Company Quick10K Filing
Spirit Airlines
Price36.31 EPS5
Shares69 P/E7
MCap2,489 P/FCF7
Net Debt1,268 EBIT422
TEV3,757 TEV/EBIT9
TTM 2019-09-30, in MM, except price, ratios
10-Q 2020-03-31 Filed 2020-05-06
10-K 2019-12-31 Filed 2020-02-05
10-Q 2019-09-30 Filed 2019-10-23
10-Q 2019-06-30 Filed 2019-07-24
10-Q 2019-03-31 Filed 2019-04-24
10-K 2018-12-31 Filed 2019-02-13
10-Q 2018-09-30 Filed 2018-10-24
10-Q 2018-06-30 Filed 2018-07-26
10-Q 2018-03-31 Filed 2018-04-26
10-K 2017-12-31 Filed 2018-02-13
10-Q 2017-09-30 Filed 2017-10-26
10-Q 2017-06-30 Filed 2017-07-27
10-Q 2017-03-31 Filed 2017-04-28
10-K 2016-12-31 Filed 2017-02-13
10-Q 2016-09-30 Filed 2016-10-25
10-Q 2016-06-30 Filed 2016-07-29
10-Q 2016-03-31 Filed 2016-04-26
10-K 2015-12-31 Filed 2016-02-17
10-Q 2015-09-30 Filed 2015-10-27
10-Q 2015-06-30 Filed 2015-07-24
10-Q 2015-03-31 Filed 2015-04-29
10-K 2014-12-31 Filed 2015-02-18
10-Q 2014-09-30 Filed 2014-10-28
10-Q 2014-06-30 Filed 2014-07-29
10-Q 2014-03-31 Filed 2014-04-29
10-K 2013-12-31 Filed 2014-02-20
10-Q 2013-09-30 Filed 2013-10-30
10-Q 2013-06-30 Filed 2013-07-26
10-Q 2013-03-31 Filed 2013-04-30
10-K 2012-12-31 Filed 2013-02-25
10-Q 2012-09-30 Filed 2012-10-31
10-Q 2012-06-30 Filed 2012-07-31
10-Q 2012-03-31 Filed 2012-05-01
10-K 2011-12-31 Filed 2012-02-23
S-1 2011-12-06 Public Filing
10-Q 2011-09-30 Filed 2011-10-27
10-Q 2011-06-30 Filed 2011-07-28
S-1 2010-09-17 Public Filing
8-K 2020-05-12 Enter Agreement, Off-BS Arrangement, Exhibits
8-K 2020-05-06 Earnings, Regulation FD, Exhibits
8-K 2020-04-30 Regulation FD
8-K 2020-04-17 Enter Agreement, Off-BS Arrangement, Sale of Shares, Other Events
8-K 2020-03-30 Enter Agreement, Off-BS Arrangement
8-K 2020-03-29 Enter Agreement, Shareholder Rights, Shareholder Rights, Amend Bylaw, Other Events, Exhibits
8-K 2020-03-21 Amendment, Regulation FD
8-K 2020-03-18 Regulation FD, Exhibits
8-K 2020-03-10 Regulation FD, Exhibits
8-K 2020-03-06 Regulation FD
8-K 2020-02-05 Earnings, Regulation FD, Exhibits
8-K 2020-01-30 Regulation FD
8-K 2020-01-15 Regulation FD, Exhibits
8-K 2019-12-20 Enter Agreement
8-K 2019-10-23 Earnings, Regulation FD, Exhibits
8-K 2019-10-15 Regulation FD
8-K 2019-10-10 Regulation FD, Exhibits
8-K 2019-09-23 Officers, Exhibits
8-K 2019-09-06 Regulation FD
8-K 2019-07-24 Earnings, Regulation FD, Exhibits
8-K 2019-07-16 Regulation FD
8-K 2019-07-11 Earnings, Regulation FD, Exhibits
8-K 2019-05-14 Shareholder Vote
8-K 2019-05-07 Regulation FD
8-K 2019-04-24 Earnings, Regulation FD, Exhibits
8-K 2019-04-18 Regulation FD
8-K 2019-04-10 Earnings, Regulation FD, Exhibits
8-K 2019-02-26 Regulation FD
8-K 2019-02-05 Earnings, Regulation FD, Exhibits
8-K 2019-01-29 Regulation FD
8-K 2019-01-16 Earnings, Regulation FD, Exhibits
8-K 2018-11-26 Regulation FD, Exhibits
8-K 2018-10-23 Earnings, Regulation FD, Exhibits
8-K 2018-10-17 Regulation FD
8-K 2018-10-15 Officers, Exhibits
8-K 2018-10-10 Earnings, Regulation FD, Exhibits
8-K 2018-08-28 Regulation FD
8-K 2018-07-25 Earnings, Regulation FD, Exhibits
8-K 2018-07-17 Regulation FD
8-K 2018-07-11 Earnings, Regulation FD, Exhibits
8-K 2018-05-22 Shareholder Vote
8-K 2018-05-15 Other Events
8-K 2018-05-15 Other Events
8-K 2018-04-25 Earnings, Exhibits
8-K 2018-04-25 Regulation FD, Exhibits
8-K 2018-04-10 Earnings, Regulation FD, Exhibits
8-K 2018-04-02 Enter Agreement, Off-BS Arrangement
8-K 2018-03-06 Regulation FD, Exhibits
8-K 2018-03-01 Regulation FD
8-K 2018-03-01 Regulation FD, Exhibits
8-K 2018-02-06 Earnings, Exhibits
8-K 2018-02-05 Regulation FD, Exhibits
8-K 2018-01-16 Earnings, Regulation FD, Exhibits
8-K 2015-09-10 Regulation FD, Exhibits
8-K 2015-09-04 Regulation FD
8-K 2015-08-11 Enter Agreement, Off-BS Arrangement, Exhibits
8-K 2015-08-10 Regulation FD, Exhibits
8-K 2015-07-28 Enter Agreement, Exhibits
8-K 2015-07-24 Regulation FD, Exhibits
8-K 2015-07-24 Earnings, Exhibits
8-K 2015-07-13 Earnings, Regulation FD, Exhibits
8-K 2015-07-13 Regulation FD, Exhibits
8-K 2015-06-16 Shareholder Vote, Exhibits
8-K 2015-06-08 Regulation FD, Exhibits
8-K 2015-05-11 Regulation FD, Exhibits
8-K 2015-04-28 Earnings, Exhibits
8-K 2015-04-28 Regulation FD, Exhibits
8-K 2015-04-15 Regulation FD, Exhibits
8-K 2015-04-09 Regulation FD, Exhibits
8-K 2015-03-09 Regulation FD, Exhibits
8-K 2015-02-10 Regulation FD, Exhibits
8-K 2015-02-09 Earnings, Exhibits
8-K 2015-02-04 Regulation FD
8-K 2015-01-15 Regulation FD, Exhibits
8-K 2015-01-08 Earnings, Regulation FD, Exhibits

SAVE 10Q Quarterly Report

Part I. Financial Information
Item 1.Unaudited Condensed Financial Statements
Item 2.Management's Discussion and Analysis of Financial Condition and Results of Operations
Item 3.Quantitative and Qualitative Disclosures About Market Risk
Item 4.Controls and Procedures
Part II. Other Information
Item 1.Legal Proceedings
Item 1A.Risk Factors
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
Item 3.Defaults Upon Senior Securities
Item 4.Mine Safety Disclosures
Item 5.Other Information
Item 6.Exhibits
EX-4.2 save-ex42x2020331x10q.htm
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EX-10.2 save-ex102x2020331x10q.htm
EX-10.3 save-ex103x2020331x10q.htm
EX-10.4 save-ex104x2020331x10q.htm
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EX-32.2 save-ex322x2020331x10q.htm

Spirit Airlines Earnings 2020-03-31

Balance SheetIncome StatementCash Flow
10.08.06.04.02.00.02012201420172020
Assets, Equity
1.10.90.60.40.1-0.12012201420172020
Rev, G Profit, Net Income
0.30.20.1-0.1-0.2-0.32012201420172020
Ops, Inv, Fin

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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 March 31, 2020
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) 
____________________________________________________________________

Title of each className of exchange on which registeredTrading Symbol
Common Stock, $0.0001 par valueNew York Stock ExchangeSAVE
Series A Preferred Stock Purchase RightsNew 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 and posted 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 and post 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,” “small 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 7(a)(2)(B) of the Securities 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 April 29, 2020:
Class Number of Shares
Common Stock, $0.0001 par value 68,539,976

1


Table of Contents
INDEX
 
 Page No.

2


PART I. Financial Information
ITEM 1.UNAUDITED CONDENSED FINANCIAL STATEMENTS
Spirit Airlines, Inc.
Condensed Statements of Operations
(unaudited, in thousands, except per share amounts)
 
 Three Months Ended March 31,
20202019
Operating revenues:
Passenger$753,550  $838,065  
Other17,531  17,731  
Total operating revenues771,081  855,796  
Operating expenses:
Aircraft fuel213,208  229,636  
Salaries, wages and benefits
240,480  203,901  
Landing fees and other rents67,121  59,649  
Depreciation and amortization65,991  50,726  
Aircraft rent45,146  45,782  
Distribution33,743  35,719  
Maintenance, materials and repairs34,076  31,604  
Loss on disposal of assets  1,913  
Other operating129,308  109,062  
Total operating expenses829,073  767,992  
Operating income (loss)(57,992) 87,804  
Other (income) expense:
Interest expense23,878  24,971  
Capitalized interest(3,664) (2,557) 
Interest income(3,593) (6,924) 
Other (income) expense(19) 233  
Total other (income) expense16,602  15,723  
Income (loss) before income taxes(74,594) 72,081  
Provision (benefit) for income taxes(46,766) 16,005  
Net income (loss)$(27,828) $56,076  
Basic earnings (loss) per share$(0.41) $0.82  
Diluted earnings (loss) per share$(0.41) $0.82  
The accompanying Notes are an integral part of these Condensed Financial Statements.
1



Spirit Airlines, Inc.
Condensed Statements of Comprehensive Income (Loss)
(unaudited, in thousands)

Three Months Ended March 31,
20202019
Net income (loss)$(27,828) $56,076  
Unrealized gain (loss) on short-term investment securities and cash and cash equivalents, net of deferred taxes of $54 and $39
185  130  
Interest rate derivative loss reclassified into earnings, net of taxes of $24 and $27
41  47  
Other comprehensive income $226  $177  
Comprehensive income (loss)$(27,602) $56,253  

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

2


Spirit Airlines, Inc.
Condensed Balance Sheets
(unaudited, in thousands)
 
March 31, 2020December 31, 2019
Assets
Current assets:
Cash and cash equivalents$788,225  $978,957  
Short-term investment securities106,208  105,321  
Accounts receivable, net33,267  73,807  
Aircraft maintenance deposits, net90,108  102,906  
Income tax receivable104,226  21,013  
Prepaid expenses and other current assets109,131  103,439  
Total current assets1,231,165  1,385,443  
Property and equipment:
Flight equipment3,965,137  3,730,751  
Ground property and equipment305,876  291,998  
Less accumulated depreciation(537,928) (492,447) 
3,733,085  3,530,302  
Operating lease right-of-use assets1,425,171  1,369,555  
Pre-delivery deposits on flight equipment372,068  291,930  
Long-term aircraft maintenance deposits61,246  67,682  
Deferred heavy maintenance, net376,765  361,603  
Other long-term assets35,761  36,897  
Total assets$7,235,261  $7,043,412  
Liabilities and shareholders’ equity
Current liabilities:
Accounts payable$62,949  $43,601  
Air traffic liability411,286  315,408  
Current maturities of long-term debt and finance leases334,931  258,852  
Current maturities of operating leases125,713  120,662  
Other current liabilities296,607  373,521  
Total current liabilities1,231,486  1,112,044  
Long-term debt and finance leases, less current maturities1,965,524  1,960,453  
Operating leases, less current maturities1,268,110  1,218,014  
Deferred income taxes505,263  469,292  
Deferred gains and other long-term liabilities30,487  22,277  
Shareholders’ equity:
Common stock
7  7  
Additional paid-in-capital383,186  379,380  
Treasury stock, at cost(73,991) (72,455) 
Retained earnings1,925,750  1,955,187  
Accumulated other comprehensive income (loss)(561) (787) 
Total shareholders’ equity2,234,391  2,261,332  
Total liabilities and shareholders’ equity$7,235,261  $7,043,412  
The accompanying Notes are an integral part of these Condensed Financial Statements.
3


Spirit Airlines, Inc.
Condensed Statements of Cash Flows
(unaudited, in thousands) 
 Three Months Ended March 31,
20202019
Operating activities:
Net income (loss)$(27,828) $56,076  
Adjustments to reconcile net income (loss) to net cash provided by operations:
Losses reclassified from other comprehensive income 65  74  
Share-based compensation 3,790  3,671  
Amortization of deferred gains, losses and debt issuance costs2,106  2,289  
Depreciation and amortization65,991  50,726  
Deferred income tax expense36,367  11,647  
Loss on disposal of assets  1,913  
Changes in operating assets and liabilities:
Accounts receivable, net39,910  (23,285) 
Aircraft maintenance deposits, net(1,330) (2,559) 
Long-term deposits and other assets(666) 20,735  
Deferred heavy maintenance, net(35,564) (44,161) 
Income tax receivable(83,213)   
Accounts payable14,854  (13,543) 
Air traffic liability95,876  111,020  
Other liabilities(75,541) 30,712  
Other(235) (164) 
Net cash provided by operating activities34,582  205,151  
Investing activities:
Purchase of available-for-sale investment securities(24,036) (26,476) 
Proceeds from the maturity and sale of available-for-sale investment securities23,600  26,085  
Pre-delivery deposits on flight equipment, net of refunds(123,044) (37,913) 
Capitalized interest(2,860) (2,276) 
Assets under construction for others(2,057) (262) 
Purchase of property and equipment(195,371) (63,109) 
Net cash used in investing activities(323,768) (103,951) 
Financing activities:
Proceeds from issuance of long-term debt168,981  59,706  
Proceeds from stock options exercised16    
Payments on debt obligations(42,561) (37,901) 
Payments on finance lease obligations(24,846) (239) 
Reimbursement for assets under construction for others2,095  262  
Repurchase of common stock(1,536) (5,223) 
Debt issuance costs(3,695) (399) 
Net cash provided by financing activities98,454  16,206  
Net increase (decrease) in cash and cash equivalents(190,732) 117,406  
Cash and cash equivalents at beginning of period978,957  1,004,733  
Cash and cash equivalents at end of period $788,225  $1,122,139  
Supplemental disclosures
Cash payments for:
Interest, net of capitalized interest$17,702  $19,167  
Income taxes paid (received), net$(1,497) $816  
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows for operating leases $50,805  $47,577  
Financing cash flows for finance leases $113  $29  
Non-cash transactions:
Capital expenditures funded by finance lease borrowings$  $1,492  
Capital expenditures funded by operating lease borrowings $85,787  $128,191  
The accompanying Notes are an integral part of these Condensed Financial Statements.
4


Spirit Airlines, Inc.
Condensed Statements of Shareholders’ Equity
(unaudited, in thousands)
Three Months Ended March 31, 2019
Common StockAdditional Paid-In-CapitalTreasury StockRetained EarningsAccumulated Other Comprehensive Income (Loss)Total
Balance at December 31, 2018$7  $371,225  $(67,016) $1,625,481  $(1,193) $1,928,504  
Effect of ASU No. 2016-02 implementation (refer to Note 3)(5,549) (5,549) 
Share-based compensation—  3,671  —  —  3,671  
Repurchase of common stock—  —  (5,223) —  —  (5,223) 
Proceeds from options exercised—  —  —  —    
Changes in comprehensive income—  —  —  —  177  177  
Net income—  —  —  56,076  —  56,076  
Balance at March 31, 2019$7  $374,896  $(72,239) $1,676,008  $(1,016) $1,977,656  

Three Months Ended March 31, 2020
Common StockAdditional Paid-In-CapitalTreasury StockRetained Earnings Accumulated Other Comprehensive Income (Loss)Total
Balance at December 31, 2019$7  $379,380  $(72,455) $1,955,187  $(787) $2,261,332  
Effect of ASU No. 2016-13 implementation (refer to Note 3)—  —  —  (1,609) —  (1,609) 
Share-based compensation—  3,790  —  —  —  3,790  
Repurchase of common stock—  —  (1,536) —  —  (1,536) 
Proceeds from options exercised—  16  —  —  —  16  
Changes in comprehensive income—  —  —  —  226  226  
Net loss—  —  —  (27,828) —  (27,828) 
Balance at March 31, 2020$7  $383,186  $(73,991) $1,925,750  $(561) $2,234,391  
The accompanying Notes are an integral part of these Condensed Financial Statements.
5


Notes to Condensed Financial Statements
(unaudited)
1. Basis of Presentation
The accompanying unaudited condensed financial statements include the accounts of Spirit Airlines, Inc. (the "Company"). These unaudited condensed 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 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/A for the year ended December 31, 2019 filed with the Securities and Exchange Commission on April 16, 2020.
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 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. The air transportation business is also volatile and highly affected by economic cycles and trends. In addition, the Company experienced significant impacts from the global coronavirus ("COVID-19") pandemic during the three months ended March 31, 2020.
2. Impact of COVID-19

As the COVID-19 pandemic evolves, the Company's financial and operational outlook remains subject to change. The Company continues to monitor the impacts of the pandemic on its operations and financial condition, and to implement mitigation strategies while working to preserve cash and protect the long-term sustainability of the Company.

The Company has implemented measures for the safety of its Guests and Team Members as well as to mitigate the impact of COVID-19 on its financial position and operations.
Caring for Guests and Team Members

The Company’s Operations and Task Force teams remain in constant contact with authorities, continuing to evolve its response to ensure the safety of Guests and Team Members. In addition to existing procedures including utilization of hospital-grade disinfectants and state-of-the-art HEPA filters that capture 99.97% of airborne particles, the Company has launched a new aircraft fogging program to provide additional disinfection of aircraft remaining overnight at Ft. Lauderdale/Hollywood International Airport ("FLL"), Dallas/Fort Worth International Airport ("DFW"), and Orlando International Airport ("MCO"). Additional stations will be added as fogging equipment is received by the Company through the second quarter of 2020.

In addition, the Company has implemented the following steps to protect its Guests and Team Members:

Secured and distributed additional supplies of gloves and sanitizer across the Company's network and augmented the contents of onboard supply kits to contain additional cleaning and sanitizing materials;
Expanded cleaning protocols at airports and other facilities, including the use of electrostatic sprayers at select locations;
Expanded aircraft turn and overnight cleaning protocols focusing on high frequency touch points as well as enhanced cockpit cleaning;
Split the Company's Operational Control Center ("OCC") into multiple units to enable social distancing and prepared the OCC to work remotely to minimize potential operational disruption;
Implemented a remote work policy for the Support Center teams to maintain support of the Company's operations;
Announced a new policy that requires all Guests and Guest-facing Team Members to wear an appropriate mask or face covering when traveling through the airport or onboard aircraft;
Offered future flight credits with extended expiration dates to Guests with impacted travel plans.

Supporting Communities

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During this unprecedented time, many travelers became stranded abroad when bans and other restrictions on travel were implemented globally and domestically with little notice. The Company has worked with governments in Aruba, Colombia, Dominican Republic, Haiti, Panama and the U.S. to operate special flights for stranded travelers in such countries. The Company has provided flights to over three thousand stranded travelers and preparations continue to transport hundreds more.

The Company has also made efforts to address the growing needs of its communities through The Spirit Airlines Charitable Foundation (the “Foundation”). As part of the its focus on supporting families, the Foundation partnered with other non-profit organizations including the YMCA and Jack and Jill Children’s Center to provide food to seniors and families struggling during this time and supported organizations creating masks for healthcare workers.

Capacity Reductions

In response to government restrictions on travel and drastically reduced consumer demand, the Company has significantly reduced capacity from its original plan. The Company reduced capacity for April 2020 by approximately 75% and for May and June 2020 by approximately 95%. The Company currently estimates that air travel demand after June will gradually recover through early 2021. However, the situation is fluid and actual capacity adjustments may be different than what the Company currently expects. The Company will continue to evaluate the need for further flight schedule adjustments. Refer to Note 4, Revenue, for discussion of the impact of COVID-19 on the Company's air traffic liability, credit shells and refunds.

CARES Act

On March 27, 2020, President Donald Trump signed the Coronavirus Aid, Relief, and Economic Security Act ("CARES Act") into law. The CARES Act is a relief package intended to assist many aspects of the American economy, including providing the airline industry with up to $25 billion in grants to be used for employee wages, salaries and benefits and up to $25 billion in secured loans.

On April 20, 2020, the Company entered into a Payroll Support Program Agreement ("PSP") with the United States Department of the Treasury ("Treasury"), pursuant to which the Company expects to receive a total of $334.7 million under the PSP over the second and third quarters of 2020, which funds will be used exclusively to pay for salaries and benefits for the Company’s Team Members through September 30, 2020. Of that amount, $264.3 million will be a direct grant from Treasury and $70.4 million will be in the form of a low-interest 10-year loan. In connection with its participation in the PSP, the Company is obligated to issue to Treasury warrants pursuant to a warrant agreement to purchase up to 500,150 shares of the Company’s common stock at a strike price of $14.08 per share (the closing price for the shares of the Company's common stock on April 9, 2020). On April 21, 2020, the Company received total proceeds of $167.4 million, representing the first installment of funding under the PSP, in exchange for which the Company issued to Treasury a $20.2 million 10-year note and warrants to purchase 143,541 shares of common stock, representing less than 1% of the outstanding shares of the Company's common stock as of April 29, 2020.

The warrant agreement sets out the Company’s obligations to issue warrants in connection with disbursements under the PSP and to file a resale shelf registration statement for the warrants and the underlying shares of common stock. The Company has also granted the Treasury certain demand and piggyback registration rights with respect to the warrants and the underlying common stock. The warrants will include adjustments for below market issuances, payment of dividends and other customary anti-dilution provisions. The warrants will be transferable and have no voting rights. The warrants will expire in five years from the date of issuance and, at the Company’s option, may be settled on a “net cash” or “net shares” basis.

In connection with the Company’s receipt of funds under the PSP, the Company will be subject to certain restrictions, including, but not limited to:

Restrictions on payment of dividends and stock buybacks through September 30, 2021;

A prohibition on involuntary terminations or furloughs of our employees (except for health, disability, cause, or certain disciplinary reasons) through September 30, 2020;

A prohibition on reducing the salary, wages, or benefits of our employees (other than our executive officers or independent contractors, or as otherwise permitted under the terms of the PSP) through September 30, 2020.

Limits on certain executive compensation, including limiting pay increases and severance pay or other benefits upon terminations, through March 24, 2022.

Use of the grant funds exclusively for the continuation of payment of employee wages, salaries and benefits.

We are subject to additional reporting and recordkeeping requirements relating to the CARES Act funds.
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On April 29, 2020, the Company applied for additional funds under the Treasury's loan program under the CARES Act (“Loan Program”). The expected maximum availability to the Company under the Loan Program is approximately $741 million in the form of a secured loan. However, the loan amount is dependent on the amount and types of collateral accepted, which may result in an actual loan less than $741 million, if the Company accepts the loan. Any loan received pursuant to the Loan Program would be subject to the restrictions and relevant provisions of the CARES Act, including many of those noted above for the PSP. The Company’s participation in the Loan Program could materially increase the funds available to the Company as it works through the operational and business issues related to the COVID-19 pandemic and provide a base of available funding that could encourage private market transactions. The Company will continue to evaluate its cash flow needs over the next several months and will determine whether or not to accept any or all of the funds available from the Loan Program. The deadline to make the election under the Loan Program is September 30, 2020.

The CARES Act also provides for tax loss carrybacks, employee tax credits, and a waiver on federal fuel taxes expected to provide approximately $180 million in current year refunds and expense savings.

Finally, the CARES Act also provides for deferred payment of the employer portion of social security taxes through the
end of 2020, with 50% of the deferred amount due December 31, 2021 and the remaining 50% due December 31, 2022. This is
expected to provide the Company with approximately $24 million of additional liquidity during the current year.

Refer to Note 14, Subsequent Events for additional information on the Company’s PSP with the Treasury and application for participation in the Loan Program.

Income Taxes

The Company's effective tax rate for the first quarter of 2020 was 62.7% compared to 22.2% for the first quarter of 2019. The increase in tax rate, as compared to the prior year period, is primarily due to a $31.1 million discrete federal tax benefit recorded in the first quarter of 2020 related to the passage of the CARES Act. The CARES Act allows for carryback of net operating losses generated at a 21% tax rate to recover taxes paid at a 35% tax rate. Excluding this discrete tax benefit, the Company's effective tax rate for the first quarter of 2020 would have been 21.0%. The decrease in tax rate from the prior year period of 22.2% to the adjusted first quarter 2020 rate of 21.0% is primarily due to a reduction of the current period tax benefit from non-deductible permanent tax items. Our effective tax rate through 2020 may be impacted further by discrete items recorded as additional CARES Act implementation guidance is released.

Balance Sheet, Cash Flow and Liquidity

The Company has taken several actions to increase liquidity and strengthen its financial position. As a result of these actions, as of March 31, 2020, the Company had unrestricted cash and short-term investment securities of $894.4 million.

In March 2020, the Company entered into a senior secured revolving credit facility (the "2022 revolving credit facility") for an initial commitment amount of $110.0 million and subsequently in April 2020, the initial commitment amount was increased to $135.0 million. In April 2020, the Company borrowed the entire available amount of $135.0 million under the 2022 revolving credit facility. In May 2020, the Company entered into a commitment whereby the 2022 revolving credit facility is expected to be increased to $165.0 million, effective May 18, 2020, subject to the satisfaction of certain conditions precedent. The 2022 revolving credit facility matures on March 30, 2022. The Company continues to pursue additional financing secured by its unencumbered assets. Refer to Note 14, Subsequent Events for additional information on the Company's 2022 revolving credit facility.

In addition to the revolving credit facility described above, the Company has taken, or intends to take, additional action, including:

Reduced planned discretionary non-aircraft capital spend in 2020 by approximately $50 million. The Company is also in discussions with Airbus to defer certain aircraft deliveries initially scheduled in 2020 and 2021, as well as the related pre-delivery deposit payments.The Company expects to reduce aircraft-related capital spend by approximately $185 million in 2020 if those discussions are successful.
Deferred $20 million in heavy maintenance events from 2020 to 2021;
Reduced planned non-fuel operating costs for 2020 by $20 million to $30 million, excluding savings related to reduced capacity;
Suspended hiring across the Company except to fill essential roles;
Engaged in discussions with the Company's significant stakeholders and vendors regarding financial support or contract adjustments, including extensions of payment terms, during this transition period;
Worked with unionized and non-unionized employees to create voluntary leave programs.

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Additionally, Ted Christie, the Company's Chief Executive Officer and President, has temporarily reduced his base salary by 30%. All Senior and Executive Vice Presidents and members of the Board of Directors have temporarily reduced their compensation as well.
For purposes of assessing its liquidity needs, the Company estimates that demand will begin to improve in the second half of 2020, but remain well below 2019 levels, and continue to recover into 2021. While the Company believes the actions described above address its future liquidity needs, the Company anticipates it may implement further discretionary changes and other cost reduction and liquidity preservation measures as needed to address the volatility and quickly changing dynamics of passenger demand and the impact of revenue changes, regulatory and public health directives and prevailing government policy and financial market conditions.

3. Recent Accounting Developments

Recently Adopted Accounting Pronouncements

Accounting for Credit Losses

In June 2016, the FASB issued ASU No. 2016-13, "Financial Instruments - Credit Losses." The standard requires the use of an "expected loss" model on certain types of financial instruments. For accounts receivables, aircraft maintenance deposits and security deposits (recorded within other long-term assets on the Company's condensed balance sheets) the Company is required to estimate lifetime expected credit losses. The standard also amends the impairment model for available-for-sale securities and requires estimated credit losses to be recorded as allowances rather than as reductions to the amortized cost of the securities. As such, the Company is required to recognize an allowance for credit losses for its short-term available-for-sale investment securities, with the exception of U.S. Treasury securities which do no require an allowance for credit losses. The Company adopted this standard effective January 1, 2020. In connection with the adoption of this standard, the Company recognized a cumulative effect adjustment, net of tax, of $1.6 million to retained earnings on the Company's condensed balance sheets with corresponding reserves against certain of our outstanding financial instruments. These amounts were not material to the Company's financial statements individually or in the aggregate.

Cloud Computing Arrangements

In August 2018, the FASB issued ASU No. 2018-15, "Intangibles - Goodwill and Other - Internal-Use Software." This new standard requires a customer in a cloud computing arrangement that is a service contract to follow the internal-use software guidance in Accounting Standards Codification ("ASC") 350-40, "Accounting for Internal-Use Software," to determine which implementation costs to capitalize as assets and amortize over the term of the hosting arrangement or expense as incurred. The Company adopted this standard effective January 1, 2020 and is applying the standard prospectively to all implementation costs incurred after the date of adoption. This adoption has not had a material impact on the Company's financial statement presentation or results.
4. Revenue
        Operating revenues is comprised of passenger revenues, which includes fare and non-fare revenues, and other revenues. The following table shows disaggregated operating revenues for the three months ended March 31, 2020 and March 31, 2019.
Three Months Ended March 31,
20202019
(in thousands)
Operating revenues:
Fare$321,447  $416,345  
Non-fare432,103  421,720  
Total passenger revenues753,550  838,065  
Other17,531  17,731  
Total operating revenues$771,081  $855,796  

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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") are summarized below:
Three Months Ended March 31,
20202019
(in thousands)
DOT—Domestic$697,828  $753,100  
DOT—Latin America73,253  102,696  
Total$771,081  $855,796  
The Company defers the amount for award travel obligation as part of loyalty deferred revenue within air traffic liability ("ATL") on the Company's condensed balance sheets and recognizes loyalty travel awards in passenger revenues as the mileage credits are used for travel or expire unused.
As a result of the COVID-19 pandemic, the Company experienced significantly increased customer requests for credit shells and refunds beginning in the second half of March 2020 primarily due to flight cancellations. In addition, in response to COVID-19, the Company increased the expiration period on some of its credit shells from 60 days to 12 months. As a result, the amount of credit shells, or customer travel funds held by the Company that can be redeemed for future travel, as of March 31, 2020, significantly exceeds the amount in the prior year period. As of March 31, 2020 and December 31, 2019, the Company had ATL balances of $411.3 million and $315.4 million, respectively. The balance of the Company's ATL, including the balance of credit shells, is expected to be recognized within 12 months of the respective balance sheet date.The total value of refunds made during the three months ended March 31, 2020 was $43.7 million. For further information on COVID-19's impact to the Company, please refer to Note 2, Impact of COVID-19.

For credit shells that the Company estimates are not likely to be used prior to expiration (“breakage”), the Company recognizes the associated value proportionally during the period over which the remaining credit shells may be used. Breakage estimates are based on the Company's historical information about customer behavior as well as assumptions about customers' future travel behavior. Assumptions used to generate breakage estimates can be impacted by several factors including, but not limited to, changes to the Company's ticketing policies, changes to the Company’s refund, exchange, and unused funds policies, and economic factors. Given the unprecedented amount of cancellations in the first quarter of 2020 and the amount of credit shells provided, the Company expects additional variability in the amount of breakage revenue recorded in future periods, as the estimates of the portion of those funds that will expire unused may differ from historical experience.
5. Loss on Disposal of Assets
During the three months ended March 31, 2020, the Company had no loss on disposal of assets in the statement of operations.

During the three months ended March 31, 2019, the Company recorded $1.9 million in loss on disposal of assets in the statement of operations. This amount primarily related to the disposal of excess and obsolete inventory.
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6. Earnings (Loss) per Share
The following table sets forth the computation of basic and diluted earnings (loss) per common share:
 
 Three Months Ended March 31,
 20202019
(in thousands, except per share amounts)
Numerator
Net income (loss)$(27,828) $56,076  
Denominator
Weighted-average shares outstanding, basic68,521  68,380  
Effect of dilutive stock awards  136  
Adjusted weighted-average shares outstanding, diluted68,521  68,516  
Earnings (loss) per share
Basic earnings (loss) per common share (1)$(0.41) $0.82  
Diluted earnings (loss) per common share (1)$(0.41) $0.82  
Anti-dilutive weighted-average shares482  159  

1) During the three months ended March 31, 2020, the Company recorded a non-recurring federal income tax benefit of $31.1 million ($0.45 and $0.45 per basic and diluted share, respectively) due to the passage of the CARES Act in the first quarter of 2020.
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 balance sheets. Realized gains and losses on sales of investments, if any, are reflected in non-operating income (expense) in the condensed statements of operations.

As of March 31, 2020 and December 31, 2019, the Company had $106.2 million and $105.3 million in short-term available-for-sale investment securities, respectively. During the three months ended March 31, 2020, these investments earned interest income at a weighted-average fixed rate of approximately 1.9%. For the three months ended March 31, 2020, an unrealized gain of $321 thousand, net of deferred taxes of $94 thousand, was recorded within accumulated other comprehensive income ("AOCI") related to these investment securities. For the three months ended March 31, 2019, an unrealized gain of $130 thousand, net of deferred taxes of $39 thousand, was recorded within AOCI related to these investment securities. The Company had no realized gains or losses related to these securities for the three months ended March 31, 2020 and March 31, 2019, as the Company did not sell any of these securities during these periods. As of March 31, 2020 and December 31, 2019, $425 thousand and $104 thousand, net of tax, respectively, remained in AOCI, related to these instruments.

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8. Accrued Liabilities
Other current liabilities as of March 31, 2020 and December 31, 2019 consist of the following:
March 31, 2020December 31, 2019
(in thousands)
Salaries and wages$89,611  $89,163  
Airport obligations73,309  80,134  
Aircraft maintenance32,005  38,099  
Aircraft and facility lease obligations20,042  20,656  
Interest payable  18,061  16,941  
Federal excise and other passenger taxes and fees payable16,580  65,312  
Fuel10,020  28,510  
Other36,979  34,706  
Other current liabilities$296,607  $373,521  


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 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.
As of March 31, 2020, the Company had a fleet consisting of 151 A320 family aircraft. As of March 31, 2020, the Company had 54 aircraft financed under operating leases with lease term expirations between 2022 and 2038. In addition, the Company owned 97 aircraft of which 29 were purchased off lease and are currently unencumbered. As of March 31, 2020, the Company also had 8 spare engines financed under operating leases with lease term expiration dates ranging from 2023 to 2027 and owned 16 spare engines, all of which were unencumbered as March 31, 2020 and of which 3 were purchased off lease.
In accordance with Topic 842, the Company has elected not to apply the recognition requirements to short term leases (i.e., leases of 12 months or less). Instead, lease payments are recognized in profit or loss on a straight-line basis over the lease term. In addition, variable lease payments in the period in which the obligation for those payments is incurred are not included in the recognition of a lease liability or right-of-use asset.
Right-of-use assets represent the Company's right to use an underlying asset for the lease term and lease liabilities represent the Company's obligation to make lease payments arising from the lease. Right-of-use assets and liabilities are recognized at the lease commencement date based on the estimated present value of lease payments over the lease term. When available, the Company uses the rate implicit in the lease to discount lease payments to present value. However, the Company's leases generally do not provide a readily determinable implicit rate. Therefore, the Company estimates the incremental borrowing rate to discount lease payments based on information available at lease commencement. The Company uses publicly available data for instruments with similar characteristics when calculating its incremental borrowing rates. The Company has options to extend certain of its operating leases for an additional period of time and options to early terminate several of its operating leases. The lease term consists of the noncancellable period of the lease, periods covered by options to extend the lease if the Company is reasonably certain to exercise the option, periods covered by an option to terminate the lease if the Company is reasonably certain not to exercise the option and periods covered by an option to extend or not terminate the lease in which the exercise of the option is controlled by the lessor. The Company's lease agreements do not contain any residual value guarantees. The Company has elected to not separate non-lease components from the associated lease component for all underlying classes of assets with lease and non-lease components.
Some of the Company’s aircraft and engine master lease agreements provide 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 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
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