Member2022-07-012022-09-300001498710save:EquipmentNotesSeriesB20171Member2021-07-012021-09-300001498710save:EquipmentNotesSeriesB20171Member2022-01-012022-09-300001498710save:EquipmentNotesSeriesB20171Member2021-01-012021-09-300001498710save:EquipmentNotesSeriesC20171Member2022-07-012022-09-300001498710save:EquipmentNotesSeriesC20171Member2021-07-012021-09-300001498710save:EquipmentNotesSeriesC20171Member2022-01-012022-09-300001498710save:EquipmentNotesSeriesC20171Member2021-01-012021-09-300001498710us-gaap:ConvertibleDebtMember2022-07-012022-09-300001498710us-gaap:ConvertibleDebtMember2021-07-012021-09-300001498710us-gaap:ConvertibleDebtMember2022-01-012022-09-300001498710us-gaap:ConvertibleDebtMember2021-01-012021-09-300001498710us-gaap:RevolvingCreditFacilityMember2022-07-012022-09-300001498710us-gaap:RevolvingCreditFacilityMember2021-07-012021-09-300001498710us-gaap:RevolvingCreditFacilityMember2022-01-012022-09-300001498710us-gaap:RevolvingCreditFacilityMember2021-01-012021-09-300001498710save:FinanceLeaseObligationsMember2022-07-012022-09-300001498710save:FinanceLeaseObligationsMember2021-07-012021-09-300001498710save:FinanceLeaseObligationsMember2022-01-012022-09-300001498710save:FinanceLeaseObligationsMember2021-01-012021-09-300001498710us-gaap:SecuredDebtMember2022-07-012022-09-300001498710us-gaap:SecuredDebtMember2022-01-012022-09-300001498710us-gaap:SecuredDebtMember2021-07-012021-09-300001498710us-gaap:SecuredDebtMember2021-01-012021-09-300001498710us-gaap:ConvertibleDebtMembersave:ConvertibleDebtDueIn2026Member2022-07-012022-09-300001498710us-gaap:ConvertibleDebtMembersave:ConvertibleDebtDueIn2026Member2022-01-012022-09-300001498710us-gaap:ConvertibleDebtMembersave:ConvertibleDebtDueIn2025And2026Member2022-07-012022-09-300001498710us-gaap:ConvertibleDebtMembersave:ConvertibleDebtDueIn2025And2026Member2022-01-012022-09-300001498710us-gaap:ConvertibleDebtMembersave:ConvertibleDebtDueIn2025Member2021-07-012021-09-300001498710us-gaap:ConvertibleDebtMembersave:ConvertibleDebtDueIn2026Member2021-07-012021-09-300001498710us-gaap:ConvertibleDebtMembersave:ConvertibleDebtDueIn2026Member2021-01-012021-09-300001498710us-gaap:ConvertibleDebtMembersave:ConvertibleDebtDueIn2025Member2021-01-012021-09-30

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
 _______________________________________________________________________
Form 10-Q
_______________________________________________________________________
(Mark One)
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 2022
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from              to             
Commission File Number: 001-35186
_______________________________________________________________________
SPIRIT AIRLINES, INC.
(Exact name of registrant as specified in its charter)
_______________________________________________________________________
Delaware38-1747023
(State or other jurisdiction of
incorporation or organization)
(I.R.S. Employer
Identification No.)
2800 Executive WayMiramarFlorida33025
(Address of principal executive offices)(Zip Code)

(954) 447-7920
(Registrant’s telephone number, including area code) 
____________________________________________________________________
Securities registered pursuant to Section 12(b) of the Act:
Title of each className of exchange on which registeredTrading Symbol
Common Stock, $0.0001 par valueNew York Stock ExchangeSAVE

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes    No  

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).    Yes      No  

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and "emerging growth company" in Rule 12b-2 of the Exchange Act. (Check one):
Large accelerated filerAccelerated filer
Non-accelerated filerSmaller reporting company
(Do not check if a smaller reporting company)Emerging growth company
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.     
Indicate by check mark whether the registrant is a shell company (as defined by Rule 12b-2 of the Exchange Act).    Yes      No  
Indicate the number of shares outstanding of each of the registrant’s classes of common stock as of the close of business on October 20, 2022:
Class Number of Shares
Common Stock, $0.0001 par value 108,857,162

1


Table of Contents
INDEX
 
 Page No.

2


PART I. Financial Information
ITEM 1.UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
Spirit Airlines, Inc.
Condensed Consolidated Statements of Operations
(unaudited, in thousands, except per share amounts)

 
 Three Months Ended September 30,Nine Months Ended September 30,
2022202120222021
Operating revenues:
Passenger$1,322,079 $907,232 $3,619,694 $2,204,074 
Other21,100 15,399 57,443 39,145 
Total operating revenues1,343,179 922,631 3,677,137 2,243,219 
Operating expenses:
Salaries, wages and benefits
311,957 277,372 926,481 780,300 
Aircraft fuel508,496 259,618 1,435,714 617,373 
Landing fees and other rents95,174 77,703 270,131 231,308 
Depreciation and amortization78,184 74,260 230,844 222,275 
Aircraft rent75,332 65,873 210,008 185,296 
Maintenance, materials and repairs45,126 41,183 136,048 110,725 
Distribution47,385 36,085 131,460 94,990 
Loss on disposal of assets9,374 532 31,562 1,838 
Special charges (credits)38,359 (85,775)71,926 (377,715)
Other operating170,182 161,785 526,151 372,153 
Total operating expenses1,379,569 908,636 3,970,325 2,238,543 
Operating income (loss)(36,390)13,995 (293,188)4,676 
Other (income) expense:
Interest expense23,708 35,709 91,712 120,177 
Loss on extinguishment of debt   331,630 
Capitalized interest(5,964)(4,677)(16,903)(14,040)
Interest income(5,642)(306)(8,670)(5,050)
Other (income) expense402 271 1,115 452 
Total other (income) expense12,504 30,997 67,254 433,169 
Income (loss) before income taxes(48,894)(17,002)(360,442)(428,493)
Provision (benefit) for income taxes(12,517)(31,776)(76,956)(43,083)
Net income (loss)$(36,377)$14,774 $(283,486)$(385,410)
Basic income (loss) per share$(0.33)$0.14 $(2.61)$(3.71)
Diluted income (loss) per share$(0.33)$0.14 $(2.61)$(3.71)
The accompanying Notes are an integral part of these Condensed Consolidated Financial Statements.
1



Spirit Airlines, Inc.
Condensed Consolidated Statements of Comprehensive Income (Loss)
(unaudited, in thousands)
Three Months Ended September 30,Nine Months Ended September 30,
2022202120222021
Net income (loss)$(36,377)$14,774 $(283,486)$(385,410)
Unrealized gain (loss) on short-term investment securities and cash and cash equivalents, net of deferred taxes of $32, $(1), $(96) and $(5)
109 (4)(329)(16)
Interest rate derivative loss reclassified into earnings, net of taxes of $11, $13, $37 and $40
38 43 114 132 
Other comprehensive income (loss)$147 $39 $(215)$116 
Comprehensive income (loss)$(36,230)$14,813 $(283,701)$(385,294)

The accompanying Notes are an integral part of these Condensed Consolidated Financial Statements.

2


Spirit Airlines, Inc.
Condensed Consolidated Balance Sheets
(unaudited, in thousands)
September 30, 2022December 31, 2021
Assets
Current assets:
Cash and cash equivalents$953,428 $1,333,507 
Restricted cash95,400 95,400 
Short-term investment securities106,255 106,313 
Accounts receivable, net172,212 128,828 
Aircraft maintenance deposits, net13,756 10,726 
Income tax receivable36,363 37,890 
Prepaid expenses and other current assets173,139 129,827 
Total current assets1,550,553 1,842,491 
Property and equipment:
Flight equipment4,447,877 4,356,523 
Ground property and equipment477,752 384,928 
Less accumulated depreciation(1,044,492)(884,858)
3,881,137 3,856,593 
Operating lease right-of-use assets2,332,808 1,950,520 
Pre-delivery deposits on flight equipment496,812 484,821 
Long-term aircraft maintenance deposits25,880 38,166 
Deferred heavy maintenance, net360,034 330,062 
Other long-term assets38,271 37,372 
Total assets$8,685,495 $8,540,025 
Liabilities and shareholders’ equity
Current liabilities:
Accounts payable$112,007 $44,952 
Air traffic liability495,815 382,317 
Current maturities of long-term debt, net and finance leases353,937 208,948 
Current maturities of operating leases175,614 158,631 
Other current liabilities531,158 480,754 
Total current liabilities1,668,531 1,275,602 
Long-term debt, net and finance leases, less current maturities2,657,830 2,975,823 
Operating leases, less current maturities2,104,484 1,751,351 
Deferred income taxes297,875 375,472 
Deferred gains and other long-term liabilities116,998 47,742 
Shareholders’ equity:
Common stock11 11 
Additional paid-in-capital1,143,076 1,131,826 
Treasury stock, at cost(77,446)(75,639)
Retained earnings774,883 1,058,369 
Accumulated other comprehensive loss(747)(532)
Total shareholders’ equity1,839,777 2,114,035 
Total liabilities and shareholders’ equity$8,685,495 $8,540,025 
The accompanying Notes are an integral part of these Condensed Consolidated Financial Statements.
3


Spirit Airlines, Inc.
Condensed Consolidated Statements of Cash Flows
(unaudited, in thousands)

 Nine Months Ended September 30,
20222021
Operating activities:
Net loss$(283,486)$(385,410)
Adjustments to reconcile net loss to net cash provided (used) by operations:
Losses reclassified from other comprehensive income 151 172 
Share-based compensation 8,545 9,972 
Allowance for doubtful accounts (recoveries)(108)138 
Amortization of debt issuance costs9,897 9,685 
Depreciation and amortization230,844 222,275 
Accretion of 8.00% senior secured notes
782 1,012 
Amortization of debt discount10,154  
Mark to market adjustments on derivative liability25,200  
Deferred income tax benefit(77,538)(44,119)
Loss on disposal of assets31,562 1,838 
Loss on extinguishment of debt 331,630 
Changes in operating assets and liabilities:
Accounts receivable, net(43,276)(90,860)
Aircraft maintenance deposits, net9,256 42,598 
Long-term deposits and other assets(39,809)(8,495)
Prepaid income taxes 11 
Deferred heavy maintenance(99,314)(45,189)
Income tax receivable1,527 109,570 
Accounts payable48,081 21,538 
Air traffic liability113,498 45,504 
Other liabilities21,466 54,631 
Other310 538 
Net cash provided (used) by operating activities(32,258)277,039 
4


Investing activities:
Purchase of available-for-sale investment securities(59,707)(84,134)
Proceeds from the maturity and sale of available-for-sale investment securities59,000 83,500 
Pre-delivery deposits on flight equipment, net of refunds(15,636)(116,771)
Capitalized interest(13,306)(12,704)
Assets under construction for others(2)(1,206)
Purchase of property and equipment(174,751)(132,131)
Net cash used in investing activities(204,402)(263,446)
Financing activities:
Proceeds from issuance of long-term debt 562,996 
Proceeds from issuance of warrants 375,662 
Payments on debt obligations(139,783)(903,168)
Payments for the early extinguishment of debt (317,905)
Payments on finance lease obligations(631)(615)
Reimbursement for assets under construction for others2 995 
Repurchase of common stock(1,807)(1,352)
Debt issuance costs(1,200)(2,746)
Net cash used by financing activities(143,419)(286,133)
Net decrease in cash, cash equivalents, and restricted cash(380,079)(272,540)
Cash, cash equivalents, and restricted cash at beginning of period (1)1,428,907 1,861,124 
Cash, cash equivalents, and restricted cash at end of period (1) $1,048,828 $1,588,584 
Supplemental disclosures
Cash payments for:
Interest, net of capitalized interest$79,791 $105,804 
Income taxes received, net$(411)$(108,544)
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows for operating leases$211,944 $197,448 
Financing cash flows for finance leases $47 $72 
Non-cash transactions:
Capital expenditures funded by finance lease borrowings$ $538 
Capital expenditures funded by operating lease borrowings $490,690 $511,277 
(1) The sum of cash and cash equivalents and restricted cash on the Company's condensed consolidated balance sheets equals cash, cash equivalents, and restricted cash in the Company's condensed consolidated statement of cash flows.
The accompanying Notes are an integral part of these Condensed Consolidated Financial Statements.
5


Spirit Airlines, Inc.
Condensed Consolidated Statements of Shareholders’ Equity
(unaudited, in thousands)
Nine Months Ended September 30, 2021
Common StockAdditional Paid-In-CapitalTreasury StockRetained EarningsAccumulated Other Comprehensive Income (Loss)Total
Balance at December 31, 2020$10 $799,549 $(74,124)$1,524,878 $(618)$2,249,695 
Effect of ASU No. 2020-06 implementation
— (55,590)— 6,060 — (49,530)
Share-based compensation— 4,254 — — — 4,254 
Repurchase of common stock— — (1,307)— — (1,307)
Changes in comprehensive income— — — — 52 52 
Issuance of warrants— 2,146 — — — 2,146 
Net loss— — — (112,321)— (112,321)
Balance at March 31, 2021$10 $750,359 $(75,431)$1,418,617 $(566)$2,092,989 
Issuance of common stock and warrants, net 1 373,186 — — — 373,187 
Share-based compensation— 2,486 — — — 2,486 
Repurchase of common stock— — (17)— — (17)
Changes in comprehensive income— — — — 25 25 
Net loss— — — (287,863)— (287,863)
Balance at June 30, 2021$11 $1,126,031 $(75,448)$1,130,754 $(541)$2,180,807 
Share-based compensation— 3,232 — — — 3,232 
Repurchase of common stock— — (28)— — (28)
Changes in comprehensive income— — — — 39 39 
Net income— — — 14,774 — 14,774 
Balance at September 30, 2021$11 $1,129,263 $(75,476)$1,145,528 $(502)$2,198,824 


Nine Months Ended September 30, 2022
Common StockAdditional Paid-In-CapitalTreasury StockRetained Earnings Accumulated Other Comprehensive Income (Loss)Total
Balance at December 31, 2021$11 $1,131,826 $(75,639)$1,058,369 $(532)$2,114,035 
Share-based compensation— 4,046 — — — 4,046 
Repurchase of common stock— — (1,772)— — (1,772)
Changes in comprehensive income— — — — (230)(230)
Net loss— — — (194,703)— (194,703)
Balance at March 31, 2022$11 $1,135,872 $(77,411)$863,666 $(762)$1,921,376 
Convertible debt conversions 2,705 — — — 2,705 
Share-based compensation— 1,677 — — — 1,677 
Repurchase of common stock— — (5)— — (5)
Changes in comprehensive income— — — — (132)(132)
Net loss— — — (52,406)— (52,406)
Balance at June 30, 2022$11$1,140,254$(77,416)$811,260$(894)$1,873,215
Share-based compensation— 2,822 — — — 2,822 
Repurchase of common stock— — (30)— — (30)
Changes in comprehensive income— — — — 147 147 
Net loss— — — (36,377)— (36,377)
Balance at September 30, 2022$11 $1,143,076 $(77,446)$774,883 $(747)$1,839,777 
The accompanying Notes are an integral part of these Condensed Consolidated Financial Statements.
6


Notes to Condensed Consolidated Financial Statements
(unaudited)
1. Basis of Presentation

The accompanying unaudited condensed consolidated financial statements include the accounts of Spirit Airlines, Inc. (“Spirit”) and its consolidated subsidiaries (the "Company").

These unaudited condensed consolidated financial statements reflect all normal recurring adjustments which management believes are necessary to fairly present the financial position, results of operations and cash flows of the Company for the respective periods presented. Certain information and footnote disclosures normally included in the audited annual financial statements prepared in accordance with U.S. generally accepted accounting principles ("GAAP") have been condensed or omitted pursuant to the rules and regulations of the Securities and Exchange Commission for Form 10-Q. These unaudited interim condensed consolidated financial statements should be read in conjunction with the audited financial statements of the Company and notes thereto included in the Company's Annual Report on Form 10-K for the year ended December 31, 2021 filed with the Securities and Exchange Commission on February 8, 2022.

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect both the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results may differ from these estimates.

The interim results reflected in the unaudited condensed consolidated financial statements are not necessarily indicative of the results that may be expected for other interim periods or for the full year. The air transportation business is subject to significant seasonal fluctuations as demand is generally greater in the second and third quarters of each year. However, beginning in early 2020, as a result of the COVID-19 pandemic, demand has not always been in line with such trends. The air transportation business is volatile and highly affected by economic cycles and trends.


2. Merger

Termination of Frontier Merger

On July 27, 2022, Spirit, Frontier Group Holdings, Inc., a Delaware corporation (“Frontier”), and Top Gun Acquisition Corp., a Delaware corporation and a direct, wholly owned subsidiary of Frontier (“Frontier Merger Sub”), entered into a Termination Agreement (the “Termination Agreement”), pursuant to which the parties agreed to terminate the Agreement and Plan of Merger, dated as of February 5, 2022 (as amended on June 2, 2022 and June 24, 2022, the “Frontier Merger Agreement”), among Spirit, Frontier and Frontier Merger Sub, effective immediately. Under the terms of the Termination Agreement, Spirit paid $25.0 million in cash to Frontier for Frontier’s reasonable and documented out-of-pocket costs and expenses (the “Frontier Expenses”).

Announcement of JetBlue Merger

On July 28, 2022, Spirit entered into an Agreement and Plan of Merger (the “Merger Agreement”) with JetBlue Airways Corporation, a Delaware corporation (“JetBlue”), and Sundown Acquisition Corp., a Delaware corporation and a direct, wholly owned subsidiary of JetBlue (“Merger Sub”), pursuant to which and subject to the terms and conditions therein, Merger Sub will merge with and into Spirit, with Spirit continuing as the surviving entity (the “Merger”). As a result of the Merger, each outstanding share of Spirit's common stock (except for dissenting shares, treasury stock, and shares of Spirit's common stock owned by JetBlue, Merger Sub or any of their respective wholly owned subsidiaries), will be converted into the right to receive an amount in cash per share, without interest, equal to (such amount, the “Merger Consideration”) (i) $33.50 minus (ii) (A) $2.50 (the “Approval Prepayment Amount”), to the extent paid (the “Approval Prepayment”) upon the adoption by Spirit stockholders of the Merger Agreement (or, in the event that the closing of the Merger (the “Closing”) occurs after the record date for the prepayment of, but before the payment date of, such Approval Prepayment Amount, to the extent payable after the Closing), and (B) an additional per share prepayment amount calculated as the product of $0.10 and the number of additional prepayments paid (or, in the event the Closing occurs after the record date of, but before the payment date of any such additional prepayment, to the extent payable after the Closing), not to exceed $1.15 per share of Spirit common stock, by JetBlue to Spirit stockholders in accordance with the Merger Agreement after December 31, 2022 (each such payment is referred to as an “Additional Prepayment” and such $0.10 amount is referred to as the “Additional Prepayment Amount”).

7


JetBlue will pay or cause to be paid the Approval Prepayment Amount to Spirit stockholders as of the record date established by Spirit for the special meeting to approve the Merger Agreement within five business days following such Spirit stockholder approval. Thereafter, on or prior to the last business day of each month beginning after December 31, 2022 until the earlier of the Closing or termination of the Merger Agreement, JetBlue will also pay or cause to be paid the Additional Prepayment Amount to Spirit stockholders as of a record date not more than 5 business days prior to the last business day of such month. The Company expects payments made from JetBlue to Spirit stockholders will not impact the Company's results of operations or cash flows. Under the terms of the Merger Agreement, JetBlue reimbursed the Company for the $25.0 million Frontier Expenses discussed above.

On October 19, 2022, Spirit’s stockholders approved the Merger Agreement at a special meeting of stockholders. The record date for both the Company’s special meeting and the Approval Prepayment is September 12, 2022. Therefore, all Spirit stockholders of record as of September 12, 2022 are entitled to receive the Approval Prepayment in accordance with the Merger Agreement. On October 26, 2022, JetBlue paid the Spirit stockholders the Approval Prepayment Amount of $2.50 per share.

Completion of the Merger is subject to the satisfaction or waiver of certain closing conditions, including, among other things: (1) approval of the transactions by Spirit’s stockholders, which was received on October 19, 2022; (2) receipt of applicable regulatory approvals, including approvals from the U.S. Federal Communications Commission, the U.S. Federal Aviation Administration and the U.S. Department of Transportation ("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 competition laws, and other required regulatory approvals; (3) the absence of any law or order prohibiting the consummation of the transactions; and (4) the absence of any material adverse effect (as defined in the Merger Agreement) on Spirit.

Spirit, JetBlue and Merger Sub each make certain customary representations, warranties and covenants, as applicable, in the Merger Agreement.

In addition, Spirit has agreed, among other things, that neither it nor any of its directors, officers, employees and representatives will (1) solicit alternative transactions, (2) participate in any discussions or negotiations relating to alternative transactions, (3) furnish any non-public information in connection with alternative transactions or (4) enter into any agreement relating to alternative transactions, except under limited circumstances described in the Merger Agreement. However, in certain circumstances, Spirit may terminate the Merger Agreement to enter into a definitive agreement for a Superior Proposal (as defined in the Merger Agreement).

The Merger Agreement contains certain termination rights for Spirit and JetBlue, including, without limitation, a right for either party to terminate if the Merger is not consummated on or before July 28, 2023, subject to certain extensions up to July 24, 2024 if needed to obtain regulatory approvals. Upon the termination of the Merger Agreement under specified circumstances, Spirit will be required to pay JetBlue a termination fee of $94.2 million. Upon the termination of the Merger Agreement by JetBlue because of a material, uncured breach by Spirit of the Merger Agreement, Spirit will be required to pay JetBlue an amount equal to the sum of all amounts paid by JetBlue to the Spirit stockholders. Upon the termination of the Merger Agreement for failure to obtain antitrust regulatory clearance, JetBlue will be required to pay (i) to Spirit, $70.0 million, and (ii) to the Spirit stockholders, the excess of (A) $400.0 million minus (B) the sum of the Approval Prepayment Amount and all Additional Prepayment Amounts previously paid by JetBlue to the Spirit stockholders.
8


3. Revenue
    
Operating revenues are comprised of passenger revenues, which includes fare and non-fare revenues, and other revenues. The following table shows disaggregated operating revenues for the three and nine months ended September 30, 2022 and 2021.
Three Months Ended September 30,Nine Months Ended September 30,
2022202120222021
(in thousands)
Operating revenues:
Fare$673,848 $421,015 $1,796,044 $964,993 
Non-fare648,231 486,217 1,823,650 1,239,081 
Total passenger revenues1,322,079 907,232 3,619,694 2,204,074 
Other21,100 15,399 57,443 39,145 
Total operating revenues$1,343,179 $922,631 $3,677,137 $2,243,219 

The Company is managed as a single business unit that provides air transportation for passengers. Operating revenues by geographic region as defined by the DOT are summarized below:
Three Months Ended September 30,Nine Months Ended September 30,
2022202120222021
(in thousands)
DOT—Domestic$1,163,193 $801,766 $3,154,984 $1,980,762 
DOT—Latin America179,986 120,865 522,153 262,457 
Total$1,343,179 $922,631 $3,677,137 $2,243,219 
The Company defers the amount for award travel obligations as part of loyalty deferred revenue within air traffic liability ("ATL") on the Company's condensed consolidated balance sheets and recognizes loyalty travel awards in passenger revenues as points are used for travel or expire unused.

As of September 30, 2022 and December 31, 2021, the Company had ATL balances of $495.8 million and $382.3 million, respectively. Substantially all of the Company's ATL is expected to be recognized within 12 months of the respective balance sheet date.

Loyalty Programs

The Company operates the Spirit Saver$ Club®, which is a subscription-based loyalty program that allows members access to unpublished, extra-low fares as well as discounted prices on bags and seats, shortcut boarding and security, "Flight Flex" flight modification product, and exclusive offers on hotels, rental cars and other travel necessities. The Company also operates the Free Spirit loyalty program, which attracts members and partners and builds customer loyalty for the Company by offering a variety of awards, benefits and services. Free Spirit loyalty program members earn and accrue points for dollars spent on Spirit for flights and other non-fare services as well as services from non-air partners such as retail merchants, hotels or car rental companies or by making purchases with credit cards issued by partner banks and financial services providers. Points earned and accrued by Free Spirit loyalty program members can be redeemed for travel awards such as free (other than taxes and government-imposed fees), discounted or upgraded travel.


9


4. Loss on Disposal

During the three and nine months ended September 30, 2022, the Company recorded $9.4 million and $31.6 million, respectively, in loss on disposal of assets in the condensed consolidated statements of operations. Loss on disposal of assets for the three months ended September 30, 2022 primarily consisted of $9.4 million related to the loss on four aircraft sale leaseback transactions completed during the third quarter of 2022. Loss on disposal of assets for the nine months ended September 30, 2022 primarily consisted of $23.8 million related to the loss on 11 aircraft sale leaseback transactions completed during the nine months ended September 30, 2022 and $6.6 million related to the impairment of one spare engine during the first quarter of 2022 which was damaged beyond economic repair.

During the three and nine months ended September 30, 2021, the Company recorded $0.5 million and $1.8 million, respectively, in loss on disposal of assets in the condensed consolidated statements of operations. Loss on disposal of assets for the three months ended September 30, 2021 primarily consisted of $0.5 million related to the loss on one aircraft sale leaseback transaction completed during the third quarter of 2021. Loss on disposal of assets for the nine months ended September 30, 2021 primarily consisted of $1.1 million related to the sale of auxiliary power units ("APUs"), $0.6 million related to the loss on three aircraft sale leaseback transactions completed during the second and third quarters of 2021 and disposal of excess and obsolete inventory.


5. Special Charges (Credits)

During the three and nine months ended September 30, 2022, the Company recorded $17.7 million and $39.2 million, respectively, within special charges (credits) on the Company's condensed consolidated statements of operations, in legal, advisory and other fees related to the former Frontier Merger Agreement, JetBlue's unsolicited proposal, received in March 2022, to acquire all of the Company's outstanding shares in an all-cash transaction and the JetBlue Merger Agreement entered into on July 28, 2022.

As part of the former Frontier Merger Agreement, the Company implemented an employee retention bonus program. On July 27, 2022, the Frontier Merger Agreement was mutually terminated; therefore, 50% of the target retention bonus was awarded to the Company's employees during the third quarter of 2022. In addition, as part of the JetBlue Merger Agreement, the Company implemented an additional employee retention bonus program during the third quarter of 2022. The target retention bonus will be paid to the Company's employees upon the successful close of the Merger. In the event the Merger fails or is abandoned, 50% of the target retention bonus will be paid to the Company's employees upon termination of the Merger. During the three and nine months ended September 30, 2022, the Company recorded $20.6 million and $32.7 million, respectively, within special charges (credits) on the Company's condensed consolidated statements of operations, related to the Company's retention bonus programs.

During the three and nine months ended September 30, 2021, the Company recorded $86.4 million and $342.2 million, respectively, net of related costs, within special credits on the Company’s condensed consolidated statements of operations related to the grant component of the agreements with the United States Department of the Treasury (the "Treasury") pursuant to the Consolidated Appropriations Act, which extended the Payroll Support Program (“PSP”) portion of the CARES Act through March 31, 2021 (“PSP2”) and the American Rescue Plan Act of 2021, which also authorized the Treasury to provide additional assistance to passenger air carriers that received financial assistance under PSP2 (“PSP3”).

In addition, during the first and second quarters of 2021, the Company recorded $37.5 million related to the CARES Act Employee Retention credit within special credits on the Company’s condensed consolidated statements of operation. During the third quarter of 2021, the Company did not qualify for the employee retention credit. These special credits were partially offset by $0.6 million and $2.0 million in special charges recorded during the three and nine months ended September 30, 2021, respectively. The $0.6 million and $2.0 million were related to salaries, wages and benefits paid to rehired employees, previously terminated with the Company's involuntary employee separation program, in compliance with the restrictions of PSP2 and PSP3.



10


6. Earnings (Loss) per Share

The following table sets forth the computation of basic and diluted earnings (loss) per common share:

 
 Three Months Ended September 30,Nine Months Ended September 30,
 2022202120222021
(in thousands, except per-share amounts)
Numerator
Net income (loss)$(36,377)$14,774 $(283,486)$(385,410)
Interest on convertible debt, net of income taxesN/A259 N/AN/A
Net income after assumed conversions for diluted earnings per shareN/A$15,033 N/AN/A
Denominator
Weighted-average shares outstanding, basic108,853 108,403 108,711 103,851 
Effect of dilutive shares (1)
 2,632   
Adjusted weighted-average shares outstanding, diluted108,853 111,035 108,711 103,851 
Earnings (loss) per share
Basic earnings (loss) per common share$(0.33)$0.14 $(2.61)$(3.71)
Diluted earnings (loss) per common share$(0.33)$0.14 $(2.61)$(3.71)
(1) Includes the effect of dilutive shares related to the convertible debt due in 2025, restricted stock awards, performance share awards and warrants issued.
Anti-dilutive common stock equivalents excluded from the diluted loss per share calculation for any of the periods presented are not material.


7. Short-term Investment Securities

The Company's short-term investment securities are classified as available-for-sale and generally consist of U.S. Treasury and U.S. government agency securities with contractual maturities of 12 months or less. These securities are stated at fair value within current assets on the Company's condensed consolidated balance sheets. Realized gains and losses on sales of investments, if any, are reflected in non-operating other (income) expense in the condensed consolidated statements of operations.

As of September 30, 2022 and December 31, 2021, the Company had $106.3 million in short-term available-for-sale investment securities. During the nine months ended September 30, 2022, these investments earned interest income at a weighted-average fixed rate of approximately 0.5%. For the three and nine months ended September 30, 2022, an unrealized gain of $100 thousand and unrealized loss of $335 thousand, respectively, net of deferred taxes, was recorded within accumulated other comprehensive income ("AOCI") related to these investment securities. For the three and nine months ended September 30, 2021, an unrealized loss of $1 thousand and $8 thousand, respectively, net of deferred taxes, was recorded within AOCI related to these investment securities. For the three and nine months ended September 30, 2022 and September 30, 2021, the Company had no realized gains or losses as the Company did not sell any of these securities during these periods. As of September 30, 2022 and December 31, 2021, $378 thousand and $43 thousand, net of tax, respectively, remained in AOCI, related to these instruments.


11


8. Accrued Liabilities

Other current liabilities as of September 30, 2022 and December 31, 2021 consisted of the following:

September 30, 2022December 31, 2021
(in thousands)
Salaries, wages and benefits$162,455 $142,893 
Federal excise and other passenger taxes and fees payable88,401 77,409 
Airport obligations78,890 85,772 
Fuel54,313 55,103 
Aircraft maintenance46,861 39,178 
Interest payable25,412 24,526 
Aircraft and facility lease obligations22,729 23,049 
Other52,097 32,824 
Other current liabilities$531,158 $480,754 


9.Leases

The Company leases aircraft, engines, airport terminals, maintenance and training facilities, aircraft hangars, commercial real estate, and office and computer equipment, among other items. Certain of these leases include provisions for variable lease payments which are based on several factors, including, but not limited to, relative leased square footage, enplaned passengers, and airports’ annual operating budgets. Due to the variable nature of the rates, these leases are not recorded on the Company's condensed consolidated balance sheets as a right-of-use asset and lease liability. Lease terms are generally 8 years to 18 years for aircraft and up to 99 years for other leased equipment and property.
During the nine months ended September 30, 2022, the Company took delivery of 11 aircraft under sale leaseback transactions and 3 spare engines purchased with cash. As of September 30, 2022, the Company had a fleet consisting of 184 A320 family aircraft. As of September 30, 2022, the Company had 78 aircraft financed under operating leases with lease term expirations between 2024 and 2040. In addition, the Company owned 105 aircraft of which 33 were purchased off lease and were unencumbered as of September 30, 2022. The Company also had one aircraft recorded as a failed sale leaseback. The related finance obligation is recorded within long-term debt in the Company's condensed consolidated balance sheets. Refer to Note 12, Debt and Other Obligations for additional information. The related asset is recorded within flight equipment in the Company's condensed consolidated balance sheets. As of September 30, 2022, the Company also had 6 spare engines financed under operating leases with lease term expiration dates ranging from 2024 to 2033 and owned 23 spare engines, of which, as of September 30, 2022, 2 were unencumbered and 21 were pledged as collateral under the Company's revolving credit facility maturing in 2024.
As of September 30, 2022, one of the Company’s aircraft and engine master lease agreements provides that the Company pays maintenance reserves to aircraft lessors to be held as collateral in advance of the Company’s required performance of major maintenance activities. A majority of these maintenance reserve payments are calculated based on a utilization measure, such as flight hours or cycles, while some maintenance reserve payments are fixed, time-based contractual amounts. Maintenance reserve payments that are probable of being recovered when the Company performs qualifying maintenance are recorded in aircraft maintenance deposits on the Company's condensed consolidated balance sheets. Fixed maintenance reserve payments that are not probable of being recovered are considered lease payments and are included in the right-of-use asset and lease liability. Maintenance reserve payments that are based on a utilization measure and are not probable of being recovered are considered variable lease payments that are recognized when they are probable of being incurred and are not included in the right-of-use asset and lease liability.
Some of the master lease agreements do not require that the Company pay maintenance reserves so long as the Company's cash balance does not fall below a certain level. As of September 30, 2022, the Company was in full compliance with those requirements and does not anticipate having to pay reserves related to these master leases in the future.
Aircraft rent expense consists of monthly lease rents for aircraft and spare engines under the terms of the Company's aircraft and spare engine lease agreements recognized on a straight-line basis. Aircraft rent expense also includes maintenance reserves paid to aircraft lessors in advance of the performance of major maintenance activities that are not probable of being reimbursed and probable lease return condition obligations.
12


Under the terms of the lease agreements, the Company will continue to operate and maintain the aircraft. Payments under the majority of the lease agreements are fixed for the term of the lease. The lease agreements contain standard termination events, including termination upon a breach of the Company's obligations to make rental payments and upon any other material breach of the Company's obligations under the leases, and standard maintenance and return condition provisions. These return provisions are evaluated at inception of the lease and throughout the lease terms and are accounted for as either fixed or variable lease payments (depending on the nature of the lease return condition) when it is probable that such amounts will be incurred. When determining probability and estimated cost of lease return obligations, there are various other factors that need to be considered such as the contractual terms of the lease, the ability to swap engines or other aircraft components, current condition of the aircraft, the age of the aircraft at lease expiration, utilization of engines and other components, the extent of repairs needed at return, return locations, current configuration of the aircraft and cost of repairs and materials at the time of return. Management assesses the factors listed above and the need to accrue lease return costs throughout the lease as facts and circumstances warrant an assessment. The Company expects lease return costs and unrecoverable maintenance deposits will increase as individual aircraft lease agreements approach their respective termination dates and the Company begins to accrue the estimated cost of return conditions for the corresponding aircraft. Upon a termination of the lease due to a breach by the Company, the Company would be liable for standard contractual damages, possibly including damages suffered by the lessor in connection with remarketing the aircraft or while the aircraft is not leased to another party.
As of September 30, 2022, the Company's finance lease obligations primarily relate to the lease of computer equipment used by the Company's flight crew and office equipment. Payments under these finance lease agreements are fixed for terms ranging from 4 to 5 years. Finance lease assets are recorded within property and equipment and the related liabilities are recorded within long-term debt and finance leases in the Company's condensed consolidated balance sheets.
During the fourth quarter of 2019, the Company purchased an 8.5-acre parcel of land for $41.0 million and entered into a 99-year lease agreement for the lease of a 2.6-acre parcel of land, in Dania Beach, Florida, where the Company is building its new headquarters campus and a 200-unit residential building. During the first quarter of 2022, the Company began building its new headquarters campus and its 200-unit residential building with an expected completion during the fourth quarter 2023. The 8.5-acre parcel of land is capitalized within ground property and equipment on the Company's condensed consolidated balance sheets. The 99-year lease was determined to be an operating lease and is recorded within operating lease right-of-use asset and operating lease liability on the Company's condensed consolidated balance sheets. Operating lease commitments related to this lease are included in the table below within property facility leases.
The following table provides details of the Company's future minimum lease payments under finance lease liabilities and operating lease liabilities recorded on the Company's condensed consolidated balance sheets as of September 30, 2022. The table does not include commitments that are contingent on events or other factors that are currently uncertain or unknown.
Finance LeasesOperating Leases
Aircraft and Spare Engine LeasesProperty Facility LeasesOtherTotal
Operating and Finance Lease Obligations
(in thousands)
Remainder of 2022$210 $74,815 $1,598 $39 $76,662 
2023465 296,016 6,385 13 302,879 
2024215 283,930 4,526  288,671 
2025117 269,042 3,072  272,231 
202639 242,728 2,989  245,756 
2027 and thereafter 2,134,609 143,389  2,277,998 
Total minimum lease payments$1,046 $3,301,140 $161,959 $52 $