10-Q

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 June 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)

_______________________________________________________________________

Delaware			38-1747023
(State or other jurisdiction of incorporation or organization)			(I.R.S. Employer Identification No.)
2800 Executive Way	Miramar	Florida	33025
(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 class	Name of exchange on which registered	Trading Symbol
Common Stock, $0.0001 par value	New York Stock Exchange	SAVE

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 filer	☒	Accelerated filer	☐
Non-accelerated filer	☐	Smaller 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 August 2, 2022:

Class	Number of Shares
Common Stock, $0.0001 par value	108,851,093

1

Table of Contents

INDEX

 

			Page No.
Part I. Financial Information
	Item 1.	Condensed Consolidated Financial Statements (unaudited)	1
		Condensed Consolidated Statements of Operations - Three and Six Months Ended June 30, 2022 and 2021	1
		Condensed Consolidated Statements of Comprehensive Income (Loss) - Three and Six Months Ended June 30, 2022 and 2021	2
		Condensed Consolidated Balance Sheets – June 30, 2022 and December 31, 2021	3
		Condensed Consolidated Statements of Cash Flows – Six Months Ended June 30, 2022 and 2021	4
		Condensed Consolidated Statements of Shareholders' Equity - Three and Six Months Ended June 30, 2022 and 2021	6
		Notes to Condensed Consolidated Financial Statements	7
	Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	23
		Glossary of Airline Terms	37
	Item 3.	Quantitative and Qualitative Disclosures About Market Risk	39
	Item 4.	Controls and Procedures	40
Part II. Other Information
	Item 1.	Legal Proceedings	41
	Item 1A.	Risk Factors	42
	Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	46
	Item 3.	Defaults Upon Senior Securities	46
	Item 4.	Mine Safety Disclosures	46
	Item 5.	Other Information	46
	Item 6.	Exhibits	47
Signature			48

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 June 30,				Six Months Ended June 30,
	2022		2021		2022		2021
Operating revenues:
Passenger	$	1,347,871	$	846,507	$	2,297,615	$	1,296,842
Other	18,772		12,802		36,343		23,746
Total operating revenues	1,366,643		859,309		2,333,958		1,320,588
Operating expenses:
Salaries, wages and benefits	308,634		257,236		614,524		502,928
Aircraft fuel	558,633		214,825		927,218		357,755
Landing fees and other rents	92,021		81,497		174,957		153,605
Depreciation and amortization	76,469		73,703		152,660		148,015
Aircraft rent	68,632		64,641		134,676		119,423
Maintenance, materials and repairs	45,407		39,639		90,922		69,542
Distribution	48,724		35,263		84,075		58,905
Loss on disposal of assets	10,636		189		22,188		1,306
Special charges (credits)	18,004		(115,002)		33,567		(291,940)
Other operating	184,813		114,107		355,969		210,368
Total operating expenses	1,411,973		766,098		2,590,756		1,329,907
Operating income (loss)	(45,330)		93,211		(256,798)		(9,319)
Other (income) expense:
Interest expense	30,124		39,662		68,004		84,468
Loss on extinguishment of debt	—		331,630		—		331,630
Capitalized interest	(5,677)		(4,631)		(10,939)		(9,363)
Interest income	(2,561)		(373)		(3,028)		(4,744)
Other (income) expense	296		233		713		181
Total other (income) expense	22,182		366,521		54,750		402,172
Income (loss) before income taxes	(67,512)		(273,310)		(311,548)		(411,491)
Provision (benefit) for income taxes	(15,106)		14,553		(64,439)		(11,307)
Net loss	$	(52,406)	$	(287,863)	$	(247,109)	$	(400,184)
Basic loss per share	$	(0.48)	$	(2.73)	$	(2.27)	$	(3.94)
Diluted loss per share	$	(0.48)	$	(2.73)	$	(2.27)	$	(3.94)

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 June 30,				Six Months Ended June 30,
	2022		2021		2022		2021
Net loss	$	(52,406)	$	(287,863)	$	(247,109)	$	(400,184)
Unrealized gain (loss) on short-term investment securities and cash and cash equivalents, net of deferred taxes of $(50), $(5), $(128) and $(3)	(171)		(19)		(438)		(12)
Interest rate derivative loss reclassified into earnings, net of taxes of $12, $13, $26 and $27	39		44		76		89
Other comprehensive income (loss)	$	(132)	$	25	$	(362)	$	77
Comprehensive loss	$	(52,538)	$	(287,838)	$	(247,471)	$	(400,107)

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

2

Spirit Airlines, Inc.

Condensed Consolidated Balance Sheets

(unaudited, in thousands)

	June 30, 2022		December 31, 2021
Assets
Current assets:
Cash and cash equivalents	$	1,197,065	$	1,333,507
Restricted cash	95,400		95,400
Short-term investment securities	105,920		106,313
Accounts receivable, net	150,149		128,828
Aircraft maintenance deposits, net	12,228		10,726
Income tax receivable	37,890		37,890
Prepaid expenses and other current assets	163,202		129,827
Total current assets	1,761,854		1,842,491
Property and equipment:
Flight equipment	4,424,409		4,356,523
Ground property and equipment	423,821		384,928
Less accumulated depreciation	(989,812)		(884,858)
	3,858,418		3,856,593
Operating lease right-of-use assets	2,198,791		1,950,520
Pre-delivery deposits on flight equipment	488,323		484,821
Long-term aircraft maintenance deposits	27,795		38,166
Deferred heavy maintenance, net	342,335		330,062
Other long-term assets	37,507		37,372
Total assets	$	8,715,023	$	8,540,025
Liabilities and shareholders’ equity
Current liabilities:
Accounts payable	$	76,048	$	44,952
Air traffic liability	561,705		382,317
Current maturities of long-term debt, net and finance leases	351,521		208,948
Current maturities of operating leases	169,195		158,631
Other current liabilities	578,663		480,754
Total current liabilities	1,737,132		1,275,602
Long-term debt, net and finance leases, less current maturities	2,696,201		2,975,823
Operating leases, less current maturities	1,981,467		1,751,351
Deferred income taxes	310,351		375,472
Deferred gains and other long-term liabilities	116,657		47,742
Shareholders’ equity:
Common stock	11		11
Additional paid-in-capital	1,140,254		1,131,826
Treasury stock, at cost	(77,416)		(75,639)
Retained earnings	811,260		1,058,369
Accumulated other comprehensive loss	(894)		(532)
Total shareholders’ equity	1,873,215		2,114,035
Total liabilities and shareholders’ equity	$	8,715,023	$	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)

	Six Months Ended June 30,
	2022		2021
Operating activities:
Net loss	$	(247,109)	$	(400,184)
Adjustments to reconcile net income (loss) to net cash provided by operations:
Losses reclassified from other comprehensive income	102		116
Share-based compensation	5,723		6,740
Allowance for doubtful accounts (recoveries)	(108)		170
Amortization of debt issuance costs	6,695		6,412
Depreciation and amortization	152,660		148,015
Accretion of 8.00% senior secured notes	521		753
Amortization of debt discount	6,346		—
Deferred income tax expense (benefit)	(65,019)		(12,353)
Loss on disposal of assets	22,188		1,306
Loss on extinguishment of debt	—		331,630
Changes in operating assets and liabilities:
Accounts receivable, net	(21,213)		(98,484)
Aircraft maintenance deposits, net	8,869		5,616
Long-term deposits and other assets	(30,717)		(5,770)
Prepaid income taxes	—		(52)
Deferred heavy maintenance, net	(58,226)		(21,657)
Income tax receivable	—		109,746
Accounts payable	22,798		24,024
Air traffic liability	179,388		206,170
Deferred salaries, wages and benefits, net	—		86,360
Other liabilities	103,591		95,193
Other	278		365
Net cash provided by operating activities	86,767		484,116

4

Investing activities:
Purchase of available-for-sale investment securities	(38,970)		(55,936)
Proceeds from the maturity and sale of available-for-sale investment securities	38,500		55,500
Pre-delivery deposits on flight equipment, net of refunds	(7,367)		(81,208)
Capitalized interest	(8,948)		(9,055)
Assets under construction for others	(2)		(1,170)
Purchase of property and equipment	(106,271)		(87,154)
Net cash used in investing activities	(123,058)		(179,023)
Financing activities:
Proceeds from issuance of long-term debt	—		562,996
Proceeds from issuance of warrants	—		375,662
Payments on debt obligations	(96,755)		(857,552)
Payments for the early extinguishment of debt	—		(317,905)
Payments on finance lease obligations	(421)		(397)
Reimbursement for assets under construction for others	2		959
Repurchase of common stock	(1,777)		(1,324)
Debt issuance costs	(1,200)		(2,746)
Net cash used by financing activities	(100,151)		(240,307)
Net increase (decrease) in cash, cash equivalents, and restricted cash	(136,442)		64,786
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)	$	1,292,465	$	1,925,910
Supplemental disclosures
Cash payments for:
Interest, net of capitalized interest	$	54,481	$	79,689
Income taxes paid (received), net	$	882	$	(108,648)
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows for operating leases	$	137,408	$	132,323
Financing cash flows for finance leases	$	34	$	48
Non-cash transactions:
Capital expenditures funded by finance lease borrowings	$	—	$	538
Capital expenditures funded by operating lease borrowings	$	319,554	$	268,169
(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 our 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)

	Six Months Ended June 30, 2021
	Common Stock		Additional Paid-In-Capital		Treasury Stock		Retained Earnings		Accumulated 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

	Six Months Ended June 30, 2022
	Common Stock		Additional Paid-In-Capital		Treasury Stock		Retained 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

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 existing 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.

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; (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 customary 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 breakup 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.

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 six months ended June 30, 2022 and 2021.

	Three Months Ended June 30,				Six Months Ended June 30,
	2022		2021		2022		2021
	(in thousands)
Operating revenues:
Fare	$	703,778	$	369,691	$	1,122,196	$	543,978
Non-fare	644,093		476,816		1,175,419		752,864
Total passenger revenues	1,347,871		846,507		2,297,615		1,296,842
Other	18,772		12,802		36,343		23,746
Total operating revenues	$	1,366,643	$	859,309	$	2,333,958	$	1,320,588

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:

8

	Three Months Ended June 30,				Six Months Ended June 30,
	2022		2021		2022		2021
	(in thousands)
DOT—Domestic	$	1,165,746	$	770,800	$	1,993,200	$	1,177,964
DOT—Latin America	200,897		88,509		340,758		142,624
Total	$	1,366,643	$	859,309	$	2,333,958	$	1,320,588

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 June 30, 2022 and December 31, 2021, the Company had ATL balances of $561.7 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.

4. Loss on Disposal

During the three and six months ended June 30, 2022, the Company recorded $10.6 million and $22.2 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 June 30, 2022 primarily consisted of $10.2 million related to the loss on four aircraft sale leaseback transactions completed during the second quarter of 2022. Loss on disposal of assets for the six months ended June 30, 2022 primarily consisted of $14.5 million related to the loss on seven aircraft sale leaseback transactions completed during the first and second quarters of 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 six months ended June 30, 2021, the Company recorded $0.2 million and $1.3 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 June 30, 2021 primarily consisted of $0.2 million related to the loss on two aircraft sale leaseback transactions completed during the second quarter of 2021. Loss on disposal of assets for the six months ended June 30, 2021 primarily consisted of $1.1 million related to the sale of auxiliary power units ("APUs"), $0.2 million related to the loss on two aircraft sale leaseback transactions completed during the second quarter of 2021 and disposal of excess and obsolete inventory.

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5. Special Charges (Credits)

During the three and six months ended June 30, 2022, the Company recorded $10.4 million and $21.5 million, respectively, within special charges (credits) on the Company's condensed consolidated statements of operations, in legal, advisory and other fees related to the Frontier Merger Agreement and JetBlue's unsolicited proposal, received in April 2022, to acquire all of the Company's outstanding shares in an all-cash transaction. In addition, as part of the 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 will be paid to the Company's employees during the third quarter of 2022. During the three and six months ended June 30, 2022, the Company recorded $7.6 million and $12.1 million, respectively, within special charges (credits) on the Company's condensed consolidated statements of operations, related to the Company's retention bonus program.

During the three and six months ended June 30, 2021, the Company recorded $99.3 million and $255.8 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 three and six months ended June 30, 2021, the Company recorded $16.3 million and $37.5 million, respectively, related to the CARES Act Employee Retention credit within special credits on the Company’s condensed consolidated statements of operation. These special credits were partially offset by $0.6 million and $1.4 million in special charges recorded during the three and six months ended June 30, 2021, respectively. The $0.6 million and $1.4 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.

6. Loss per Share

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

 

	Three Months Ended June 30,				Six Months Ended June 30,
	2022		2021		2022		2021
	(in thousands, except per-share amounts)
Numerator
Net loss	$	(52,406)	$	(287,863)	$	(247,109)	$	(400,184)
Denominator
Weighted-average shares outstanding, basic	108,697		105,258		108,639		101,537
Effect of dilutive shares	—		—		—		—
Adjusted weighted-average shares outstanding, diluted	108,697		105,258		108,639		101,537
Loss per share
Basic loss per common share	$	(0.48)	$	(2.73)	$	(2.27)	$	(3.94)
Diluted loss per common share	$	(0.48)	$	(2.73)	$	(2.27)	$	(3.94)

Anti-dilutive common stock equivalents excluded from the diluted loss per share calculation for any of the periods presented are not material.

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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 June 30, 2022 and December 31, 2021, the Company had $105.9 million and $106.3 million, respectively, in short-term available-for-sale investment securities, respectively. During the six months ended June 30, 2022, these investments earned interest income at a weighted-average fixed rate of approximately 0.3%. For the three and six months ended June 30, 2022, an unrealized loss of $173 thousand and $435 thousand, respectively, net of deferred taxes of $51 thousand and $127 thousand, respectively, was recorded within accumulated other comprehensive income ("AOCI") related to these investment securities. For the three and six months ended June 30, 2021, an unrealized loss of $13 thousand and $6 thousand, respectively, net of deferred taxes of $4 thousand and $2 thousand, respectively, was recorded within AOCI related to these investment securities. For the three and six months ended June 30, 2022 and June 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 June 30, 2022 and December 31, 2021, $478 thousand and $43 thousand, net of tax, respectively, remained in AOCI, related to these instruments.

8. Accrued Liabilities

Other current liabilities as of June 30, 2022 and December 31, 2021 consist of the following:

	June 30, 2022		December 31, 2021
	(in thousands)
Salaries, wages and benefits	$	156,025	$	142,893
Federal excise and other passenger taxes and fees payable	122,040		77,409
Fuel	94,151		55,103
Airport obligations	83,149		85,772
Aircraft maintenance	39,193		39,178
Interest payable	23,719		24,526
Aircraft and facility lease obligations	22,049		23,049
Other	38,337		32,824
Other current liabilities	$	578,663	$	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 six months ended June 30, 2022, the Company took delivery of seven aircraft under sale leaseback transactions and two spare engines purchased with cash. As of June 30, 2022, the Company had a fleet consisting of 180 A320 family aircraft. As of June 30, 2022, the Company had 74 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 June 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 June 30, 2022, the Company also had 12 spare engines financed under operating leases with lease term expiration dates ranging from 2022 to 2033 and owned 22 spare engines, of which, as of June 30, 2022, 1 was unencumbered and 21 were pledged as collateral under the Company's revolving credit facility maturing in 2024.

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As of June 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 June 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.

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 June 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 June 30, 2022. The table does not include commitments that are contingent on events or other factors that are currently uncertain or unknown.

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	Finance Leases		Operating Leases
			Aircraft and Spare Engine Leases		Property Facility Leases		Other		Total Operating and Finance Lease Obligations
	(in thousands)
Remainder of 2022	$	421	$	141,250	$	2,882	$	79	$	144,632
2023	465		279,258		5,763		13		285,499
2024	215		267,172		3,885		—		271,272
2025	117		252,230		1,212		—		253,559
2026	38		225,970		964		—		226,972
2027 and thereafter	—		1,904,800		142,174		—		2,046,974
Total minimum lease payments	$	1,256	$	3,070,680	$	156,880	$	92	$	3,228,908
Less amount representing interest	56		944,235		132,754		1		1,077,046
Present value of minimum lease payments	$	1,200	$	2,126,445	$	24,126	$	91	$	2,151,862
Less current portion	665		164,532		4,572		91		169,860
Long-term portion	$	535	$	1,961,913	$	19,554	$	—	$	1,982,002

Commitments related to the Company's noncancellable short-term operating leases not recorded on the Company's condensed consolidated balance sheets are expected to be $3.2 million for the remainder of 2022 and none for 2023 and beyond.

The table below presents information for lease costs related to the Company's finance and operating leases:

	Three Months Ended June 30,				Six Months Ended June 30,
	2022		2021		2022		2021
	(in thousands)
Finance lease cost
Amortization of leased assets	$	188	$	176	$	375	$	345
Interest of lease liabilities	16		24		34		48
Operating lease cost
Operating lease cost (1)	65,430		52,632		128,681		104,774
Short-term lease cost (1)	9,551		7,076		19,808		14,091
Variable lease cost (1)	50,128		50,511		98,723		88,661
Total lease cost	$	125,313	$	110,419	$	247,621	$	207,919

(1) Expenses are classified within aircraft rent and landing fees and other rents on the Company's condensed consolidated statements of operations.

The table below presents lease terms and discount rates related to the Company's finance and operating leases:

	June 30, 2022		June 30, 2021
Weighted-average remaining lease term
Operating leases	14.1 years		13.7 years
Finance leases	2.2 years		2.9 years
Weighted-average discount rate
Operating leases	5.80	%	5.92	%
Finance leases	4.60	%	4.91	%

10. Commitments and Contingencies

Aircraft-Related Commitments and Financing Arrangements

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The Company’s contractual purchase commitments consist primarily of aircraft and engine acquisitions through manufacturers and aircraft leasing companies. As of June 30, 2022, the Company's total firm aircraft orders consisted of 113 A320 family aircraft with Airbus, including A319neos, A320neos and A321neos, with deliveries expected through 2027. Out of these 113 aircraft, the Company has 10 aircraft scheduled for delivery in the remainder of 2022 and 17 aircraft scheduled for delivery in 2023. As of June 30, 2022, the Company had secured financing for the 10 aircraft scheduled for delivery from Airbus through the remainder of 2022, which will be financed through sale leaseback transactions. As of June 30, 2022, the Company did not have financing commitments in place for the remaining 103 Airbus aircraft on firm order through 2027. However, the Company has a financing letter of agreement with Airbus which provides backstop financing for a majority of the aircraft included in the A320 NEO Family Purchase Agreement signed in the fourth quarter of 2019. The agreement provides a standby credit facility in the form of senior secured mortgage debt financing. The contractual purchase amounts for all aircraft orders from Airbus are included within the purchase commitments below.

During the third quarter of 2021, the Company entered into an Engine Purchase Support Agreement which requires the Company to purchase a certain number of spare engines in order to maintain a contractual ratio of spare engines to aircraft in the fleet. As of June 30, 2022, the Company is committed to purchase 14 PW1100G-JM spare engines, with deliveries through 2027.

As of June 30, 2022, purchase commitments for the Company's aircraft and engine orders, including estimated amounts for contractual price escalations and pre-delivery payments, are expected to be $507.3 million for the remainder of 2022, $906.9 million in 2023, $999.8 million in 2024, $1,060.7 million in 2025, $1,349.9 million in 2026, and $872.8 million in 2027 and beyond.

During the third quarter of 2019, the United States announced its decision to levy tariffs on certain imports from the European Union, including commercial aircraft and related parts. These tariffs include aircraft and other parts that the Company is already contractually obligated to purchase including those reflected above. In June 2021, the United States Trade Representative announced that the United States and European Union had agreed to suspend reciprocal tariffs on large civilian aircraft for five years, pending discussions to resolve their trade dispute.

In addition to the aircraft purchase agreement, as of June 30, 2022, the Company has agreements in place for 40 A320neos and A321neos to be financed through direct leases with third-party lessors with deliveries scheduled from the remainder of 2022 through 2024. As of June 30, 2022, aircraft rent commitments for future aircraft deliveries to be financed under direct leases from third-party lessors and sale leaseback transactions are expected to be approximately $18.0 million for the remainder of 2022, $110.8 million in 2023, $188.9 million in 2024, $217.9 million in 2025, $217.9 million in 2026, and $1,861.5 million in 2027 and beyond.

Interest commitments related to the secured debt financing of 73 delivered aircraft as of June 30, 2022 are $46.2 million for the remainder of 2022, $64.6 million in 2023, $53.3 million in 2024, $45.8 million in 2025, $38.3 million in 2026, and $90.3 million in 2027 and beyond. As of June 30, 2022, interest commitments related to the Company's 8.00% senior secured notes, convertible debt financing, unsecured term loans and revolving credit facility are $24.5 million for the remainder of 2022, $48.4 million in 2023, $48.4 million in 2024, $45.4 million in 2025, $5.9 million in 2026, and $14.0 million in 2027 and beyond. For principal commitments related to the Company's debt financing, refer to Note 12, Debt and Other Obligations.

The Company is contractually obligated to pay the following minimum guaranteed payments for its reservation system, construction commitments related to its new headquarters campus and residential building and other miscellaneous subscriptions and services as of June 30, 2022: $34.3 million for the remainder of 2022, $21.7 million in 2023, $18.1 million in 2024, $18.1 million in 2025, $17.5 million in 2026, and $19.2 million in 2027 and thereafter. During the first quarter of 2018, the Company entered into a contract renewal with its reservation system provider which expires in 2028.

Litigation and Assessments

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The Company is subject to commercial litigation claims and to administrative and regulatory proceedings and reviews that may be asserted or maintained from time to time. The Company believes the ultimate outcome of such lawsuits, proceedings and reviews will not, individually or in the aggregate, have a material adverse effect on its financial position, liquidity or results of operations. In making a determination regarding accruals, using available information, the Company evaluates the likelihood of an unfavorable outcome in legal or regulatory proceedings and assessments to which the Company is a party and records a loss contingency when it is probable a liability has been incurred and the amount of the loss can be reasonably estimated. These subjective determinations are based on the status of such legal or regulatory proceedings, the merits of the Company's defenses, and consultation with legal counsel. Actual outcomes of these legal and regulatory proceedings may materially differ from the Company's current estimates. It is possible that resolution of one or more of the legal matters currently pending or threatened could result in losses material to the Company's consolidated results of operations, liquidity, or financial condition.

Following an audit by the Internal Revenue Service ("IRS") related to the collection of federal excise taxes on optional passenger seat selection charges covering the period of the second quarter 2018 through the fourth quarter 2020, on March 31, 2022, the Company was assessed $34.9 million. On July 19, 2022, the assessment was reduced to $27.5 million. The Company believes a loss in this matter is not probable and has not recognized a loss contingency.

Credit Card Processing Arrangements

The Company has agreements with organizations that process credit card transactions arising from the purchase of air travel, baggage charges, and other ancillary services by customers. As is standard in the airline industry, the Company's contractual arrangements with credit card processors permit them, under certain circumstances, to retain a holdback or other collateral, which the Company records as restricted cash, when future air travel and other future services are purchased via credit card transactions. The required holdback is the percentage of the Company's overall credit card sales that its credit card processors hold to cover refunds to customers if the Company fails to fulfill its flight obligations.

The Company's credit card processors do not require the Company to maintain cash collateral provided that the Company satisfies certain liquidity and other financial covenants. Failure to meet these covenants would provide the processors the right to place a holdback resulting in a commensurate reduction of unrestricted cash. As of June 30, 2022 and December 31, 2021, the Company's credit card processors were holding back no remittances.

The maximum potential exposure to cash holdbacks by the Company's credit card processors, based upon advance ticket sales and Spirit Saver$ Club® memberships as of June 30, 2022 and December 31, 2021, was $632.5 million and $371.8 million, respectively.

Employees

The Company has 5 union-represented employee groups that together represented approximately 79% of all employees as of June 30, 2022. The table below sets forth the Company's employee groups and status of the collective bargaining agreements as of June 30, 2022.

Employee Groups	Representative	Amendable Date (1)	Percentage of Workforce
Pilots	Air Line Pilots Association, International ("ALPA")	February 2023	27%
Flight Attendants	Association of Flight Attendants ("AFA-CWA")	September 2021	46%
Dispatchers	Professional Airline Flight Control Association ("PAFCA")	October 2023	1%
Ramp Service Agents	International Association of Machinists and Aerospace Workers ("IAMAW")	November 2026	3%
Passenger Service Agents	Transport Workers Union of America ("TWU")	February 2027	2%

(1) Subject to standard early opener provisions.

The Company's passenger service agents are represented by the TWU, but the representation applies only to the Company's Fort Lauderdale station where the Company has direct employees in the passenger service classification. The Company and the TWU began meeting in late October 2018 to negotiate an initial collective bargaining agreement. During February 2022, the Company reached a tentative agreement with the TWU. The Company's passenger service agents ratified the five-year agreement on February 21, 2022.

In February 2021, the Company entered into a Letter of Agreement with the AFA-CWA to change the amendable date of the collective bargaining agreement from May 4, 2021 to September 1, 2021. All other terms of the collective bargaining

15

agreement remained the same. In June 2021, the AFA-CWA notified the Company, as required by the Railway Labor Act, that it intends to submit proposed changes to the collective bargaining agreement covering the Company’s flight attendants. The Company and the AFA-CWA began the negotiation sessions on September 27, 2021. As of June 30, 2022, the Company continued to negotiate with the AFA-CWA.

In May 2022, the Aircraft Mechanics Fraternal Association ("AMFA") filed an application with the NMB to represent the Company's aircraft maintenance technicians ("AMTs"). In June 2022, the Company received confirmation that the union election was authorized. The union election is currently ongoing through August 25, 2022. As of June 30, 2022, the Company had approximately 600 AMTs. In the event that the Company's AMTs vote to be represented by the AMFA, the Company's labor costs may increase.

11.Fair Value Measurements

Under ASC 820, "Fair Value Measurements and Disclosures," disclosures relating to how fair value is determined for assets and liabilities are required, and a hierarchy for which these assets and liabilities must be grouped is established, based on significant levels of inputs, as follows:

Level 1—Quoted prices in active markets for identical assets or liabilities.

Level 2—Observable inputs other than Level 1 prices such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities.

Level 3—Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities.

Fair value is defined as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. The Company utilizes several valuation techniques in order to assess the fair value of the Company’s financial assets and liabilities.

Long-Term Debt

The estimated fair value of the Company's secured notes, term loan debt agreements and revolving credit facilities have been determined to be Level 3 as certain inputs used to determine the fair value of these agreements are unobservable. The Company utilizes a discounted cash flow method to estimate the fair value of the Level 3 long-term debt. The estimated fair value of the Company's publicly and non-publicly held EETC debt agreements and the Company's convertible notes has been determined to be Level 2 as the Company utilizes quoted market prices in markets with low trading volumes to estimate the fair value of its Level 2 long-term debt.

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    The carrying amounts and estimated fair values of the Company's long-term debt at June 30, 2022 and December 31, 2021 were as follows:

	June 30, 2022				December 31, 2021				Fair Value Level Hierarchy
	Carrying Value		Estimated Fair Value		Carrying Value		Estimated Fair Value
	(in millions)
8.00% senior secured notes	$	510.0	$	468.4	$	510.0	$	530.4	Level 3
Fixed-rate term loans	1,159.1		1,041.4		1,223.5		1,262.6		Level 3
Unsecured term loans	136.3		111.0		136.3		146.4		Level 3
2015-1 EETC Class A	289.6		271.5		300.6		311.1		Level 2
2015-1 EETC Class B	52.0		50.3		56.0		56.4		Level 2
2015-1 EETC Class C	69.5		67.7		75.2		74.0		Level 2
2017-1 EETC Class AA	193.3		175.2		200.3		203.3		Level 2
2017-1 EETC Class A	64.4		57.4		66.8		65.8		Level 2
2017-1 EETC Class B	53.4		47.5		55.8		53.6		Level 2
2017-1 EETC Class C	85.5		83.7		85.5		84.1		Level 2
4.75% convertible notes due 2025	25.4		53.3		28.2		55.6		Level 2
1.00% convertible notes due 2026	500.0		452.0		500.0		432.5		Level 2
Total long-term debt	$	3,138.5	$	2,879.4	$	3,238.2	$	3,275.8

Cash and Cash Equivalents

Cash and cash equivalents at June 30, 2022 and December 31, 2021 are comprised of liquid money market funds and cash, and are categorized as Level 1 instruments. The Company maintains cash with various high-quality financial institutions.

Restricted Cash

Restricted cash is comprised of cash held in an account subject to account control agreements or otherwise pledged as collateral against the Company's letters of credit and is categorized as a Level 1 instrument. As of June 30, 2022, the Company had $85.0 million in standby letters of credit secured by $75.0 million of restricted cash, of which $26.2 million had been drawn upon for issued letters of credit. In addition, the Company had $20.4 million of restricted cash held in accounts subject to control agreements to be used for the payment of interest and fees on the 8.00% senior secured notes.

Short-term Investment Securities

Short-term investment securities at June 30, 2022 and December 31, 2021 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. The Company's short-term investment securities are categorized as Level 1 instruments, as the Company uses quoted market prices in active markets when determining the fair value of these securities. For additional information, refer to Note 7, Short-term Investment Securities.

Derivative Liability

As a result of the settlement terms stipulated by the Frontier Merger Agreement, as of the Frontier Merger Agreement date, the convertible notes due 2026 no longer qualify for the derivative accounting scope exception provided under ASC 815. As such, the Company was required to bifurcate the fair value of the conversion option of the convertible notes due 2026 as a derivative liability as of the Frontier Merger Agreement date with subsequent changes in fair value recorded in earnings.

As of February 5, 2022, the Company recorded the fair value of the embedded derivative of $49.5 million as a derivative liability within deferred gains and other long-term liabilities and a debt discount within long-term debt and finance leases, less current maturities on its condensed consolidated balance sheets. The fair value of the derivative liability was estimated as the difference in value of the traded price of the convertible notes, including the conversion option and the value of the convertible notes in the absence of the conversion option (the debt component). The debt component was estimated using a discounted cash flow analysis with a yield calibrated to the traded price of the convertible notes. The change in fair value of the derivative

17

liability is recorded within interest expense on the Company's condensed consolidated statements of operations. During the three and six months ended June 30, 2022, the Company recorded $8.4 million and $9.3 million, respectively, related to the change in fair value of the derivative liability. The fair value of the derivative liability has been determined to be Level 2 as observable inputs were used to determine the fair value of derivative liability. For additional information, refer to Note 12, Debt and Other Obligations.

    Assets and liabilities measured at gross fair value on a recurring basis are summarized below:

	Fair Value Measurements as of June 30, 2022
	Total		Level 1		Level 2		Level 3
	(in millions)
Cash and cash equivalents	$	1,197.1	$	1,197.1	$	—	$	—
Restricted cash	95.4		95.4		—		—
Short-term investment securities	105.9		105.9		—		—
Assets held for sale	2.5		—		—		2.5
Total assets	$	1,400.9	$	1,398.4	$	—	$	2.5
Derivative liability	$	40.2	$	—	$	40.2	$	—
Total liabilities	$	40.2	$	—	$	40.2	$	—

	Fair Value Measurements as of December 31, 2021
	Total		Level 1		Level 2		Level 3
	(in millions)
Cash and cash equivalents	$	1,333.5	$	1,333.5	$	—	$	—
Restricted cash	95.4		95.4		—		—
Short-term investment securities	106.3		106.3		—		—
Assets held for sale	2.5		—		—		2.5
Total assets	$	1,537.7	$	1,535.2	$	—	$	2.5
Total liabilities	$	—	$	—	$	—	$	—

The Company had no transfers of assets or liabilities between any of the above levels during the six months ended June 30, 2022 and the year ended December 31, 2021.

The Company's Valuation Group, which reports to the Chief Financial Officer, is made up of individuals from the Company's Treasury and Corporate Accounting departments. The Valuation Group is responsible for the execution of the Company's valuation policies and procedures. The Valuation Group compares the results of the Company's internally developed valuation methods with counterparty reports at each balance sheet date, assesses the Company's valuation methods for accurateness and identifies any needs for modification.

12. Debt and Other Obligations

As of June 30, 2022, the Company had outstanding public and non-public debt instruments.

Revolving credit facility due in 2024

As of June 30, 2022 and December 31, 2021, the Company had $240.0 million undrawn and available under its revolving credit facility due 2024. Any amounts drawn on this facility are included in long-term debt and finance leases, less current maturities on the Company's condensed consolidated balance sheets. This facility matures on March 30, 2024.

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Convertible senior notes due 2025

On May 12, 2020, the Company completed the public offering of $175.0 million aggregate principal amount of 4.75% convertible senior notes due 2025 ("convertible notes due 2025").

Noteholders may convert their notes at their option only in the following circumstances: (1) during any calendar quarter commencing after the calendar quarter ending on June 30, 2020 (and only during such calendar quarter), if the last reported sale price per share of the Company’s common stock exceeds 130% of the conversion price for each of at least 20 trading days (whether or not consecutive) during the 30 consecutive trading days ending on, and including, the last trading day of the immediately preceding calendar quarter; (2) during the five consecutive business days immediately after any five consecutive trading day period (such five consecutive trading day period, the “measurement period”) in which the trading price per $1,000 principal amount of notes for each trading day of the measurement period was less than 98% of the product of the last reported sale price per share of the Company’s common stock on such trading day and the conversion rate on such trading day; (3) upon the occurrence of certain corporate events or distributions on the Company’s common stock; and (4) at any time from, and including, February 18, 2025 until the close of business on the second scheduled trading day immediately before the maturity date. As of June 30, 2022, the notes may be converted by noteholders through September 30, 2022.

Upon conversion, the Company will pay or deliver, as the case may be, cash, shares of the Company’s common stock or a combination of cash and shares of common stock, at the Company’s election. Based on the terms of the Frontier Merger Agreement executed on February 5, 2022 (the Frontier Merger Agreement date), upon conversion of any convertible notes due 2025 through the closing or termination of the Frontier Merger, the conversion value, including the principal amount, will be paid all in shares of the Company's common stock. The initial conversion rate is 78.4314 shares of voting common stock per $1,000 principal amount of convertible notes (equivalent to an initial conversion price of approximately $12.75 per share of common stock). The conversion rate will be subject to adjustment in some events but will not be adjusted for any accrued and unpaid interest. On July 27, 2022, the Frontier Merger Agreement was terminated; however, on July 28, 2022, the Company entered into the Merger Agreement with JetBlue. Based on the terms of the Merger Agreement with JetBlue, upon conversion of any convertible notes due 2025 through the closing or termination of the Merger Agreement with JetBlue, the conversion value, including the principal amount, will be paid all in shares of the Company's common stock.

During the second quarter of 2022, $2.8 million of the Company's convertible notes due 2025 were converted to 217,226 shares of the Company's voting common stock. As of June 30, 2022, the Company had recorded $2.7 million, net of issuance costs and common stock, in additional paid-in-capital on its condensed consolidated balance sheets as of June 30, 2022 related to the conversion of these notes. Since the notes are currently convertible in accordance with the terms of the indenture governing such notes, the Company had $25.4 million recorded within current maturities of long-term debt and finance leases on its condensed consolidated balance sheets as of June 30, 2022 related to its convertible notes due 2025. As of June 30, 2022, the if-converted value exceeds the principal amount of the convertible notes due 2025 by $18.8 million and $19.5 million using the average stock price for the three and six months ended June 30, 2022, respectively.

Convertible senior notes due 2026

On April 30, 2021, the Company completed the public offering of $500.0 million aggregate principal amount of 1.00% convertible senior notes due 2026 ("convertible notes due 2026").

Noteholders may convert their notes at their option only in the following circumstances: (1) during any calendar quarter commencing after the calendar quarter ending on June 30, 2021 (and only during such calendar quarter), if the last reported sale price per share of the Company’s common stock exceeds 130% of the conversion price for each of at least 20 trading days (whether or not consecutive) during the 30 consecutive trading days ending on, and including, the last trading day of the immediately preceding calendar quarter; (2) during the five consecutive business days immediately after any five consecutive trading day period (such five consecutive trading day period, the “measurement period”) in which the trading price per $1,000 principal amount of notes for each trading day of the measurement period was less than 98% of the product of the last reported sale price per share of the Company’s common stock on such trading day and the conversion rate on such trading day; (3) upon the occurrence of certain corporate events or distributions on the Company’s common stock; (4) if the Company calls such notes for redemption; and (5) at any time from, and including, February 17, 2026 until the close of business on the second scheduled trading day immediately before the maturity date. As of June 30, 2022, the notes did not qualify for conversion by noteholders through September 30, 2022.

Based on the terms of the indenture, the Company will have the right to elect to settle conversions in cash, shares of the Company’s common stock or a combination of cash and shares of common stock. However, upon conversion of any notes, the conversion value will be paid in cash up to at least the principal amount of the notes being converted. Based on the terms of the

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Frontier Merger Agreement executed on February 5, 2022 (the Frontier Merger Agreement date), upon conversion of any convertible notes due 2026 through the closing or termination of the Frontier Merger, the conversion value, including the principal amount, will be paid all in cash. The conversion value will be determined over an observation period consisting of 40 trading days, will be paid in cash up to at least the principal amount of the notes being converted. The initial conversion rate is 20.3791 shares of voting common stock per $1,000 principal amount of convertible notes (equivalent to an initial conversion price of approximately $49.07 per share of common stock). The conversion rate will be subject to adjustment in some events but will not be adjusted for any accrued and unpaid interest. On July 27, 2022, the Frontier Merger Agreement was terminated; however, on July 28, 2022, the Company entered into the Merger Agreement with JetBlue. Based on the terms of the Merger Agreement with JetBlue, upon conversion of any convertible notes due 2026 through the closing or termination of the Merger Agreement with JetBlue, the conversion value, including the principal amount, will be paid all in cash.

The notes will be redeemable, in whole or in part (subject to certain limitations described below), at the Company’s option at any time, and from time to time, on or after May 15, 2024 and on or before the 40th scheduled trading day immediately before the maturity date, at a cash redemption price equal to the principal amount of the notes to be redeemed, plus accrued and unpaid interest, if any, to, but excluding, the redemption date, but only if the last reported sale price per share of the Company's common stock exceeds 130% of the conversion price for a specified period of time. However, the Company may not redeem less than all of the outstanding notes unless at least $150.0 million aggregate principal amount of notes are outstanding and not called for redemption as of the time the Company sends the related redemption notice.

As a result of the settlement terms stipulated by the Frontier Merger Agreement, as of the Frontier Merger Agreement date, the notes no longer qualify for the derivative accounting scope exception provided under ASC 815. As such, the Company was required to bifurcate the fair value of the conversion option of the convertible senior notes due 2026 as a derivative liability as of the Frontier Merger Agreement date with subsequent changes in fair value recorded in earnings.

As of February 5, 2022, the Company recorded the fair value of the embedded derivative of $49.5 million as a derivative liability within deferred gains and other long-term liabilities and a debt discount within long-term debt and finance leases, less current maturities on its condensed consolidated balance sheets. The debt discount will be amortized through interest expense, using the effective interest rate method, over the remaining life of the instrument. Since the notes are currently not convertible in accordance with the terms of the indenture governing such notes, the Company had $456.8 million, net of the related unamortized debt discount of $43.2 million, recorded within long-term debt and finance leases, less current maturities on the Company's condensed consolidated balance sheets as of June 30, 2022 related to its convertible notes due 2026. For additional information, refer to Note 11, Fair Value Measurements.

Long-term debt is comprised of the following:

	As of				As of
	June 30, 2022		December 31, 2021		June 30, 2022		December 31, 2021
	(in millions)				(weighted-average interest rates)
8.00% senior secured notes due 2025	$	510.0	$	510.0	8.00	%	8.00	%
Fixed-rate loans due through 2039 (1)	1,159.1		1,223.5		3.52	%	3.52	%
Unsecured term loans due in 2031	136.3		136.3		1.00	%	1.00	%
Fixed-rate class A 2015-1 EETC due through 2028	289.6		300.6		4.10	%	4.10	%
Fixed-rate class B 2015-1 EETC due through 2024	52.0		56.0		4.45	%	4.45	%
Fixed-rate class C 2015-1 EETC due through 2023	69.5		75.2		4.93	%	4.93	%
Fixed-rate class AA 2017-1 EETC due through 2030	193.3		200.3		3.38	%	3.38	%
Fixed-rate class A 2017-1 EETC due through 2030	64.4		66.8		3.65	%	3.65	%
Fixed-rate class B 2017-1 EETC due through 2026	53.4		55.8		3.80	%	3.80	%
Fixed-rate class C 2017-1 EETC due through 2023	85.5		85.5		5.11	%	5.11	%
Convertible notes due 2025	25.4		28.2		4.75	%	4.75	%
Convertible notes due 2026	500.0		500.0		1.00	%	1.00	%
Long-term debt	$	3,138.5	$	3,238.2
Less current maturities	350.9		208.2
Less unamortized discounts, net	92.1		54.9
Total	$	2,695.5	$	2,975.1

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(1) Includes obligations related to one aircraft recorded as a failed sale leaseback. Refer to Note 9, Leases for additional information.

During the three and six months ended June 30, 2022, the Company made scheduled principal payments of $52.4 million and $96.8 million, respectively, on its outstanding debt obligations. During the three and six months ended June 30, 2021, the Company made scheduled principal payments of $234.8 million and $370.7 million, respectively, on its outstanding debt obligations.

At June 30, 2022, long-term debt principal payments for the next five years and thereafter are as follows:

	June 30, 2022
	(in millions)
remainder of 2022	$	96.2
2023	336.6
2024	222.1
2025	723.8
2026	731.1
2027 and beyond	1,028.7
Total debt principal payments	$	3,138.5

Interest Expense

Interest expense related to long-term debt and finance leases consists of the following:

	Three Months Ended June 30,				Six Months Ended June 30,
	2022		2021		2022		2021
	(in thousands)
8.00% senior secured notes (1)	$	10,461	$	13,541	20,921		$	30,975
Fixed-rate term loans	10,485		10,746		21,169		21,649
Unsecured term loans	340		282		676		481
Class A 2015-1 EETC	2,954		3,178		6,001		6,453
Class B 2015-1 EETC	575		664		1,191		1,369
Class C 2015-1 EETC	856		997		1,773		2,053
Class AA 2017-1 EETC	1,640		1,759		3,278		3,514
Class A 2017-1 EETC	591		634		1,182		1,267
Class B 2017-1 EETC	510		556		1,022		1,113
Class C 2017-1 EETC	1,092		1,092		2,171		2,171
Convertible notes (2)	(3,024)		1,749		199		3,827
Revolving credit facilities	—		562		—		1,733
Finance leases	16		24		34		48
Commitment and other fees	418		604		955		1,032
Amortization of deferred financing costs	3,210		3,274		7,432		6,783
Total	$	30,124	$	39,662	$	68,004	$	84,468

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(1) Includes $0.3 million and $0.5 million of accretion and $10.2 million and $20.4 million of interest expense for the three and six months ended June 30, 2022, respectively. Includes $0.3 million and $0.8 million of accretion and $13.2 million and $30.2 million of interest expense for the three and six months ended June 30, 2021, respectively.

(2) Includes $3.8 million and $6.3 million of amortization of the discount for the convertible notes due 2026, $1.6 million and $3.2 million of interest expense for the convertible notes due 2025 and 2026 offset by $8.4 million and $9.3 million of favorable mark to market adjustments for the convertible notes due 2026 for the three and six months ended June 30, 2022, respectively. Includes $1.7 million and $3.8 million of interest expense for the convertible notes due 2025 and 2026 for the three and six months ended June 30, 2021, respectively.

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ITEM 2.MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

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

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

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

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

Forward-Looking Statements

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

Overview

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

We focus on value-conscious travelers who pay for their own travel, and our business model is designed to deliver what our Guests want: low fares and a great experience. We compete based on total price. We allow our Guests to see all available

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options and their respective prices prior to purchasing a ticket, and this full transparency illustrates that our total price, including options selected, is lower on average than other airlines. By offering Guests unbundled base fares, we give them the power to save by paying only for the À La Smarte® options they choose, such as checked and carry-on bags and advance seat assignments. We record revenue related to these options as non-fare passenger revenue, which is recorded within passenger revenues in our statement of operations.

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

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

Comparative Operating Statistics:

The following tables set forth our operating statistics for the three and six month periods ended June 30, 2022 and 2021:

 

	Three Months Ended June 30,				Percent Change
	2022		2021
Operating Statistics (unaudited) (A):
Average aircraft	177.6		159.9		11.1	%
Aircraft at end of period	180		164		9.8	%
Average daily aircraft utilization (hours)	10.7		9.9		8.1	%
Average stage length (miles)	1,022		1,012		1.0	%
Departures	63,148		53,984		17.0	%
Passenger flight segments (PFSs) (thousands)	9,719		8,385		15.9	%
Revenue passenger miles (RPMs) (thousands)	10,192,686		8,635,827		18.0	%
Available seat miles (ASMs) (thousands)	11,846,547		10,226,746		15.8	%
Load factor (%)	86.0	%	84.4	%	1.6 pts
Fare revenue per passenger flight segment ($)	72.41		44.09		64.2	%
Non-ticket revenue per passenger flight segment ($)	68.20		58.39		16.8	%
Total revenue per passenger flight segment ($)	140.61		102.48		37.2	%
Average yield (cents)	13.41		9.95		34.8	%
TRASM (cents)	11.54		8.40		37.4	%
CASM (cents)	11.92		7.49		59.1	%
Adjusted CASM (cents)	11.68		8.62		35.5	%
Adjusted CASM ex-fuel (cents)	6.96		6.52		6.7	%
Fuel gallons consumed (thousands)	129,972		110,202		17.9	%
Average economic fuel cost per gallon ($)	4.30		1.95		120.5	%

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

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	Six Months Ended June 30,				Percent Change
	2022		2021
Operating Statistics (unaudited) (A):
Average aircraft	176.2		158.6		11.1	%
Aircraft at end of period	180		164		9.8	%
Average daily aircraft utilization (hours)	10.7		8.8		21.6	%
Average stage length (miles)	1,034		1,024		1.0	%
Departures	124,106		93,986		32.0	%
Passenger flight segments (PFSs) (thousands)	18,224		13,858		31.5	%
Revenue passenger miles (RPMs) (thousands)	19,242,720		14,383,382		33.8	%
Available seat miles (ASMs) (thousands)	23,565,443		18,202,904		29.5	%
Load factor (%)	81.7	%	79.0	%	2.7 pts
Fare revenue per passenger flight segment ($)	61.58		39.25		56.9	%
Non-ticket revenue per passenger flight segment ($)	66.49		56.04		18.6	%
Total revenue per passenger flight segment ($)	128.07		95.29		34.4	%
Average yield (cents)	12.13		9.18		32.1	%
TRASM (cents)	9.90		7.25		36.6	%
CASM (cents)	10.99		7.31		50.3	%
Adjusted CASM (cents)	10.76		8.90		20.9	%
Adjusted CASM ex-fuel (cents)	6.82		6.93		(1.6)	%
Fuel gallons consumed (thousands)	254,888		190,748		33.6	%
Average economic fuel cost per gallon ($)	3.64		1.88		93.6	%

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

Executive Summary

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, we 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 existing 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

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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”).

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. We expect payments made from JetBlue to Spirit stockholders will not impact our results of operations or cash flows. Under the terms of the Merger Agreement, JetBlue reimbursed Spirit for the $25.0 million Frontier Expenses discussed above.

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; (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 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 customary 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 breakup 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.

Summary of Results

For the second quarter of 2022, we had a negative operating margin of 3.3%, a decrease of 14.1 percentage points compared to an operating margin of 10.8% in the prior year period. We generated a pre-tax loss of $67.5 million and a net loss of $52.4 million on operating revenues of $1,366.6 million. For the second quarter of 2021, we generated a pre-tax loss of $273.3 million and a net loss of $287.9 million on operating revenues of $859.3 million.

Our Adjusted CASM ex-fuel for the second quarter of 2022 was 6.96 cents compared to 6.52 cents in the same period in the prior year. The increase on a per-ASM basis was primarily due to increases in reaccommodation expense, salaries, wages and benefits expense and ground handling expense, period over period. On a per-ASM basis, these increases were partially offset by decreases in primarily fixed operating costs such as depreciation and amortization expense and aircraft rent expense. Improved air travel demand, as compared to the prior year period, drove an increase in ASMs of 15.8%, period over period.

Due to the impacts of the pandemic on the demand for airline travel, beginning in 2020, we paused hiring across all work groups, including pilots and flight attendants, for nearly a year. During this time, we continued to take scheduled delivery of aircraft per our contractual purchase commitments with Airbus. In early 2021, as travel demand improved, we re-launched our recruiting, hiring and training initiatives. The pause in hiring during 2020 through early 2021, as well as staffing and

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operational challenges that have affected the airline industry overall, have restricted our ability to both optimize our network and operate our fleet at full utilization. As a result, on a per-ASM basis, we have experienced higher costs since early 2020 and expect this trend to continue until we are able to reach full fleet utilization.

As of June 30, 2022, we had 180 Airbus A320-family aircraft in our fleet comprised of 31 A319s, 64 A320s, 30 A321s, and 55 A320neos. With the scheduled delivery of 17 aircraft during the remainder of 2022, we expect to end 2022 with 197 aircraft in our fleet.

Comparison of three months ended June 30, 2022 to three months ended June 30, 2021

Operating Revenues

Operating revenues increased $507.3 million, or 59.0%, to $1,366.6 million for the second quarter of 2022, as compared to the second quarter of 2021, primarily due to an increase in average yield of 34.8%, an increase in traffic of 18.0% and an increase in load factor of 1.6 pts, year over year, driven by increased air travel demand as compared to prior year period.

Total revenue per passenger flight segment increased 37.2%, year over year. The increase in total revenue per passenger flight segment was primarily driven by a 34.8% increase in average yield, period over period. Fare revenue per passenger flight segment increased 64.2% and non-ticket revenue per passenger flight segment increased 16.8%. The increase in non-ticket revenue per passenger flight segment was primarily attributable to increases in bag revenue, passenger usage fee revenue, change fee revenue, seat revenue and boost-it and bundle-it revenue per passenger flight segment, as compared to the prior year.

Operating Expenses

Operating expenses increased $645.9 million, or 84.3%, to $1,412.0 million for the second quarter of 2022 compared to $766.1 million for the second quarter of 2021, primarily due to an increase in aircraft fuel expense, period over period. We also had an increase in operations as reflected by an 18.0% increase in traffic and 15.8% increase in capacity. In addition, we had $18.0 million in special charges in the second quarter of 2022 compared to $115.0 million in special credits during the second quarter of 2021. For additional information, refer to "Notes to Condensed Consolidated Financial Statements—5. Special Charges (Credits)."

Aircraft fuel expense includes into-plane fuel expense (defined below) and realized and unrealized gains and losses associated with our fuel derivative contracts, if any. Into-plane fuel expense is defined as the price that we generally pay at the airport, including taxes and fees. Into-plane fuel prices are affected by the global oil market, refining costs, taxes and fees, which can vary by region in the United States and other countries where we operate. Into-plane fuel expense approximates cash paid to the supplier and does not reflect the effect of any fuel derivatives. We had no activity related to fuel derivative instruments during the three months ended June 30, 2022 and 2021.

Aircraft fuel expense increased by $343.8 million, or 160.0%, from $214.8 million in the second quarter of 2021 to $558.6 million in the second quarter of 2022. This higher fuel expense, period over period, was due to a 120.5% increase in average economic fuel cost per gallon and a 17.9% increase in fuel gallons consumed.

The elements of the changes in aircraft fuel expense are illustrated in the following table:

	Three Months Ended June 30,
	2022		2021
	(in thousands, except per-gallon amounts)				Percent Change
Fuel gallons consumed	129,972		110,202		17.9	%
Into-plane fuel cost per gallon	$	4.30	$	1.95	120.5	%
Aircraft fuel expense (per condensed consolidated statements of operations)	$	558,633	$	214,825	160.0	%

Gulf Coast Jet indexed fuel is the basis for a substantial majority of our fuel consumption and is impacted by both the price of crude oil as well as increases or decreases in refining margins associated with the conversion of crude oil to jet fuel. The into-plane fuel cost per gallon increase of 120.5% was primarily a result of an increase in jet fuel prices.

We measure our operating cost performance on a per-ASM basis, since one ASM is the unit of production of an airline’s capacity. The following table presents our cost per-ASM, or unit cost, for the three months ended June 30, 2022 and 2021, followed by explanations of the material changes on a dollar basis and/or unit cost basis:

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	Three Months Ended June 30,				Dollar Change		Percent Change		Cost per ASM		Per-ASM Change	Percent Change
									Three Months Ended June 30,
	2022		2021						2022	2021
	(in thousands)								(in cents)
Salaries, wages, and benefits	$	308,634	$	257,236	$	51,398	20.0	%	2.61	2.52	0.09	3.6	%
Aircraft fuel	558,633		214,825		343,808		160.0	%	4.72	2.10	2.62	124.8	%
Landing fees and other rents	92,021		81,497		10,524		12.9	%	0.78	0.80	(0.02)	(2.5)	%
Depreciation and amortization	76,469		73,703		2,766		3.8	%	0.65	0.72	(0.07)	(9.7)	%
Aircraft rent	68,632		64,641		3,991		6.2	%	0.58	0.63	(0.05)	(7.9)	%
Maintenance, materials and repairs	45,407		39,639		5,768		14.6	%	0.38	0.39	(0.01)	(2.6)	%
Distribution	48,724		35,263		13,461		38.2	%	0.41	0.34	0.07	20.6	%
Loss on disposal of assets	10,636		189		10,447		NM		0.09	—	0.09	NM
Special charges (credits)	18,004		(115,002)		133,006		NM		0.15	(1.12)	1.27	NM
Other operating	184,813		114,107		70,706		62.0	%	1.56	1.12	0.44	39.3	%
Total operating expenses	$	1,411,973	$	766,098	$	645,875	84.3	%	11.92	7.49	4.43	59.1	%
Adjusted CASM (1)									11.68	8.62	3.06	35.5	%
Adjusted CASM ex-fuel (2)									6.96	6.52	0.44	6.7	%

(1)Reconciliation of CASM to Adjusted CASM:

	Three Months Ended June 30,
	2022			2021
	(in millions)		Per ASM	(in millions)		Per ASM
CASM (cents)			11.92			7.49
Loss on disposal of assets	$	10.6	0.09	$	0.2	—
Special charges (credits)	18.0		0.15	(115.0)		(1.12)
Federal excise tax recovery	—		—	(2.2)		(0.02)
Accelerated depreciation	—		—	1.8		0.02
Adjusted CASM (cents)			11.68			8.62

(2)Excludes aircraft fuel expense, loss on disposal of assets, special charges (credits), amounts related to out-of-period interrupted trip expense credits recognized in connection with Federal Excise Tax recovery and accelerated depreciation on aircraft seats related to the retrofit of 36 aircraft with new Acro6 seats completed in 2021.

Our Adjusted CASM ex-fuel for the second quarter of 2022 was 6.96 cents compared to 6.52 cents in the same period in the prior year. The increase on a per-ASM basis was primarily due to increases in reaccommodation expense, salaries, wages and benefits expense and ground handling expense, period over period. On a per-ASM basis, these increases were partially offset by decreases in primarily fixed operating costs such as depreciation and amortization expense and aircraft rent expense. Improved air travel demand, as compared to the prior year period, drove an increase in ASMs of 15.8%, period over period.

Salaries, wages and benefits for the second quarter of 2022 increased $51.4 million, or 20.0%, as compared to the second quarter of 2021. This increase on a dollar and per-ASM basis was primarily driven by higher salaries, crew overtime and 401(k) expense, period over period. The increase in salaries and crew overtime was mainly driven by a 15.8% increase in our pilot and flight attendant workforce, period over period, as well as due to an increase in operations as compared to the prior year period. The increase in 401(k) expense was mainly driven by higher pay to our pilot workforce driven by an increase in operations as well as higher average pay rates and 401(k) employer contribution rates to our pilots as compared to the prior year period.

Landing fees and other rents for the second quarter of 2022 increased $10.5 million, or 12.9%, as compared to the second quarter of 2021. On a dollar basis, landing fees and other rents expense primarily increased as a result of an increase in facility rent driven by increased operations, higher rent rates and the addition of new stations, period over period. A portion of our facility rent is variable in nature and varies based on factors such as the number of departures. As compared to the prior year period, departures increased by 17.0%. On a per-ASM basis, landing fees and other rents decreased, period over period,

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primarily due to a lower average rate per landing based on the location and volume of where we operated, partially offset by an increase in facility rent.

Depreciation and amortization for the second quarter of 2022 increased by $2.8 million, or 3.8%, as compared to the prior year period. The increase in depreciation expense on a dollar basis was primarily driven by an increase in computer software and hardware.

We account for heavy maintenance under the deferral method. Under the deferral method, the cost of heavy maintenance is capitalized and amortized as a component of depreciation and amortization expense in the statement of operations until the earlier of the next heavy maintenance event or the end of the lease term. The amortization of heavy maintenance costs was $22.5 million and $22.6 million for the second quarters of 2022 and 2021, respectively. The amortization of heavy maintenance costs is driven by the timing and number of maintenance events. As our fleet continues to grow and age, we generally expect that the amount of deferred heavy maintenance events will increase and will result in an increase in the amortization of those costs. If heavy maintenance events were amortized within maintenance, materials and repairs expense in the condensed consolidated statements of operations, our maintenance, materials and repairs expense would have been $67.9 million and $62.2 million for the second quarter of 2022 and 2021, respectively.

Aircraft rent expense for the second quarter of 2022 increased by $4.0 million, or 6.2%, as compared to the second quarter of 2021. This increase in aircraft rent expense was primarily due to an increase in the number of aircraft financed under operating leases throughout the current period, as compared to the prior year period. Since the second quarter of 2021, we have acquired 15 new aircraft financed under operating leases. The increase in aircraft rent was partially offset by a decrease in supplemental rent, period over period. The decrease in supplemental rent is driven by the accrual of lease return costs in the prior year period related to the purchase of two A319 aircraft off lease made during the second quarter of 2021, partially offset by the accrual of lease return costs during the second quarter of 2022 related to our short-term spare engines. The decrease on a per-ASM basis was primarily due to the decrease in supplemental rent noted above, partially offset by the increase in rent expense related to the increase in aircraft financed under operating leases throughout the current period.

Maintenance, materials and repairs expense for the second quarter of 2022 increased by $5.8 million, or 14.6%, as compared to the second quarter of 2021. On a per dollar basis, the increase in maintenance, materials and repairs expense was mainly due to a higher volume of aircraft and rotable maintenance events as a result of an 8.1% increase in average daily aircraft utilization in the current period as compared to the prior year period. On a per-ASM basis, maintenance, materials and repairs expense remained relatively stable, period over period.

Distribution costs increased by $13.5 million, or 38.2%, in the second quarter of 2022 as compared to the second quarter of 2021. The increase on a dollar and per-ASM basis was primarily due to increased sales volume, which impacts our variable distribution costs such as credit card fees.

Loss on disposal of assets for the three months ended June 30, 2022 primarily consisted of $10.2 million related to the loss on four aircraft sale leaseback transactions completed during the second quarter of 2022. Loss on disposal of assets for the three months ended June 30, 2021 primarily consisted of $0.2 million related to the loss on two aircraft sale leaseback transactions completed during the second quarter of 2021.

Special charges for the three months ended June 30, 2022 consisted of $10.4 million in legal, advisory and other fees related to the Merger Agreement with Frontier and JetBlue's unsolicited proposal to acquire all of our outstanding shares in an all-cash transaction as well as $7.6 million related to our retention bonus program. Special credits for the three months ended June 30, 2021 consisted of $99.3 million related to the grant component of the PSP2 and PSP3 agreements with the Treasury. In addition, we recorded $16.3 million related to the CARES Act Employee Retention credit. These special credits were partially offset by $0.6 million in special charges recorded in connection with the rehire of Team Members previously terminated under our involuntary employee separation program which were rehired in compliance with the restrictions mandated by our participation in the PSP2. For additional information, refer to "Notes to Condensed Consolidated Financial Statements—5. Special Charges (Credits)."

Other operating expenses for the three months ended June 30, 2022 increased by $70.7 million, or 62.0%, as compared to the three months ended June 30, 2021. The increase in other operating expenses on a dollar basis was primarily due to an increase in ground handling expense, travel and lodging expense and passenger reaccomodation expense, period over period. As compared to the prior year period, departures increased by 17.0% and passenger flight segments increased by 15.9%, which drove these increases in variable other operating expenses. The increase in ground handling expense was also attributable to higher rates, period over period. In addition, we had higher passenger reaccomodation expense, period over period, related to a number of adverse weather events and increases in air traffic control ("ATC") programs and restrictions, which led to a number

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of flight delays and cancellations during the second quarter of 2022. The increase on a per-ASM basis, was primarily attributable to higher passenger reaccommodation expense, ground handling rates and travel and lodging expense, as compared to the prior year period.

Other (Income) Expense

Our interest expense and corresponding capitalized interest for the three months ended June 30, 2022 primarily represented interest related to the financing of purchased aircraft as well as the interest and accretion related to our 8.00% senior secured notes, the discount amortization related to our convertible notes due in 2026 and the interest related to our convertible notes. In addition, our interest expense for the three months ended June 30, 2022, includes mark to market adjustments of $8.4 million to the derivative liability related to our convertible notes due 2026. Refer to "Notes to Condensed Consolidated Financial Statements—11. Fair Value Measurements" for additional information. Our interest expense and corresponding capitalized interest for the three months ended June 30, 2021, primarily represents interest related to the financing of purchased aircraft as well as the interest related to our convertible notes and the interest and accretion related to our 8.00% senior secured notes. As of June 30, 2022 and 2021, we had 73 and 72 aircraft financed through fixed-rate long-term debt, respectively.

During the three months ended June 30, 2022, we had no loss on extinguishment of debt in our condensed consolidated statement of operations. Our loss on extinguishment of debt for the three months ended June 30, 2021 primarily represents premiums paid to early extinguish a portion of our 8.00% senior secured notes and our convertible notes due 2025. In addition, it includes the write-off of related deferred financing costs and original issuance discount.

Our interest income for the three months ended June 30, 2022 represents interest income earned on our cash, cash equivalents and short-term investments as well as interest earned on income tax refunds. Our interest income for the three months ended June 30, 2021 represents interest income earned on cash, cash equivalents and short-term investments.

Income Taxes

Our effective tax rate for the second quarter of 2022 was 22.4% compared to (5.3)% for the second quarter of 2021. The increase in the tax rate, as compared to the prior year period, is primarily due to an unfavorable permanent tax adjustment recorded during the three months ended June 30, 2021, related to the repurchase of a portion of our convertible notes due 2025. Excluding the impact from the unfavorable permanent tax adjustment, our effective tax rate for the three months ended June 30, 2021 would have been 22.0%. While we expect our tax rate to be a fairly consistent in the near term, it will tend to vary depending on items such as changes to permanent tax items, the amount of income we earn in each state and the state tax applicable to such income. Discrete items particular to a given year may also affect our effective tax rates.

Comparison of six months ended June 30, 2022 to six months ended June 30, 2021

Operating Revenues

Operating revenues increased $1,013.4 million, or 76.7%, to $2,334.0 million for the six months ended June 30, 2022, as compared to the prior year period, primarily due to an increase in traffic of 33.8%, an increase in average yield of 32.1% and an increase in load factor of 2.7 pts driven by increased air travel demand as compared to prior year period.

Total revenue per passenger flight segment increased 34.4%, year over year. The increase in total revenue per passenger flight segment was primarily due to an increase of 32.1% in average yield, period over period. Fare revenue per passenger flight segment increased 56.9%, as compared to the prior year period, while non-ticket revenue per passenger flight segment increased 18.6%, as compared to the prior year period. The increase in non-ticket revenue per passenger flight segment was primarily attributable to increases in passenger usage fee revenue, change fee revenue, bag revenue, seat revenue and boost-it and bundle-it revenue per passenger flight segment, as compared to the prior year.

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Operating Expenses

Operating expenses increased for the six months ended June 30, 2022 by $1,260.8 million, or 94.8%, as compared to the prior year period primarily due to a 93.6% increase in average economic fuel cost per gallon and a 33.6% increase in fuel gallons consumed, both of which contributed to a $569.5 million increase in aircraft fuel expense, period over period. We also had an increase in operations as reflected by a 33.8% increase in traffic and a 29.5% increase in capacity, as a result of increased travel demand as compared to the prior year period. In addition, we had $33.6 million in special charges during the six months ended June 30, 2022 compared to $291.9 million in special credits in the same period in the prior year. For additional information, refer to "Notes to Condensed Consolidated Financial Statements—5. Special Charges (Credits)."

The elements of the changes in aircraft fuel expense are illustrated in the following table:

	Six Months Ended June 30,
	2022		2021
	(in thousands, except per-gallon amounts)				Percent Change
Fuel gallons consumed	254,888		190,748		33.6	%
Into-plane fuel cost per gallon	$	3.64	$	1.88	93.6	%
Aircraft fuel expense (per condensed consolidated statements of operations)	$	927,218	$	357,755	159.2	%

We measure our operating cost performance on a per-ASM basis, since one ASM is the unit of production of an airline’s capacity. The following table presents our cost per-ASM, or unit cost, for the six months ended June 30, 2022 and 2021, followed by explanations of the material changes on a unit cost basis and/or dollar basis:

	Six Months Ended June 30,				Dollar Change		Percent Change		Cost per ASM		Per-ASM Change	Percent Change
									Six Months Ended June 30,
	2022		2021						2022	2021
	(in thousands)								(in cents)
Salaries, wages, and benefits	$	614,524	$	502,928	$	111,596	22.2	%	2.61	2.76	(0.15)	(5.4)	%
Aircraft fuel	927,218		357,755		569,463		159.2	%	3.93	1.97	1.96	99.5	%
Landing fees and other rents	174,957		153,605		21,352		13.9	%	0.74	0.84	(0.10)	(11.9)	%
Depreciation and amortization	152,660		148,015		4,645		3.1	%	0.65	0.81	(0.16)	(19.8)	%
Aircraft rent	134,676		119,423		15,253		12.8	%	0.57	0.66	(0.09)	(13.6)	%
Maintenance, materials and repairs	90,922		69,542		21,380		30.7	%	0.39	0.38	0.01	2.6	%
Distribution	84,075		58,905		25,170		42.7	%	0.36	0.32	0.04	12.5	%
Loss on disposal of assets	22,188		1,306		20,882		NM		0.09	0.01	0.08	NM
Special charges (credits)	33,567		(291,940)		325,507		NM		0.14	(1.60)	1.74	NM
Other operating	355,969		210,368		145,601		69.2	%	1.51	1.16	0.35	30.2	%
Total operating expenses	$	2,590,756	$	1,329,907	$	1,260,849	94.8	%	10.99	7.31	3.68	50.3	%
Adjusted CASM (1)									10.76	8.90	1.86	20.9	%
Adjusted CASM ex-fuel (2)									6.82	6.93	(0.11)	(1.6)	%

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(1)Reconciliation of CASM to Adjusted CASM:

	Six Months Ended June 30,
	2022			2021
	(in millions)		Per ASM	(in millions)		Per ASM
CASM (cents)			10.99			7.31
Loss on disposal of assets	$	22.2	0.09	$	1.3	0.01
Special charges (credits)	33.6		0.14	(291.9)		(1.60)
Federal excise tax recovery	—		—	(2.2)		(0.01)
Accelerated depreciation	—		—	3.5		0.02
Adjusted CASM (cents)			10.76			8.90

(2)Excludes aircraft fuel expense, loss on disposal of assets, special charges (credits), amounts related to out-of-period interrupted trip expense credits recognized in connection with Federal Excise Tax recovery, and accelerated depreciation on current aircraft seats related to the retrofit of 36 aircraft with new Acro6 seats.

Our Adjusted CASM ex-fuel for the six months ended June 30, 2022 was 6.82 cents as compared to 6.93 cents for the six months ended June 30, 2021. Improved air travel demand, as compared to the prior year period, drove an increase of 29.5% in ASMs, period over period. This increase in ASMs drove a decrease in operating expenses on a per-ASM basis with the greatest impact noted on primarily fixed costs such as salaries, wages, and benefits expense, depreciation and amortization expense and landing fees and other rents expense and aircraft rent expense. On a per-ASM basis, these decreases were partially offset by increases in reaccommodation expense and ground handling expense, period over period.

Salaries, wages and benefits for the six months ended June 30, 2022 increased $111.6 million, or 22.2%, as compared to the prior year period. This increase on a dollar basis was primarily driven by higher salaries, crew overtime and per diem pay and 401(k) expense, period over period. The increase in salaries and crew overtime and per diem pay was mainly driven by a 17.2% increase in our pilot and flight attendant workforce, period over period, as well as due to an increase in operations as compared to the prior year period. The increase in 401(k) expense was mainly driven by higher pay to our pilot workforce driven by an increase in operations as well as higher average pay rates and 401(k) employer contribution rates to our pilots as compared to the prior year period.

Landing fees and other rents for the six months ended June 30, 2022 increased $21.4 million, or 13.9%, as compared to the prior year period. On a dollar basis, landing fees and other rents expense primarily increased as a result of an increase in facility rent, gate charges and overfly fees driven by increased operations, higher rent rates and the addition of new stations, period over period. Gate charges and overfly fees are variable in nature and vary based on factors such as the number of departures and passengers. As compared to the prior year period, departures increased by 32.0% and passenger flight segments increased by 31.5%. These increases were partially offset by an increase in signatory adjustment credits as compared to the prior year period. On a per-ASM basis, landing fees and other rents decreased, period over period, primarily due to a lower average rate per landing based on the location and volume of where we operated.

Depreciation and amortization for the six months ended June 30, 2022 increased by $4.6 million, or 3.1%, as compared to the prior year period. The increase in depreciation expense on a dollar basis was primarily driven by an increase in computer hardware and software and spare rotables.

We account for heavy maintenance under the deferral method. Under the deferral method, the cost of heavy maintenance is capitalized and amortized as a component of depreciation and amortization expense in the statement of operations until the earlier of the next heavy maintenance event or end of the lease term. The amortization of heavy maintenance costs was $46.0 million and $46.5 million for the six months ended June 30, 2022 and 2021, respectively. As our fleet continues to grow and age, we generally expect that the amount of deferred heavy maintenance events will increase and will result in an increase in the amortization of those costs. If heavy maintenance events were amortized within maintenance, materials and repairs expense in the condensed consolidated statements of operations, our maintenance, materials and repairs expense would have been $136.9 million and $116.0 million for the six months ended June 30, 2022 and 2021, respectively.

Aircraft rent expense for the six months ended June 30, 2022 increased by $15.3 million, or 12.8%, as compared to the prior year period. This increase in aircraft rent expense was primarily due to an increase in the number of aircraft financed under operating leases throughout the current period, as compared to the prior year period. Since the second quarter of 2021, we have acquired 15 new aircraft financed under operating leases. The increase in aircraft rent was partially offset by a decrease in

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supplemental rent, period over period. The decrease in supplemental rent is driven by the accrual of lease return costs in the prior year period related to the purchase of four aircraft off lease made during the six months ended June 30, 2021, partially offset by the accrual of lease return cost in the current year period related to our short-term spare engines. The decrease on a per-ASM basis was primarily due to the decrease in supplemental rent noted above.

Maintenance, materials and repairs expense for the six months ended June 30, 2022 increased by $21.4 million, or 30.7%, as compared to the prior year period. The increase on a dollar basis was mainly due to a higher volume of aircraft and rotable maintenance events as a result of an increase of 21.6% in average daily aircraft utilization in the current period as compared to the prior year period. On a per-ASM basis, maintenance, materials and repairs expense remained relatively stable, period over period.

Distribution costs increased by $25.2 million, or 42.7%, for the six months ended June 30, 2022 as compared to the prior year period. The increase on a dollar and per-ASM basis was primarily due to increased sales volume, which impacts our variable distribution costs such as credit card fees.

Loss on disposal of assets for the six months ended June 30, 2022 primarily consisted of $14.5 million related to the loss on seven aircraft sale leaseback transactions completed during the first and second quarters of 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. Loss on disposal of assets for the six months ended June 30, 2021 consisted of $1.1 million related to the sale of auxiliary power units ("APUs"), $0.2 million related to the loss on two aircraft sale leaseback transactions completed during the second quarter of 2021 and disposal of excess and obsolete inventory.

Special charges for the six months ended June 30, 2022 consisted of $21.5 million in legal, advisory and other fees related to the Merger Agreement with Frontier and JetBlue's unsolicited proposal to acquire all of our outstanding shares in an all-cash transaction as well as $12.1 million related to our retention bonus program. Special credits for the six months ended June 30, 2021 consisted of $255.8 million related to the grant component of the PSP agreement with the Treasury. In addition, we recorded $37.5 million related to the CARES Act Employee Retention credit. These special credits were partially offset by $1.4 million in special charges recorded in connection with the rehire of Team Members previously terminated under our involuntary employee separation program which were rehired in compliance with the restrictions mandated by our participation in the PSP2. For additional information, refer to "Notes to Condensed Consolidated Financial Statements—5. Special Charges (Credits)."

Other operating expenses for the six months ended June 30, 2022 increased by $145.6 million, or 69.2%, as compared to the prior year period. The increase in other operating expenses on a dollar basis was primarily due to an increase in passenger reaccomodation expense, ground handling expense and travel and lodging expense, period over period. As compared to the prior year period, departures increased by 32.0% and we had 31.5% more passenger flight segments, which drove increases in variable other operating expenses. In addition, we had higher passenger reaccomodation expense, period over period, related to a number of adverse weather events and increases in ATC programs and restrictions, which led to a significant number of flight delays and cancellations during the first half of 2022. The increase on a per-ASM basis, was primarily attributable to higher passenger reaccommodation expense, ground handling rates and travel and lodging expense, as compared to the prior year period.

Other (Income) Expense

Our interest expense and corresponding capitalized interest for the six months ended June 30, 2022 primarily represented interest related to the financing of purchased aircraft as well as the interest and accretion related to our 8.00% senior secured notes, the discount amortization related to our convertible notes due in 2026 and the interest related to our convertible notes. In addition, our interest expense for the six months ended June 30, 2022, includes mark to market adjustments of $9.3 million to the derivative liability related to our convertible notes due 2026. Refer to "Notes to Condensed Consolidated Financial Statements—11. Fair Value Measurements" for additional information. Our interest expense and corresponding capitalized interest for the six months ended June 30, 2021 primarily represents interest related to the financing of purchased aircraft as well as the interest related to our convertible notes and the interest and accretion related to our 8.00% senior secured notes. As of June 30, 2022 and 2021, we had 73 and 72 aircraft financed through secured long-term debt arrangements, respectively.

During the six months ended June 30, 2022, we had no loss on extinguishment of debt in our condensed consolidated statement of operations. Our loss on extinguishment of debt for the six months ended June 30, 2021 primarily represents premiums paid to early extinguish a portion of our 8.00% senior secured notes and 4.75% convertible notes due 2025. In addition, it includes the write-off of related deferred financing costs and original issuance discount.

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Our interest income for the six months ended June 30, 2022 and 2021 represents interest income earned on cash, cash equivalents and short-term investments as well as interest earned on income tax refunds.

Income Taxes

Our effective tax rate for the six months ended June 30, 2022 was 20.7% compared to 2.7% for the six months ended June 30, 2021. The increase in tax rate, as compared to the prior year period, is primarily due to an unfavorable permanent tax adjustment recorded during the six months ended June 30, 2021, related to the repurchase of a portion of our convertible notes due 2025. Excluding this unfavorable permanent tax adjustment, our effective tax rate for the six months ended June 30, 2021 would have been 20.9%. While we expect our tax rate to be fairly consistent in the near term, it will tend to vary depending on items such as changes to permanent tax items, the amount of income we earn in each state and the state tax applicable to such income. Discrete items particular to a given year may also affect our effective tax rates.

Liquidity and Capital Resources

Our primary sources of liquidity generally include cash on hand, cash provided by operations and capital from debt and equity financing. Primary uses of liquidity are for working capital needs, capital expenditures, aircraft and engine pre-delivery deposit payments ("PDPs") and debt and lease obligations. We expect to meet our cash needs for the next twelve months with cash and cash equivalents, financing arrangements and cash flows from operations. As of June 30, 2022, we had $1,543.0 million of liquidity comprised of unrestricted cash and cash equivalents, short-term investment securities and funds available under our revolving credit facility due in 2024.

As of June 30, 2022, we had $25.4 million recorded within current maturities of long-term debt and finance leases on our condensed consolidated balance sheets related to our convertible notes due 2025. As of June 30, 2022, the convertible notes due 2025 may be converted by noteholders through September 30, 2022. During the second quarter of 2022, $2.8 million of our convertible notes due 2025 were converted to 217,226 shares of our voting common stock. Refer to "Notes to Condensed Consolidated Financial Statements—12. Debt and Other Obligations," for additional information on the convertible notes due 2025.

As of June 30, 2022, we had $456.8 million, net of the related unamortized debt discount of $43.2 million, recorded within long-term debt and finance leases, less current maturities on our condensed consolidated balance sheets related to our convertible notes due 2026. As of June 30, 2022, the convertible notes due 2026 did not qualify for conversion by noteholders through September 30, 2022. Refer to "Notes to Condensed Consolidated Financial Statements —12. Debt and Other Obligations" for additional information on the convertible notes due 2026.

Currently, one of our largest capital expenditure needs is funding the acquisition costs of our aircraft. Aircraft may be acquired through debt financing, cash purchases, direct leases or sale leaseback transactions. During the six months ended June 30, 2022, we took delivery of seven aircraft under sale leaseback transactions and two spare engines purchased with cash. During the six months ended June 30, 2022, we made $135.3 million in debt payments (principal, interest and fees) on our outstanding aircraft debt obligations.

Under our purchase agreements for aircraft and engines, we are required to pay PDPs relating to future deliveries at various times prior to each delivery date. During the six months ended June 30, 2022, we paid $7.4 million in PDPs, net of refunds, and $8.9 million of capitalized interest for future deliveries of aircraft and spare engines. As of June 30, 2022, we had $488.3 million of pre-delivery deposits on flight equipment, including capitalized interest, on our condensed consolidated balance sheets.

As of June 30, 2022, we have secured financing for 40 aircraft to be leased directly from third-party lessors and 10 aircraft which will be financed through sale leaseback transactions, with deliveries expected through 2024. We do not have financing commitments in place for the remaining 103 Airbus firm aircraft orders, scheduled for delivery through 2027. However, we have a financing letter of agreement with Airbus which provides backstop financing for a majority of the aircraft included in the A320 NEO Family Purchase Agreement signed in the fourth quarter of 2019. The agreement provides a standby credit facility in the form of senior secured mortgage debt financing. Future aircraft deliveries may be paid in cash, leased or otherwise financed based on market conditions, our prevailing level of liquidity, and capital market availability.

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Net Cash Flows Provided By Operating Activities. Operating activities in the six months ended June 30, 2022 provided $86.8 million in cash compared to $484.1 million provided in the six months ended June 30, 2021. Cash provided by operating activities in the six months ended June 30, 2022 is primarily related to cash provided from an increase in air traffic liability, an increase in other liabilities as well as higher non-cash expense of depreciation and amortization. These increases were partially offset by the net loss in the period as well as the increase in the deferred income tax benefit in the period and deferred heavy maintenance, net.

Net Cash Flows Used In Investing Activities. During the six months ended June 30, 2022, investing activities used $123.1 million, compared to $179.0 million used in the prior year period. The decrease was mainly driven by a decrease in PDPs paid, net of refunds, partially offset by any increase in purchases of property and equipment, year over year.

Net Cash Flows Used By Financing Activities. During the six months ended June 30, 2022, financing activities used $100.2 million in cash compared to $240.3 million used in the six months ended June 30, 2021. During the six months ended June 30, 2022, we paid $96.8 million in debt principal payment obligations.

Commitments and Contractual Obligations

Our contractual purchase commitments consist primarily of aircraft and engine acquisitions through manufacturers and aircraft leasing companies. As of June 30, 2022, our aircraft orders consisted of 113 A320 family aircraft with Airbus, including A319neos, A320neos and A321neos, with deliveries expected through 2027. Out of these 113 aircraft, we have 10 aircraft scheduled for delivery in the remainder of 2022 and 17 aircraft scheduled for delivery in 2023. As of June 30, 2022, we had secured financing for the 10 aircraft scheduled for delivery from Airbus through the remainder of 2022, which will be financed through sale leaseback transactions. As of June 30, 2022, we do not have financing commitments in place for the remaining 103 Airbus aircraft on firm order through 2027. However, we have a financing letter of agreement with Airbus which provides backstop financing for a majority of the aircraft included in the A320 NEO Family Purchase Agreement signed in the fourth quarter of 2019. The agreement provides a standby credit facility in the form of senior secured mortgage debt financing. The contractual purchase amounts for all aircraft orders from Airbus are included within the flight equipment purchase obligations in the table below.

During the third quarter of 2021, we entered into an Engine Purchase Support Agreement which requires us to purchase a certain number of spare engines in order to maintain a contractual ratio of spare engines to aircraft in the fleet. As of June 30, 2022, we are committed to purchase 14 PW1100G-JM spare engines, with deliveries through 2027.

During the third quarter of 2019, the United States announced its decision to levy tariffs on certain imports from the European Union, including commercial aircraft and related parts. These tariffs would include aircraft and other parts that we are already contractually obligated to purchase including those reflected above. In June 2021, the United States Trade Representative announced that the United States and European Union had agreed to suspend reciprocal tariffs on large civilian aircraft for five years, pending discussions to resolve their trade dispute.

As of June 30, 2022, we had secured 40 direct leases for aircraft with third-party lessors, with deliveries in the remainder of 2022 through 2024. Aircraft rent commitments for future aircraft deliveries to be financed under direct leases from third-party lessors and sale leaseback transactions are expected to be approximately $18.0 million for the remainder of 2022, $110.8 million in 2023, $188.9 million in 2024, $217.9 million in 2025, $217.9 million in 2026, and $1,861.5 million in 2027 and beyond.

We have significant obligations for aircraft and spare engines as 74 of our 180 aircraft and 12 of our 34 spare engines are financed under operating leases. These leases expire between 2022 and 2040. Aircraft rent payments were $68.0 million and $68.5 million for the three months ended June 30, 2022 and June 30, 2021, respectively. Aircraft rent payments were $132.9 million and $127.5 million for the six months ended June 30, 2022 and June 30, 2021, respectively.

Our fixed-rate operating leases with terms greater than 12 months are included within operating lease right-of-use assets with the corresponding liabilities included within current maturities of operating leases and operating leases, less current maturities on our condensed consolidated balance sheets. Leases with a term of 12 months or less and variable-rate leases are not recorded on our condensed consolidated balance sheets. Please see "Notes to Condensed Consolidated Financial Statements—9. Leases" for further discussion on our leases.

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We have contractual obligations and commitments primarily with regard to future purchases of aircraft and engines, payments of debt, and lease arrangements. The following table discloses aggregate information about our contractual obligations as of June 30, 2022 and the periods in which payments are due (in millions): 

	Remainder of 2022		2023 - 2024		2025 - 2026		2027 and beyond		Total
Long-term debt (1)	$	96	$	559	$	1,455	$	1,029	$	3,139
Interest and fee commitments (2)	71		215		135		104		525
Finance and operating lease obligations	145		557		481		2,047		3,230
Flight equipment purchase obligations (3)	507		1,907		2,411		873		5,698
Other (4)	34		40		36		19		129
Total future payments on contractual obligations	$	853	$	3,278	$	4,518	$	4,072	$	12,721

(1) Includes principal only associated with our 8.00% senior secured notes, senior term loans, fixed-rate loans, unsecured term loans, Class A, Class B, and Class C Series 2015-1 EETCs, Class AA, Class A, Class B, and Class C Series 2017-1 EETCs and convertible notes. Refer to "Notes to Condensed Consolidated Financial Statements—12. Debt and Other Obligations."

(2) Related to our 8.00% senior secured notes, senior term loans, fixed-rate loans, unsecured term loans, Class A, Class B, and Class C Series 2015-1 EETCs, Class AA, Class A, Class B, and Class C Series 2017-1 EETCs and convertible notes. Includes interest accrued as of June 30, 2022 related to our variable-rate revolving credit facility.

(3) Includes estimated amounts for contractual price escalations and PDPs.

(4) Primarily related to our reservation system, construction commitments related to our new headquarters campus and residential building and other miscellaneous subscriptions and services. Refer to "Notes to Condensed Consolidated Financial Statements—10. Commitments and Contingencies."

Currently, one of our lease agreements require that we pay maintenance reserves to aircraft lessors to be held as collateral in advance of our required performance of major maintenance activities.

During the fourth quarter of 2019, we 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 we are building a new headquarters campus and a 200-unit residential building. During the first quarter of 2022, we began building our new headquarters campus and a 200-unit residential building with an expected completion during the fourth quarter 2023. Operating lease commitments related to this lease are included in the table above under the caption "Finance and operating lease obligations." For more detailed information, please refer to “Notes to Condensed Consolidated Financial Statements— 9. Leases." Commitments related to the construction of the headquarters campus and the 200-unit residential building are included in the table above under the caption "Other."

Off-Balance Sheet Arrangements

As of June 30, 2022, we had lines of credit related to corporate credit cards of $20.1 million, from which we had drawn $1.1 million.

As of June 30, 2022, we had lines of credit with counterparties for both physical fuel delivery and derivatives in the amount of $41.5 million. As of June 30, 2022, we had drawn $15.9 million on these lines of credit for physical fuel delivery. We are required to post collateral for any excess above the lines of credit if the derivatives are in a net liability position and make periodic payments in order to maintain an adequate undrawn portion for physical fuel delivery. As of June 30, 2022, we did not hold any derivatives.

As of June 30, 2022, we had $11.4 million in uncollateralized surety bonds and $85.0 million in standby letters of credit, collateralized by $75.0 million of restricted cash, representing an off-balance sheet commitment, of which $26.2 million had been drawn upon for issued letters of credit.

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GLOSSARY OF AIRLINE TERMS

Set forth below is a glossary of industry terms:

“Adjusted CASM” means operating expenses, excluding loss on disposal of assets, special charges and credits, accelerated depreciation and federal excise tax recovery, divided by ASMs.

“Adjusted CASM ex fuel” means operating expenses excluding aircraft fuel expense, loss on disposal of assets, special charges and credits, accelerated depreciation and federal excise tax recovery, divided by ASMs.

“AFA-CWA” means the Association of Flight Attendants-CWA.

“Air traffic liability” or “ATL” means the value of tickets sold in advance of travel.

“ALPA” means the Air Line Pilots Association, International.

“ASIF” means an Aviation Security Infrastructure Fee assessed by the TSA on each airline.

“Available seat miles” or “ASMs” means the number of seats available for passengers multiplied by the number of miles the seats are flown, also referred to as "capacity."

“Average aircraft” means the average number of aircraft in our fleet as calculated on a daily basis.

“Average daily aircraft utilization” means block hours divided by number of days in the period divided by average aircraft.

“Average fuel cost per gallon” means total aircraft fuel expense divided by the total number of fuel gallons consumed.

“Average stage length” represents the average number of miles flown per flight.

“Average yield” means average operating revenue earned per RPM, calculated as total revenue divided by RPMs, also referred to as "passenger yield."

“Block hours” means the number of hours during which the aircraft is in revenue service, measured from the time of gate departure before take-off until the time of gate arrival at the destination.

“CASM” or “unit costs” means operating expenses divided by ASMs.

“CBA” means a collective bargaining agreement.

“CBP” means United States Customs and Border Protection.

“DOT” means the United States Department of Transportation.

"EETC" means enhanced equipment trust certificate.

“EPA” means the United States Environmental Protection Agency.

“FAA” means the United States Federal Aviation Administration.

“Fare revenue per passenger flight segment” means total fare passenger revenue divided by passenger flight segments.

“FCC” means the United States Federal Communications Commission.

"FLL Airport" means the Fort Lauderdale Hollywood International Airport.

“GDS” means Global Distribution System (e.g., Amadeus, Galileo, Sabre and Worldspan).

"IAMAW" means the International Association of Machinists and Aerospace Workers.

“Into-plane fuel cost per gallon” means into-plane fuel expense divided by number of fuel gallons consumed.

“Into-plane fuel expense” represents the cost of jet fuel and certain other charges such as fuel taxes and oil.

“Load factor” means the percentage of aircraft seats actually occupied on a flight (RPMs divided by ASMs).

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“NMB” means the National Mediation Board.

"Non-ticket revenue" means total non-fare passenger revenue and other revenue

“Non-ticket revenue per passenger flight segment” means total non-fare passenger revenue and other revenue divided by passenger flight segments.

“OTA” means Online Travel Agent (e.g., Orbitz and Travelocity).

"PAFCA" means the Professional Airline Flight Control Association.

“Passenger flight segments” means the total number of passengers flown on all flight segments.

“PDP” means pre-delivery deposit payment.

“Revenue passenger mile” or “RPM” means one revenue passenger transported one mile. RPMs equals revenue passengers multiplied by miles flown, also referred to as “traffic.”

“RLA” means the United States Railway Labor Act.

"Total operating revenue per-ASM," "TRASM" or "unit revenue" means operating revenue divided by ASMs.

“TWU” means the Transport Workers Union of America.

“TSA” means the United States Transportation Security Administration.

“ULCC” means “ultra low-cost carrier.”

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ITEM 3.QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Market Risk-Sensitive Instruments and Positions

We are subject to certain market risks, including commodity prices (specifically aircraft fuel) and interest rates. We purchase the majority of our jet fuel at prevailing market prices and seek to manage market risk through execution of our hedging strategy and other means. We have market-sensitive instruments in the form of fixed-rate debt instruments, short-term investment securities and, from time to time, financial derivative instruments used to hedge our exposure to jet fuel price increases and interest rate increases. We do not purchase or hold any derivative financial instruments for trading purposes. The adverse effects of changes in these markets could pose a potential loss as discussed below. The sensitivity analysis provided below does not consider the effects that such adverse changes may have on overall economic activity, nor does it consider additional actions we may take to mitigate our exposure to such changes. Actual results may differ.

Aircraft Fuel. Our results of operations can vary materially due to changes in the price and availability of aircraft fuel. Aircraft fuel expense for the six months ended June 30, 2022 represented approximately 35.8% of our operating expenses. Volatility in aircraft fuel prices or a shortage of supply could have a material adverse effect on our operations and operating results. We source a significant portion of our fuel from refining resources located in the southeast United States, particularly facilities adjacent to the Gulf of Mexico. Gulf Coast fuel is subject to volatility and supply disruptions, particularly during hurricane season when refinery shutdowns have occurred, or when the threat of weather-related disruptions has caused Gulf Coast fuel prices to spike above other regional sources. Both jet fuel swaps and jet fuel options are used at times to protect the refining price risk between the price of crude oil and the price of refined jet fuel, and to manage the risk of increasing fuel prices. Gulf Coast Jet indexed fuel is the basis for a substantial majority of our fuel consumption. Based on our annual fuel consumption over the last 12 months, a hypothetical 10% increase in the average price per gallon of aircraft fuel would have increased into-plane aircraft fuel expense by approximately $148 million. As of June 30, 2022, we did not have any outstanding jet fuel derivatives, and we have not engaged in fuel derivative activity since 2015.

Interest Rates. We have market risk associated with our short-term investment securities, which had a fair market value of $105.9 million as of June 30, 2022.

Fixed-Rate Debt. As of June 30, 2022, we had $1,966.8 million outstanding in fixed-rate debt related to 43 Airbus A320 aircraft and 30 Airbus A321 aircraft which had a fair value of $1,794.7 million. In addition, as of June 30, 2022, we had $510.0 million and $136.3 million outstanding in fixed-rate debt related to our 8.00% senior secured notes and our unsecured term loans, respectively, which had fair values of $468.4 million and $111.0 million. As of June 30, 2022, we also had $525.4 million outstanding in convertible debt which had a fair value of $505.3 million.

Variable-Rate Debt. As of June 30, 2022, we did not have any outstanding variable-rate long term debt.

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ITEM 4.CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures

Management, with the participation of our Chief Executive Officer and our Chief Financial Officer, evaluated the effectiveness of our disclosure controls and procedures as of June 30, 2022. The term “disclosure controls and procedures,” as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act, means controls and other procedures of a company that are designed to ensure that information required to be disclosed by a company in the reports that it files or submits under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the SEC’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by a company in the reports that it files or submits under the Exchange Act is accumulated and communicated to our management, including its chief executive and principal financial officers, as appropriate to allow timely decisions regarding required disclosure.

Management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving their objectives and management necessarily applies its judgment in evaluating the cost-benefit relationship of possible controls and procedures.

Based on the evaluation of our disclosure controls and procedures as of June 30, 2022, our Chief Executive Officer and Chief Financial Officer concluded that, as of such date, our disclosure controls and procedures were effective at the reasonable assurance level.

Changes in Internal Control over Financial Reporting

There were no changes in our internal control over financial reporting (as defined in Rule 13a-15(f) under the Exchange Act), during the quarter ended June 30, 2022 that have materially affected or are reasonably likely to materially affect our internal control over financial reporting.

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PART II. OTHER INFORMATION

ITEM 1.LEGAL PROCEEDINGS

We are subject to commercial litigation claims and to administrative and regulatory proceedings and reviews that may be asserted or maintained from time to time. We believe the ultimate outcome of such lawsuits, proceedings and reviews will not, individually or in the aggregate, have a material adverse effect on our financial position, liquidity or results of operations.

Following an audit by the IRS related to the collection of federal excise taxes on optional passenger seat selection charges covering the period of the second quarter 2018 through the fourth quarter 2020, on March 31, 2022, we were assessed $34.9 million. On July 19, 2022, the assessment was reduced to $27.5 million. We believe the assessment is without merit and intend to challenge the assessment.

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ITEM 1A.RISK FACTORS

There have been no material changes to the risk factors disclosed in Item 1A "Risk Factors" contained in our Annual Report on Form 10-K for the year ended December 31, 2021, filed with the Securities and Exchange Commission on February 8, 2022, other than the addition of the following risk factors. Investors are urged to review such risk factors carefully.

The pendency of the proposed Merger may cause disruption in our business.

On July 28, 2022, we entered into the Merger Agreement with JetBlue and 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 Agreement restricts us from taking specified actions without JetBlue’s consent until the Merger is completed or the Merger Agreement is terminated, including amending our organizational documents, issuing shares of our common stock, divesting certain assets (including certain intellectual property rights), declaring or paying dividends, making certain significant acquisitions or investments, entering into any new lines of business, incurring certain indebtedness in excess of certain thresholds, amending or modifying certain material contracts, making non-ordinary course capital expenditures, making certain non-ordinary course changes to personnel and employee compensation, changing the cabin configuration or amenities on our aircraft and taking actions that may result in the loss of our FAA airworthiness certification or takeoff and landing slots. These restrictions and others more fully described in the Merger Agreement may affect our ability to execute our business strategies and attain our financial and other goals and may impact our business, results of operations and financial condition.

The pendency of the proposed Merger could cause disruptions to our business or business relationships, which could have an adverse impact on our results of operations. Parties with which we have business relationships, including Guests, pilots, employees, suppliers, third-party service providers and third-party distribution channels, may be uncertain as to the future of such relationships and may delay or defer certain business decisions, seek alternative relationships with third parties or seek to alter their present business relationships with us. Parties with whom we otherwise may have sought to establish business relationships may seek alternative relationships with third parties.

The pursuit of the Merger is expected to place a significant burden on our management and internal resources. The diversion of management’s attention away from day-to-day business concerns and any difficulties encountered in the transition process could adversely affect our business, results of operations and financial condition.

We have incurred and will continue to incur significant costs, expenses and fees for professional services and other transaction costs in connection with the Merger. The substantial majority of these costs will be non-recurring expenses relating to the Merger, and many of these costs are payable regardless of whether or not the Merger is consummated. We also could be subject to litigation related to the proposed Merger, which could prevent or delay the consummation of the Merger and result in significant costs and expenses.

Failure to complete the Merger in a timely manner or at all could negatively impact the market price of our common stock, as well as our future business and our results of operations and financial condition.

The Merger cannot be completed until conditions to closing are satisfied or (if permissible under applicable law) waived. The Merger is subject to numerous closing conditions, including among other things: (1) approval of the transactions by our stockholders; (2) receipt of applicable regulatory approvals, including approvals from the FCC, FAA and 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 the Company.

The satisfaction of the required conditions could delay the completion of the Merger for a significant period of time or prevent it from occurring. Further, there can be no assurance that the conditions to the closing of the Merger will be satisfied or waived or that the Merger will be completed.

If the Merger is not completed in a timely manner or at all, our ongoing business may be adversely affected as follows:

•we may experience negative reactions from the financial markets, and our stock price could decline to the extent that the current market price reflects an assumption that the Merger will be completed;

•we may experience negative reactions from employees, Guests, suppliers or other third parties;

•we may be subject to litigation, which could result in significant costs and expenses;

•management’s focus may be diverted from day-to-day business operations and from pursuing other opportunities that could have been beneficial to the Company; and

•our costs of pursuing the Merger may be higher than anticipated.

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Additionally, in approving the Merger Agreement, the Board of Directors considered a number of factors and potential benefits, including the fact that the merger consideration to be received by holders of common stock represented a significant premium over the last closing stock price prior to announcement of the Merger. If the Merger is not completed, the holders of our common stock will not realize this benefit of the Merger.

In addition to the above risks, we may be required, under certain circumstances, to pay JetBlue a breakup fee equal to $94.2 million and/or to reimburse or indemnify JetBlue for certain of its expenses. If the Merger is not consummated due to the inability to receive regulatory approval, JetBlue would be required to pay Spirit a reverse termination fee of $70 million. The reverse termination fee may not be sufficient to cover all of the expenses Spirit incurred in connection with the Merger, which may have an adverse effect on our liquidity and results of operations. If the Merger is not consummated, there can be no assurance that these risks will not materialize and will not materially adversely affect our stock price, business, results of operations and financial condition.

In order to complete the Merger, the Company and JetBlue must obtain certain governmental approvals, and if such approvals are not granted or are granted with conditions, completion of the Merger may be jeopardized or the anticipated benefits of the Merger could be reduced.

Although the Company and JetBlue have agreed to use reasonable best efforts, subject to certain limitations, to make certain governmental filings and obtain the required governmental approvals, including from the FCC, FAA and DOT, or expiration or earlier termination of relevant waiting periods, as the case may be, there can be no assurance that the relevant waiting periods will expire or be terminated or that the relevant approvals will be obtained. In connection with its prior tender offer, JetBlue has made regulatory submissions to certain governmental authorities, and received a “second request” for information from the U.S. Department of Justice, with which the Company and JetBlue are in the process of complying. Complying with requests for information from governmental authorities is time-consuming and expensive and distracts management from the day-to-day operations of the Company. As a condition to approving the Merger, these governmental authorities may impose conditions, terms, obligations or restrictions or require divestitures or place restrictions on the conduct of our business after completion of the Merger. There can be no assurance that regulators will not impose conditions, terms, obligations or restrictions and that such conditions, terms, obligations or restrictions will not have the effect of delaying or preventing completion of the Merger or imposing additional material costs on or materially limiting the revenues of the combined company following the Merger, or otherwise adversely affecting, including to a material extent, our business, results of operations and financial condition after completion of the Merger. If we are required to divest assets or businesses, there can be no assurance that we will be able to negotiate such divestitures expeditiously or on favorable terms or that the governmental authorities will approve the terms of such divestitures. We can provide no assurance that these conditions, terms, obligations or restrictions will not result in the abandonment of the Merger. Any of the governmental authorities from which we need approvals may also sue us and JetBlue in U.S. federal court to prevent the Merger from being consummated. Defending any such lawsuit will be time-consuming and expensive and there can be no assurance that we and JetBlue would ultimately be successful.

If the Merger is not consummated, holders of convertible notes or warrants will not receive any adjustment to the conversion rate or exercise price as a result of any prepayment of merger consideration or ticking fee.

The indentures governing each series of our convertible notes outstanding and the warrant agreements governing our outstanding warrants do not provide for an adjustment to the conversion rate or exercise price when payments are made by a third party to our stockholders, as JetBlue has agreed to do in the Merger Agreement. As a result, if the Merger is not consummated, convertible noteholders and warrant holders will not receive the benefit of these payments.

You must be a Spirit stockholder as of the specified record dates to receive the prepayments of merger consideration.

The prepayments of merger consideration by JetBlue will only be made to Spirit stockholders as of the specified record dates. If you are not a Spirit stockholder as of that record date, you will not receive the relevant prepayment even if you are a Spirit stockholder at the time of consummation of the Merger. As a result, if you are not a Spirit stockholder at each relevant time, you will receive less than $33.50 (or less than the up to $34.15 maximum amount of merger consideration, depending on the timing of Closing) in total for each share of Spirit common stock you own upon the consummation of the Merger.

Increased labor costs, union disputes, employee strikes and other labor-related disruption may adversely affect our business, results of operations and financial conditions.

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Our business is labor intensive, with labor costs representing approximately 32.4%, 39.3% and 26.0% of our total operating costs for 2021, 2020 and 2019, respectively. As of June 30, 2022, approximately 79% of our workforce was represented by labor unions. We cannot assure that our labor costs going forward will remain competitive, because in the future our labor agreements may be amended or become amendable and new agreements could have terms with higher labor costs; one or more of our competitors may significantly reduce their labor costs, thereby reducing or eliminating our comparative advantages as to one or more of such competitors; or our labor costs may increase in connection with our growth. If our aircraft maintenance technicians (“AMTs”) vote to unionize, as further described below, we will be required to negotiated a collective bargaining agreement with the Aircraft Mechanics Fraternal Association (the “AMFA”). Any such negotiation may cause us to incur higher labor costs for our AMTs over the term of the agreement than we would have incurred absent such agreement. We may also become subject to additional collective bargaining agreements in the future if other non-unionized workers unionize.

Relations between air carriers and labor unions in the United States are governed by the RLA. Under the RLA, collective bargaining agreements generally contain “amendable dates” rather than expiration dates, subject to standard opener provisions, and the RLA requires that a carrier maintain the existing terms and conditions of employment following the amendable date through a multi-stage and usually lengthy series of bargaining processes overseen by the NMB. This process continues until either the parties have reached agreement on a new collective bargaining agreement or the parties have been released to “self-help” by the NMB. In most circumstances, the RLA prohibits strikes; however, after release by the NMB, carriers and unions are free to engage in self-help measures such as lockouts and strikes.

During 2017, we experienced operational disruption from pilot-related work action which adversely impacted our results. We obtained a temporary restraining order to enjoin further illegal labor action. In January 2018, under the guidance of the NMB-assigned mediators, the parties reached a tentative agreement. In February 2018, the pilot group voted to approve the current five-year agreement with us.

In March 2016, under the supervision of the NMB, we reached a tentative agreement for a five-year contract with our flight attendants. Our flight attendants ratified the agreement in May 2016. In February 2021, we entered into a Letter of Agreement with the AFA-CWA to change the amendable date of the collective bargaining agreement from May 4, 2021 to September 1, 2021. All other terms of the collective bargaining agreement remained the same. In June 2021, the AFA-CWA notified us, as required by the RLA, that it intended to submit proposed changes to the collective bargaining agreement covering our flight attendants. We commenced negotiations with the AFA-CWA on September 27, 2021. As of June 30, 2022, we continued to negotiate with the AFA-CWA.

Our dispatchers are represented by the PAFCA. In October 2018, we reached a tentative agreement with PAFCA for a new five-year agreement, which was ratified by the PAFCA members in October 2018.

Our ramp service agents are represented by IAMAW. In February 2020, the IAMAW notified us, as required by the RLA, that it intended to submit proposed changes to the collective bargaining agreement covering our ramp service agents which became amendable in June 2020. On September 28, 2021, we filed an “Application for Mediation Services” with the NMB. We were able to reach a tentative agreement with the IAMAW with the assistance of the NMB on October 16, 2021. Our ramp service agents ratified the five-year agreement in November 2021.

In June 2018, our passenger service agents voted to be represented by the TWU, but the representation only applies to our Fort Lauderdale station where we have direct employees in the passenger service classification. We began meeting with the TWU in late October 2018 to negotiate an initial collective bargaining agreement. During February 2022, we reached a tentative agreement with the TWU. Our passenger service agents ratified the five-year agreement on February 21, 2022.

In May 2022, the AMFA filed an application with the NMB to represent our AMTs. In June 2022, we received confirmation that the union election was authorized. The union election is currently ongoing through August 25, 2022. As of June 30, 2022, we had approximately 600 AMTs. In the event that our AMTs vote to be represented by the AMFA, our labor costs may increase as a result of any collective bargaining agreement we enter into with the AMTs.

If we are unable to reach agreement with any of our unionized work groups in current or future negotiations regarding the terms of their CBAs, we may be subject to work interruptions or stoppages, such as the strike by our pilots in June 2010 and the operational disruption from pilot-related work action experienced in 2017. A strike or other significant labor dispute with our unionized employees is likely to adversely affect our ability to conduct business. Any agreement we do reach could increase our labor and related expenses.

The Patient Protection and Affordable Care Act was enacted in 2010. A decision in the Supreme Court regarding this law is pending and it may be repealed in its entirety or certain aspects may be changed or replaced. If the law is repealed or

44

significantly modified or if new healthcare legislation is passed, such action could significantly increase cost of the healthcare benefits provided to our U.S. employees. In addition, the failure to comply materially with such existing and new laws, rules and regulations could adversely affect our business, results of operations and financial conditions.

45

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

Repurchases of Equity Securities

The following table reflects our repurchases of our common stock during the second quarter of 2022. All stock repurchases during this period were made from employees who received restricted stock. All employee stock repurchases were made at the election of each employee pursuant to an offer to repurchase by us. In each case, the shares repurchased constituted the portion of vested shares necessary to satisfy tax withholding requirements.

ISSUER PURCHASES OF EQUITY SECURITIES
Period	Total Number of Shares Purchased	Average Price Paid per Share		Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs	Approximate Dollar Value of Shares that May Yet be Purchased Under Plans or Programs
April 1-30, 2022	69	$	26.06	—	$	—
May 1-31, 2022	176	16.94		—	—
June 1-30, 2022	31	21.74		—	—
Total	276	$	19.76	—

ITEM 3.DEFAULTS UPON SENIOR SECURITIES

None

ITEM 4.MINE SAFETY DISCLOSURES

Not applicable

ITEM 5.OTHER INFORMATION

None

46

ITEM 6.EXHIBITS

 

Exhibit Number	Description of Exhibits
2.1	Amendment to Agreement and Plan of Merger, dated June 2, 2022, by and among Spirit Airlines, Inc., Frontier Group Holdings, Inc. and Top Gun Acquisition Corp., filed as Exhibit 2.1 to the Company’s Form 8-K dated June 2, 2022, is hereby incorporated by reference.
2.2	Amendment No. 2 to Agreement and Plan of Merger, dated June 24, 2022, by and among Spirit Airlines, Inc., Frontier Group Holdings, Inc. and Top Gun Acquisition Corp., filed as Exhibit 2.1 to the Company’s Form 8-K dated June 24, 2022, is hereby incorporated by reference.
31.1	Certification of the Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2	Certification of the Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32.1*	Certification of the Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
32.2*	Certification of the Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
101.INS	XBRL Instance Document - The instance document does not appear in the interactive data file because its XBRL tags are embedded within the inline XBRL document.
101.SCH	XBRL Taxonomy Extension Schema
101.CAL	XBRL Taxonomy Extension Calculation Linkbase
101.LAB	XBRL Taxonomy Extension Label Linkbase
101.PRE	XBRL Taxonomy Extension Presentation Linkbase
104	Cover Page Interactive Data File (formatted as inline XBRL and contained in Exhibit 101)

 

* Exhibits 32.1 and 32.2 are being furnished and shall not be deemed to be “filed” for purposes of Section 18 of the Exchange Act, or otherwise subject to the liability of that section, nor shall such exhibits be deemed to be incorporated by reference in any registration statement or other document filed under the Securities Act or the Exchange Act, except as otherwise specifically stated in such filing.

47

SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

 

	SPIRIT AIRLINES, INC.
August 8, 2022	By:	/s/ Scott M. Haralson
		Scott M. Haralson
		Senior Vice President and Chief Financial Officer

48

EX-31.1

Exhibit 31.1

CERTIFICATION

I, Edward M. Christie, certify that:

1. I have reviewed this quarterly report on Form 10-Q of Spirit Airlines, Inc. (the "Registrant");

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the Registrant as of, and for, the periods presented in this report;

4. The Registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as described in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the Registrant and have:

a) designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the Registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b) designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c) evaluated the effectiveness of the Registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d) disclosed in this report any change in the Registrant's internal control over financial reporting that occurred during the Registrant's most recent fiscal quarter (the Registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the Registrant's internal control over financial reporting; and

5. The Registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the Registrant's auditors and the audit committee of the Registrant's board of directors (or persons performing the equivalent functions):

a) all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the Registrant's ability to record, process, summarize and report financial information; and

b) any fraud, whether or not material, that involves management or other employees who have a significant role in the Registrant's internal control over financial reporting.

August 8, 2022	/s/ Edward M. Christie
	Edward M. Christie
	President and Chief Executive Officer

EX-31.2

Exhibit 31.2

CERTIFICATION

I, Scott M. Haralson, certify that:

1. I have reviewed this quarterly report on Form 10-Q of Spirit Airlines, Inc. (the "Registrant");

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the Registrant as of, and for, the periods presented in this report;

4. The Registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as described in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the Registrant and have:

a) designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the Registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b) designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c) evaluated the effectiveness of the Registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d) disclosed in this report any change in the Registrant's internal control over financial reporting that occurred during the Company’s most recent fiscal quarter (the Registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the Registrant's internal control over financial reporting; and

5. The Registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the Registrant's auditors and the audit committee of the Registrant's board of directors (or persons performing the equivalent functions):

a) all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the Registrant's ability to record, process, summarize and report financial information; and

b) any fraud, whether or not material, that involves management or other employees who have a significant role in the Registrant's internal control over financial reporting.

August 8, 2022	/s/ Scott M. Haralson
	Scott M. Haralson
	Senior Vice President and Chief Financial Officer

EX-32.1

Exhibit 32.1

Certification of Chief Executive Officer Pursuant to 18 U.S.C. § 1350 As Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

Pursuant to 18 U.S.C. § 1350, adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, the undersigned officer of Spirit Airlines, Inc. (the “Company”) hereby certifies, to such officer’s knowledge, that:

(i.)the Quarterly Report on Form 10-Q of the Company for the quarter ended June 30, 2022 (the "Report") fully complies with the requirements of Section 13(a) or Section 15(d), as applicable, of the Securities Exchange Act of 1934, as amended; and

(ii.)the information contained in the Report fairly present, in all material respects, the financial condition and results of operations of the Company.

August 8, 2022	/s/ Edward M. Christie
	Edward M. Christie
	President and Chief Executive Officer

EX-32.2

Exhibit 32.2

Certification of Chief Financial Officer Pursuant to 18 U.S.C. § 1350 As Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

Pursuant to 18 U.S.C. § 1350, adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, the undersigned officer of Spirit Airlines, Inc. (the “Company”) hereby certifies, to such officer’s knowledge, that:

(i.)the Quarterly Report on Form 10-Q of the Company for the quarter ended June 30, 2022 (the "Report") fully complies with the requirements of Section 13(a) or Section 15(d), as applicable, of the Securities Exchange Act of 1934, as amended; and

(ii.)the information contained in the Report fairly present, in all material respects, the financial condition and results of operations of the Company.

August 8, 2022	/s/ Scott M. Haralson
	Scott M. Haralson
	Senior Vice President and Chief Financial Officer

XML

Cover - shares	6 Months Ended
	Jun. 30, 2022	Aug. 02, 2022
Cover [Abstract]
Document Type	10-Q
Document Quarterly Report	true
Document Period End Date	Jun. 30, 2022
Document Transition Report	false
Entity File Number	001-35186
Entity Registrant Name	SPIRIT AIRLINES, INC.
Entity Incorporation, State or Country Code	DE
Entity Tax Identification Number	38-1747023
Entity Address, Address Line One	2800 Executive Way
Entity Address, City or Town	Miramar
Entity Address, State or Province	FL
Entity Address, Postal Zip Code	33025
City Area Code	954
Local Phone Number	447-7920
Title of 12(b) Security	Common Stock, $0.0001 par value
Security Exchange Name	NYSE
Trading Symbol	SAVE
Entity Current Reporting Status	Yes
Entity Interactive Data Current	Yes
Entity Filer Category	Large Accelerated Filer
Entity Small Business	false
Entity Emerging Growth Company	false
Entity Shell Company	false
Entity Common Stock, Shares Outstanding (in shares)		108,851,093
Amendment Flag	false
Document Fiscal Year Focus	2022
Document Fiscal Period Focus	Q2
Entity Central Index Key	0001498710
Current Fiscal Year End Date	--12-31

XML

Condensed Consolidated Statements of Operations - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2022	Jun. 30, 2021	Jun. 30, 2022	Jun. 30, 2021
Operating revenues:
Total operating revenues	$ 1,366,643	$ 859,309	$ 2,333,958	$ 1,320,588
Operating expenses:
Salaries, wages and benefits	308,634	257,236	614,524	502,928
Aircraft fuel	558,633	214,825	927,218	357,755
Landing fees and other rents	92,021	81,497	174,957	153,605
Depreciation and amortization	76,469	73,703	152,660	148,015
Aircraft rent	68,632	64,641	134,676	119,423
Maintenance, materials and repairs	45,407	39,639	90,922	69,542
Distribution	48,724	35,263	84,075	58,905
Loss on disposal of assets	10,636	189	22,188	1,306
Special charges (credits)	18,004	(115,002)	33,567	(291,940)
Other operating	184,813	114,107	355,969	210,368
Total operating expenses	1,411,973	766,098	2,590,756	1,329,907
Operating income (loss)	(45,330)	93,211	(256,798)	(9,319)
Other (income) expense:
Interest expense	30,124	39,662	68,004	84,468
Loss on extinguishment of debt	0	331,630	0	331,630
Capitalized interest	(5,677)	(4,631)	(10,939)	(9,363)
Interest income	(2,561)	(373)	(3,028)	(4,744)
Other (income) expense	296	233	713	181
Total other (income) expense	22,182	366,521	54,750	402,172
Income (loss) before income taxes	(67,512)	(273,310)	(311,548)	(411,491)
Provision (benefit) for income taxes	(15,106)	14,553	(64,439)	(11,307)
Net loss	$ (52,406)	$ (287,863)	$ (247,109)	$ (400,184)
Basic loss per share (in dollars per share)	$ (0.48)	$ (2.73)	$ (2.27)	$ (3.94)
Diluted loss per share (in dollars per share)	$ (0.48)	$ (2.73)	$ (2.27)	$ (3.94)
Passenger
Operating revenues:
Total operating revenues	$ 1,347,871	$ 846,507	$ 2,297,615	$ 1,296,842
Other
Operating revenues:
Total operating revenues	$ 18,772	$ 12,802	$ 36,343	$ 23,746

XML

Condensed Consolidated Statements of Comprehensive Income (Loss) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2022	Jun. 30, 2021	Jun. 30, 2022	Jun. 30, 2021
Statement of Comprehensive Income [Abstract]
Net loss	$ (52,406)	$ (287,863)	$ (247,109)	$ (400,184)
Unrealized gain (loss) on short-term investment securities and cash and cash equivalents, net of deferred taxes of $(50), $(5), $(128) and $(3)	(171)	(19)	(438)	(12)
Interest rate derivative loss reclassified into earnings, net of taxes of $12, $13, $26 and $27	39	44	76	89
Other comprehensive income (loss)	(132)	25	(362)	77
Comprehensive loss	$ (52,538)	$ (287,838)	$ (247,471)	$ (400,107)

XML

Condensed Consolidated Statements of Comprehensive Income (Loss) (Parenthetical) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2022	Jun. 30, 2021	Jun. 30, 2022	Jun. 30, 2021
Statement of Comprehensive Income [Abstract]
Tax effect of the unrealized gain (loss) on short-term investment securities and cash and cash equivalents	$ (50)	$ (5)	$ (128)	$ (3)
Tax effect of interest rate derivative loss reclassified into earnings	$ 12	$ 13	$ 26	$ 27

XML

Condensed Consolidated Balance Sheets - USD ($) $ in Thousands	Jun. 30, 2022	Dec. 31, 2021
Current assets:
Cash and cash equivalents	$ 1,197,065	$ 1,333,507
Restricted cash	95,400	95,400
Short-term investment securities	105,920	106,313
Accounts receivable, net	150,149	128,828
Aircraft maintenance deposits, net	12,228	10,726
Income tax receivable	37,890	37,890
Prepaid expenses and other current assets	163,202	129,827
Total current assets	1,761,854	1,842,491
Property and equipment:
Flight equipment	4,424,409	4,356,523
Ground property and equipment	423,821	384,928
Less accumulated depreciation	(989,812)	(884,858)
Total property and equipment, net	3,858,418	3,856,593
Operating lease right-of-use assets	2,198,791	1,950,520
Pre-delivery deposits on flight equipment	488,323	484,821
Long-term aircraft maintenance deposits	27,795	38,166
Deferred heavy maintenance, net	342,335	330,062
Other long-term assets	37,507	37,372
Total assets	8,715,023	8,540,025
Current liabilities:
Accounts payable	76,048	44,952
Air traffic liability	561,705	382,317
Current maturities of long-term debt, net and finance leases	351,521	208,948
Current maturities of operating leases	169,195	158,631
Other current liabilities	578,663	480,754
Total current liabilities	1,737,132	1,275,602
Long-term debt, net and finance leases, less current maturities	2,696,201	2,975,823
Operating leases, less current maturities	1,981,467	1,751,351
Deferred income taxes	310,351	375,472
Deferred gains and other long-term liabilities	116,657	47,742
Shareholders’ equity:
Common stock	11	11
Additional paid-in-capital	1,140,254	1,131,826
Treasury stock, at cost	(77,416)	(75,639)
Retained earnings	811,260	1,058,369
Accumulated other comprehensive loss	(894)	(532)
Total shareholders’ equity	1,873,215	2,114,035
Total liabilities and shareholders’ equity	$ 8,715,023	$ 8,540,025

XML

Condensed Consolidated Statements of Cash Flows - USD ($) $ in Thousands		6 Months Ended
		Jun. 30, 2022	Jun. 30, 2021
Operating activities:
Net loss		$ (247,109)	$ (400,184)
Adjustments to reconcile net income (loss) to net cash provided by operations:
Losses reclassified from other comprehensive income		102	116
Share-based compensation		5,723	6,740
Allowance for doubtful accounts (recoveries)		(108)	170
Amortization of debt issuance costs		6,695	6,412
Depreciation and amortization		152,660	148,015
Accretion of 8.00% senior secured notes		521	753
Amortization of debt discount		6,346	0
Deferred income tax expense (benefit)		(65,019)	(12,353)
Loss on disposal of assets		22,188	1,306
Loss on extinguishment of debt		0	331,630
Changes in operating assets and liabilities:
Accounts receivable, net		(21,213)	(98,484)
Aircraft maintenance deposits, net		8,869	5,616
Long-term deposits and other assets		(30,717)	(5,770)
Prepaid income taxes		0	(52)
Deferred heavy maintenance, net		(58,226)	(21,657)
Income tax receivable		0	109,746
Accounts payable		22,798	24,024
Air traffic liability		179,388	206,170
Deferred salaries, wages and benefits, net		0	86,360
Other liabilities		103,591	95,193
Other		278	365
Net cash provided by operating activities		86,767	484,116
Investing activities:
Purchase of available-for-sale investment securities		(38,970)	(55,936)
Proceeds from the maturity and sale of available-for-sale investment securities		38,500	55,500
Pre-delivery deposits on flight equipment, net of refunds		(7,367)	(81,208)
Capitalized interest		(8,948)	(9,055)
Assets under construction for others		(2)	(1,170)
Purchase of property and equipment		(106,271)	(87,154)
Net cash used in investing activities		(123,058)	(179,023)
Financing activities:
Proceeds from issuance of long-term debt		0	562,996
Proceeds from issuance of warrants		0	375,662
Payments on debt obligations		(96,755)	(857,552)
Payments for the early extinguishment of debt		0	(317,905)
Payments on finance lease obligations		(421)	(397)
Reimbursement for assets under construction for others		2	959
Repurchase of common stock		(1,777)	(1,324)
Debt issuance costs		(1,200)	(2,746)
Net cash used by financing activities		(100,151)	(240,307)
Net increase (decrease) in cash, cash equivalents, and restricted cash		(136,442)	64,786
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]	1,292,465	1,925,910
Cash payments for:
Interest, net of capitalized interest		54,481	79,689
Income taxes paid (received), net		882	(108,648)
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows for operating leases		137,408	132,323
Financing cash flows for finance leases		34	48
Non-cash transactions:
Capital expenditures funded by finance lease borrowings		0	538
Capital expenditures funded by operating lease borrowings		$ 319,554	$ 268,169

[1] (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 our statement of cash flows.

XML

Condensed Consolidated Statements of Cash Flows (Parenthetical)	Jun. 30, 2022	Aug. 31, 2020
8.00% Senior Secured Notes Due 2025 | Secured Debt
Stated interest rate percentage	8.00%	8.00%

XML

Condensed Consolidated Statements of Shareholders' Equity - USD ($) $ in Thousands	Total	Cumulative Effect, Period of Adoption, Adjustment	Common Stock	Additional Paid-In-Capital	Additional Paid-In-Capital Cumulative Effect, Period of Adoption, Adjustment	Treasury Stock	Retained Earnings	Retained Earnings Cumulative Effect, Period of Adoption, Adjustment	Accumulated Other Comprehensive Income (Loss)
Beginning balance at Dec. 31, 2020	$ 2,249,695	$ (49,530)	$ 10	$ 799,549	$ (55,590)	$ (74,124)	$ 1,524,878	$ 6,060	$ (618)
Increase (Decrease) in Stockholders' Equity [Roll Forward]
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)
Ending balance at Mar. 31, 2021	2,092,989		10	750,359		(75,431)	1,418,617		(566)
Beginning balance at Dec. 31, 2020	2,249,695	$ (49,530)	10	799,549	$ (55,590)	(74,124)	1,524,878	$ 6,060	(618)
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Net loss	(400,184)
Ending balance at Jun. 30, 2021	2,180,807		11	1,126,031		(75,448)	1,130,754		(541)
Beginning balance at Mar. 31, 2021	2,092,989		10	750,359		(75,431)	1,418,617		(566)
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Issuance of common stock and warrants, net	373,187		1	373,186
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)
Ending balance at Jun. 30, 2021	2,180,807		11	1,126,031		(75,448)	1,130,754		(541)
Beginning balance at Dec. 31, 2021	2,114,035		11	1,131,826		(75,639)	1,058,369		(532)
Increase (Decrease) in Stockholders' Equity [Roll Forward]
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)
Ending balance at Mar. 31, 2022	1,921,376		11	1,135,872		(77,411)	863,666		(762)
Beginning balance at Dec. 31, 2021	2,114,035		11	1,131,826		(75,639)	1,058,369		(532)
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Net loss	(247,109)
Ending balance at Jun. 30, 2022	1,873,215		11	1,140,254		(77,416)	811,260		(894)
Beginning balance at Mar. 31, 2022	1,921,376		11	1,135,872		(77,411)	863,666		(762)
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Convertible debt conversions	2,705		0	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)
Ending balance at Jun. 30, 2022	$ 1,873,215		$ 11	$ 1,140,254		$ (77,416)	$ 811,260		$ (894)

XML

Basis of Presentation

6 Months Ended

Jun. 30, 2022

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Basis of Presentation

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.

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Merger

6 Months Ended

Jun. 30, 2022

Business Combination and Asset Acquisition [Abstract]

Merger

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 existing 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”).

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.

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; (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 customary 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 breakup 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.

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Revenue

6 Months Ended

Jun. 30, 2022

Revenue from Contract with Customer [Abstract]

Revenue

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 six months ended June 30, 2022 and 2021.

	Three Months Ended June 30,				Six Months Ended June 30,
	2022		2021		2022		2021
	(in thousands)
Operating revenues:
Fare	$	703,778	$	369,691	$	1,122,196	$	543,978
Non-fare	644,093		476,816		1,175,419		752,864
Total passenger revenues	1,347,871		846,507		2,297,615		1,296,842
Other	18,772		12,802		36,343		23,746
Total operating revenues	$	1,366,643	$	859,309	$	2,333,958	$	1,320,588

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 June 30,				Six Months Ended June 30,
	2022		2021		2022		2021
	(in thousands)
DOT—Domestic	$	1,165,746	$	770,800	$	1,993,200	$	1,177,964
DOT—Latin America	200,897		88,509		340,758		142,624
Total	$	1,366,643	$	859,309	$	2,333,958	$	1,320,588

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 June 30, 2022 and December 31, 2021, the Company had ATL balances of $561.7 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.

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Loss on Disposal

6 Months Ended

Jun. 30, 2022

Discontinued Operations and Disposal Groups [Abstract]

Loss on Disposal

Loss on Disposal

During the three and six months ended June 30, 2022, the Company recorded $10.6 million and $22.2 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 June 30, 2022 primarily consisted of $10.2 million related to the loss on four aircraft sale leaseback transactions completed during the second quarter of 2022. Loss on disposal of assets for the six months ended June 30, 2022 primarily consisted of $14.5 million related to the loss on seven aircraft sale leaseback transactions completed during the first and second quarters of 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 six months ended June 30, 2021, the Company recorded $0.2 million and $1.3 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 June 30, 2021 primarily consisted of $0.2 million related to the loss on two aircraft sale leaseback transactions completed during the second quarter of 2021. Loss on disposal of assets for the six months ended June 30, 2021 primarily consisted of $1.1 million related to the sale of auxiliary power units ("APUs"), $0.2 million related to the loss on two aircraft sale leaseback transactions completed during the second quarter of 2021 and disposal of excess and obsolete inventory.

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Special Charges (Credits)

6 Months Ended

Jun. 30, 2022

Special Credits [Abstract]

Special Charges (Credits)

Special Charges (Credits)

During the three and six months ended June 30, 2022, the Company recorded $10.4 million and $21.5 million, respectively, within special charges (credits) on the Company's condensed consolidated statements of operations, in legal, advisory and other fees related to the Frontier Merger Agreement and JetBlue's unsolicited proposal, received in April 2022, to acquire all of the Company's outstanding shares in an all-cash transaction. In addition, as part of the 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 will be paid to the Company's employees during the third quarter of 2022. During the three and six months ended June 30, 2022, the Company recorded $7.6 million and $12.1 million, respectively, within special charges (credits) on the Company's condensed consolidated statements of operations, related to the Company's retention bonus program.

During the three and six months ended June 30, 2021, the Company recorded $99.3 million and $255.8 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 three and six months ended June 30, 2021, the Company recorded $16.3 million and $37.5 million, respectively, related to the CARES Act Employee Retention credit within special credits on the Company’s condensed consolidated statements of operation. These special credits were partially offset by $0.6 million and $1.4 million in special charges recorded during the three and six months ended June 30, 2021, respectively. The $0.6 million and $1.4 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.

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Loss per Share

6 Months Ended

Jun. 30, 2022

Earnings Per Share [Abstract]

Loss per Share

Loss per Share

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

 

	Three Months Ended June 30,				Six Months Ended June 30,
	2022		2021		2022		2021
	(in thousands, except per-share amounts)
Numerator
Net loss	$	(52,406)	$	(287,863)	$	(247,109)	$	(400,184)
Denominator
Weighted-average shares outstanding, basic	108,697		105,258		108,639		101,537
Effect of dilutive shares	—		—		—		—
Adjusted weighted-average shares outstanding, diluted	108,697		105,258		108,639		101,537
Loss per share
Basic loss per common share	$	(0.48)	$	(2.73)	$	(2.27)	$	(3.94)
Diluted loss per common share	$	(0.48)	$	(2.73)	$	(2.27)	$	(3.94)

Anti-dilutive common stock equivalents excluded from the diluted loss per share calculation for any of the periods presented are not material.

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Short-term Investment Securities	6 Months Ended
	Jun. 30, 2022
Investments, Debt and Equity Securities [Abstract]
Short-term Investment Securities	Short-term Investment SecuritiesThe 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 June 30, 2022 and December 31, 2021, the Company had $105.9 million and $106.3 million, respectively, in short-term available-for-sale investment securities, respectively. During the six months ended June 30, 2022, these investments earned interest income at a weighted-average fixed rate of approximately 0.3%. For the three and six months ended June 30, 2022, an unrealized loss of $173 thousand and $435 thousand, respectively, net of deferred taxes of $51 thousand and $127 thousand, respectively, was recorded within accumulated other comprehensive income ("AOCI") related to these investment securities. For the three and six months ended June 30, 2021, an unrealized loss of $13 thousand and $6 thousand, respectively, net of deferred taxes of $4 thousand and $2 thousand, respectively, was recorded within AOCI related to these investment securities. For the three and six months ended June 30, 2022 and June 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 June 30, 2022 and December 31, 2021, $478 thousand and $43 thousand, net of tax, respectively, remained in AOCI, related to these instruments.

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Accrued Liabilities

6 Months Ended

Jun. 30, 2022

Payables and Accruals [Abstract]

Accrued Liabilities

Accrued Liabilities

Other current liabilities as of June 30, 2022 and December 31, 2021 consist of the following:

	June 30, 2022		December 31, 2021
	(in thousands)
Salaries, wages and benefits	$	156,025	$	142,893
Federal excise and other passenger taxes and fees payable	122,040		77,409
Fuel	94,151		55,103
Airport obligations	83,149		85,772
Aircraft maintenance	39,193		39,178
Interest payable	23,719		24,526
Aircraft and facility lease obligations	22,049		23,049
Other	38,337		32,824
Other current liabilities	$	578,663	$	480,754

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Leases

6 Months Ended

Jun. 30, 2022

Leases [Abstract]

Leases

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 six months ended June 30, 2022, the Company took delivery of seven aircraft under sale leaseback transactions and two spare engines purchased with cash. As of June 30, 2022, the Company had a fleet consisting of 180 A320 family aircraft. As of June 30, 2022, the Company had 74 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 June 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 June 30, 2022, the Company also had 12 spare engines financed under operating leases with lease term expiration dates ranging from 2022 to 2033 and owned 22 spare engines, of which, as of June 30, 2022, 1 was unencumbered and 21 were pledged as collateral under the Company's revolving credit facility maturing in 2024.

As of June 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 June 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.

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 June 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 June 30, 2022. The table does not include commitments that are contingent on events or other factors that are currently uncertain or unknown.

	Finance Leases		Operating Leases
			Aircraft and Spare Engine Leases		Property Facility Leases		Other		Total Operating and Finance Lease Obligations
	(in thousands)
Remainder of 2022	$	421	$	141,250	$	2,882	$	79	$	144,632
2023	465		279,258		5,763		13		285,499
2024	215		267,172		3,885		—		271,272
2025	117		252,230		1,212		—		253,559
2026	38		225,970		964		—		226,972
2027 and thereafter	—		1,904,800		142,174		—		2,046,974
Total minimum lease payments	$	1,256	$	3,070,680	$	156,880	$	92	$	3,228,908
Less amount representing interest	56		944,235		132,754		1		1,077,046
Present value of minimum lease payments	$	1,200	$	2,126,445	$	24,126	$	91	$	2,151,862
Less current portion	665		164,532		4,572		91		169,860
Long-term portion	$	535	$	1,961,913	$	19,554	$	—	$	1,982,002

Commitments related to the Company's noncancellable short-term operating leases not recorded on the Company's condensed consolidated balance sheets are expected to be $3.2 million for the remainder of 2022 and none for 2023 and beyond.

The table below presents information for lease costs related to the Company's finance and operating leases:

	Three Months Ended June 30,				Six Months Ended June 30,
	2022		2021		2022		2021
	(in thousands)
Finance lease cost
Amortization of leased assets	$	188	$	176	$	375	$	345
Interest of lease liabilities	16		24		34		48
Operating lease cost
Operating lease cost (1)	65,430		52,632		128,681		104,774
Short-term lease cost (1)	9,551		7,076		19,808		14,091
Variable lease cost (1)	50,128		50,511		98,723		88,661
Total lease cost	$	125,313	$	110,419	$	247,621	$	207,919

(1) Expenses are classified within aircraft rent and landing fees and other rents on the Company's condensed consolidated statements of operations.

The table below presents lease terms and discount rates related to the Company's finance and operating leases:

	June 30, 2022		June 30, 2021
Weighted-average remaining lease term
Operating leases	14.1 years		13.7 years
Finance leases	2.2 years		2.9 years
Weighted-average discount rate
Operating leases	5.80	%	5.92	%
Finance leases	4.60	%	4.91	%

Leases

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 six months ended June 30, 2022, the Company took delivery of seven aircraft under sale leaseback transactions and two spare engines purchased with cash. As of June 30, 2022, the Company had a fleet consisting of 180 A320 family aircraft. As of June 30, 2022, the Company had 74 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 June 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 June 30, 2022, the Company also had 12 spare engines financed under operating leases with lease term expiration dates ranging from 2022 to 2033 and owned 22 spare engines, of which, as of June 30, 2022, 1 was unencumbered and 21 were pledged as collateral under the Company's revolving credit facility maturing in 2024.

As of June 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 June 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.

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 June 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 June 30, 2022. The table does not include commitments that are contingent on events or other factors that are currently uncertain or unknown.

	Finance Leases		Operating Leases
			Aircraft and Spare Engine Leases		Property Facility Leases		Other		Total Operating and Finance Lease Obligations
	(in thousands)
Remainder of 2022	$	421	$	141,250	$	2,882	$	79	$	144,632
2023	465		279,258		5,763		13		285,499
2024	215		267,172		3,885		—		271,272
2025	117		252,230		1,212		—		253,559
2026	38		225,970		964		—		226,972
2027 and thereafter	—		1,904,800		142,174		—		2,046,974
Total minimum lease payments	$	1,256	$	3,070,680	$	156,880	$	92	$	3,228,908
Less amount representing interest	56		944,235		132,754		1		1,077,046
Present value of minimum lease payments	$	1,200	$	2,126,445	$	24,126	$	91	$	2,151,862
Less current portion	665		164,532		4,572		91		169,860
Long-term portion	$	535	$	1,961,913	$	19,554	$	—	$	1,982,002

Commitments related to the Company's noncancellable short-term operating leases not recorded on the Company's condensed consolidated balance sheets are expected to be $3.2 million for the remainder of 2022 and none for 2023 and beyond.

The table below presents information for lease costs related to the Company's finance and operating leases:

	Three Months Ended June 30,				Six Months Ended June 30,
	2022		2021		2022		2021
	(in thousands)
Finance lease cost
Amortization of leased assets	$	188	$	176	$	375	$	345
Interest of lease liabilities	16		24		34		48
Operating lease cost
Operating lease cost (1)	65,430		52,632		128,681		104,774
Short-term lease cost (1)	9,551		7,076		19,808		14,091
Variable lease cost (1)	50,128		50,511		98,723		88,661
Total lease cost	$	125,313	$	110,419	$	247,621	$	207,919

(1) Expenses are classified within aircraft rent and landing fees and other rents on the Company's condensed consolidated statements of operations.

The table below presents lease terms and discount rates related to the Company's finance and operating leases:

	June 30, 2022		June 30, 2021
Weighted-average remaining lease term
Operating leases	14.1 years		13.7 years
Finance leases	2.2 years		2.9 years
Weighted-average discount rate
Operating leases	5.80	%	5.92	%
Finance leases	4.60	%	4.91	%

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Commitments and Contingencies

6 Months Ended

Jun. 30, 2022

Commitments and Contingencies Disclosure [Abstract]

Commitments and Contingencies

Commitments and Contingencies Aircraft-Related Commitments and Financing Arrangements

The Company’s contractual purchase commitments consist primarily of aircraft and engine acquisitions through manufacturers and aircraft leasing companies. As of June 30, 2022, the Company's total firm aircraft orders consisted of 113 A320 family aircraft with Airbus, including A319neos, A320neos and A321neos, with deliveries expected through 2027. Out of these 113 aircraft, the Company has 10 aircraft scheduled for delivery in the remainder of 2022 and 17 aircraft scheduled for delivery in 2023. As of June 30, 2022, the Company had secured financing for the 10 aircraft scheduled for delivery from Airbus through the remainder of 2022, which will be financed through sale leaseback transactions. As of June 30, 2022, the Company did not have financing commitments in place for the remaining 103 Airbus aircraft on firm order through 2027. However, the Company has a financing letter of agreement with Airbus which provides backstop financing for a majority of the aircraft included in the A320 NEO Family Purchase Agreement signed in the fourth quarter of 2019. The agreement provides a standby credit facility in the form of senior secured mortgage debt financing. The contractual purchase amounts for all aircraft orders from Airbus are included within the purchase commitments below.

During the third quarter of 2021, the Company entered into an Engine Purchase Support Agreement which requires the Company to purchase a certain number of spare engines in order to maintain a contractual ratio of spare engines to aircraft in the fleet. As of June 30, 2022, the Company is committed to purchase 14 PW1100G-JM spare engines, with deliveries through 2027.

As of June 30, 2022, purchase commitments for the Company's aircraft and engine orders, including estimated amounts for contractual price escalations and pre-delivery payments, are expected to be $507.3 million for the remainder of 2022, $906.9 million in 2023, $999.8 million in 2024, $1,060.7 million in 2025, $1,349.9 million in 2026, and $872.8 million in 2027 and beyond.

During the third quarter of 2019, the United States announced its decision to levy tariffs on certain imports from the European Union, including commercial aircraft and related parts. These tariffs include aircraft and other parts that the Company is already contractually obligated to purchase including those reflected above. In June 2021, the United States Trade Representative announced that the United States and European Union had agreed to suspend reciprocal tariffs on large civilian aircraft for five years, pending discussions to resolve their trade dispute.

In addition to the aircraft purchase agreement, as of June 30, 2022, the Company has agreements in place for 40 A320neos and A321neos to be financed through direct leases with third-party lessors with deliveries scheduled from the remainder of 2022 through 2024. As of June 30, 2022, aircraft rent commitments for future aircraft deliveries to be financed under direct leases from third-party lessors and sale leaseback transactions are expected to be approximately $18.0 million for the remainder of 2022, $110.8 million in 2023, $188.9 million in 2024, $217.9 million in 2025, $217.9 million in 2026, and $1,861.5 million in 2027 and beyond.

Interest commitments related to the secured debt financing of 73 delivered aircraft as of June 30, 2022 are $46.2 million for the remainder of 2022, $64.6 million in 2023, $53.3 million in 2024, $45.8 million in 2025, $38.3 million in 2026, and $90.3 million in 2027 and beyond. As of June 30, 2022, interest commitments related to the Company's 8.00% senior secured notes, convertible debt financing, unsecured term loans and revolving credit facility are $24.5 million for the remainder of 2022, $48.4 million in 2023, $48.4 million in 2024, $45.4 million in 2025, $5.9 million in 2026, and $14.0 million in 2027 and beyond. For principal commitments related to the Company's debt financing, refer to Note 12, Debt and Other Obligations.

The Company is contractually obligated to pay the following minimum guaranteed payments for its reservation system, construction commitments related to its new headquarters campus and residential building and other miscellaneous subscriptions and services as of June 30, 2022: $34.3 million for the remainder of 2022, $21.7 million in 2023, $18.1 million in 2024, $18.1 million in 2025, $17.5 million in 2026, and $19.2 million in 2027 and thereafter. During the first quarter of 2018, the Company entered into a contract renewal with its reservation system provider which expires in 2028.

Litigation and Assessments

The Company is subject to commercial litigation claims and to administrative and regulatory proceedings and reviews that may be asserted or maintained from time to time. The Company believes the ultimate outcome of such lawsuits, proceedings and reviews will not, individually or in the aggregate, have a material adverse effect on its financial position, liquidity or results of operations. In making a determination regarding accruals, using available information, the Company evaluates the likelihood of an unfavorable outcome in legal or regulatory proceedings and assessments to which the Company is a party and records a loss contingency when it is probable a liability has been incurred and the amount of the loss can be reasonably estimated. These subjective determinations are based on the status of such legal or regulatory proceedings, the merits of the Company's defenses, and consultation with legal counsel. Actual outcomes of these legal and regulatory proceedings may materially differ from the Company's current estimates. It is possible that resolution of one or more of the legal matters currently pending or threatened could result in losses material to the Company's consolidated results of operations, liquidity, or financial condition.

Following an audit by the Internal Revenue Service ("IRS") related to the collection of federal excise taxes on optional passenger seat selection charges covering the period of the second quarter 2018 through the fourth quarter 2020, on March 31, 2022, the Company was assessed $34.9 million. On July 19, 2022, the assessment was reduced to $27.5 million. The Company believes a loss in this matter is not probable and has not recognized a loss contingency.

Credit Card Processing Arrangements

The Company has agreements with organizations that process credit card transactions arising from the purchase of air travel, baggage charges, and other ancillary services by customers. As is standard in the airline industry, the Company's contractual arrangements with credit card processors permit them, under certain circumstances, to retain a holdback or other collateral, which the Company records as restricted cash, when future air travel and other future services are purchased via credit card transactions. The required holdback is the percentage of the Company's overall credit card sales that its credit card processors hold to cover refunds to customers if the Company fails to fulfill its flight obligations.

The Company's credit card processors do not require the Company to maintain cash collateral provided that the Company satisfies certain liquidity and other financial covenants. Failure to meet these covenants would provide the processors the right to place a holdback resulting in a commensurate reduction of unrestricted cash. As of June 30, 2022 and December 31, 2021, the Company's credit card processors were holding back no remittances.

The maximum potential exposure to cash holdbacks by the Company's credit card processors, based upon advance ticket sales and Spirit Saver$ Club® memberships as of June 30, 2022 and December 31, 2021, was $632.5 million and $371.8 million, respectively.

Employees

The Company has 5 union-represented employee groups that together represented approximately 79% of all employees as of June 30, 2022. The table below sets forth the Company's employee groups and status of the collective bargaining agreements as of June 30, 2022.

Employee Groups	Representative	Amendable Date (1)	Percentage of Workforce
Pilots	Air Line Pilots Association, International ("ALPA")	February 2023	27%
Flight Attendants	Association of Flight Attendants ("AFA-CWA")	September 2021	46%
Dispatchers	Professional Airline Flight Control Association ("PAFCA")	October 2023	1%
Ramp Service Agents	International Association of Machinists and Aerospace Workers ("IAMAW")	November 2026	3%
Passenger Service Agents	Transport Workers Union of America ("TWU")	February 2027	2%

(1) Subject to standard early opener provisions.

The Company's passenger service agents are represented by the TWU, but the representation applies only to the Company's Fort Lauderdale station where the Company has direct employees in the passenger service classification. The Company and the TWU began meeting in late October 2018 to negotiate an initial collective bargaining agreement. During February 2022, the Company reached a tentative agreement with the TWU. The Company's passenger service agents ratified the five-year agreement on February 21, 2022.

In February 2021, the Company entered into a Letter of Agreement with the AFA-CWA to change the amendable date of the collective bargaining agreement from May 4, 2021 to September 1, 2021. All other terms of the collective bargaining

agreement remained the same. In June 2021, the AFA-CWA notified the Company, as required by the Railway Labor Act, that it intends to submit proposed changes to the collective bargaining agreement covering the Company’s flight attendants. The Company and the AFA-CWA began the negotiation sessions on September 27, 2021. As of June 30, 2022, the Company continued to negotiate with the AFA-CWA.In May 2022, the Aircraft Mechanics Fraternal Association ("AMFA") filed an application with the NMB to represent the Company's aircraft maintenance technicians ("AMTs"). In June 2022, the Company received confirmation that the union election was authorized. The union election is currently ongoing through August 25, 2022. As of June 30, 2022, the Company had approximately 600 AMTs. In the event that the Company's AMTs vote to be represented by the AMFA, the Company's labor costs may increase.

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Fair Value Measurements

6 Months Ended

Jun. 30, 2022

Fair Value Disclosures [Abstract]

Fair Value Measurements

Fair Value Measurements

Under ASC 820, "Fair Value Measurements and Disclosures," disclosures relating to how fair value is determined for assets and liabilities are required, and a hierarchy for which these assets and liabilities must be grouped is established, based on significant levels of inputs, as follows:

Level 1—Quoted prices in active markets for identical assets or liabilities.

Level 2—Observable inputs other than Level 1 prices such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities.

Level 3—Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities.

Fair value is defined as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. The Company utilizes several valuation techniques in order to assess the fair value of the Company’s financial assets and liabilities.

Long-Term Debt

The estimated fair value of the Company's secured notes, term loan debt agreements and revolving credit facilities have been determined to be Level 3 as certain inputs used to determine the fair value of these agreements are unobservable. The Company utilizes a discounted cash flow method to estimate the fair value of the Level 3 long-term debt. The estimated fair value of the Company's publicly and non-publicly held EETC debt agreements and the Company's convertible notes has been determined to be Level 2 as the Company utilizes quoted market prices in markets with low trading volumes to estimate the fair value of its Level 2 long-term debt.

    The carrying amounts and estimated fair values of the Company's long-term debt at June 30, 2022 and December 31, 2021 were as follows:

	June 30, 2022				December 31, 2021				Fair Value Level Hierarchy
	Carrying Value		Estimated Fair Value		Carrying Value		Estimated Fair Value
	(in millions)
8.00% senior secured notes	$	510.0	$	468.4	$	510.0	$	530.4	Level 3
Fixed-rate term loans	1,159.1		1,041.4		1,223.5		1,262.6		Level 3
Unsecured term loans	136.3		111.0		136.3		146.4		Level 3
2015-1 EETC Class A	289.6		271.5		300.6		311.1		Level 2
2015-1 EETC Class B	52.0		50.3		56.0		56.4		Level 2
2015-1 EETC Class C	69.5		67.7		75.2		74.0		Level 2
2017-1 EETC Class AA	193.3		175.2		200.3		203.3		Level 2
2017-1 EETC Class A	64.4		57.4		66.8		65.8		Level 2
2017-1 EETC Class B	53.4		47.5		55.8		53.6		Level 2
2017-1 EETC Class C	85.5		83.7		85.5		84.1		Level 2
4.75% convertible notes due 2025	25.4		53.3		28.2		55.6		Level 2
1.00% convertible notes due 2026	500.0		452.0		500.0		432.5		Level 2
Total long-term debt	$	3,138.5	$	2,879.4	$	3,238.2	$	3,275.8

Cash and Cash Equivalents

Cash and cash equivalents at June 30, 2022 and December 31, 2021 are comprised of liquid money market funds and cash, and are categorized as Level 1 instruments. The Company maintains cash with various high-quality financial institutions.

Restricted Cash

Restricted cash is comprised of cash held in an account subject to account control agreements or otherwise pledged as collateral against the Company's letters of credit and is categorized as a Level 1 instrument. As of June 30, 2022, the Company had $85.0 million in standby letters of credit secured by $75.0 million of restricted cash, of which $26.2 million had been drawn upon for issued letters of credit. In addition, the Company had $20.4 million of restricted cash held in accounts subject to control agreements to be used for the payment of interest and fees on the 8.00% senior secured notes.

Short-term Investment Securities

Short-term investment securities at June 30, 2022 and December 31, 2021 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. The Company's short-term investment securities are categorized as Level 1 instruments, as the Company uses quoted market prices in active markets when determining the fair value of these securities. For additional information, refer to Note 7, Short-term Investment Securities.

Derivative Liability

As a result of the settlement terms stipulated by the Frontier Merger Agreement, as of the Frontier Merger Agreement date, the convertible notes due 2026 no longer qualify for the derivative accounting scope exception provided under ASC 815. As such, the Company was required to bifurcate the fair value of the conversion option of the convertible notes due 2026 as a derivative liability as of the Frontier Merger Agreement date with subsequent changes in fair value recorded in earnings.

As of February 5, 2022, the Company recorded the fair value of the embedded derivative of $49.5 million as a derivative liability within deferred gains and other long-term liabilities and a debt discount within long-term debt and finance leases, less current maturities on its condensed consolidated balance sheets. The fair value of the derivative liability was estimated as the difference in value of the traded price of the convertible notes, including the conversion option and the value of the convertible notes in the absence of the conversion option (the debt component). The debt component was estimated using a discounted cash flow analysis with a yield calibrated to the traded price of the convertible notes. The change in fair value of the derivative

liability is recorded within interest expense on the Company's condensed consolidated statements of operations. During the three and six months ended June 30, 2022, the Company recorded $8.4 million and $9.3 million, respectively, related to the change in fair value of the derivative liability. The fair value of the derivative liability has been determined to be Level 2 as observable inputs were used to determine the fair value of derivative liability. For additional information, refer to Note 12, Debt and Other Obligations.

    Assets and liabilities measured at gross fair value on a recurring basis are summarized below:

	Fair Value Measurements as of June 30, 2022
	Total		Level 1		Level 2		Level 3
	(in millions)
Cash and cash equivalents	$	1,197.1	$	1,197.1	$	—	$	—
Restricted cash	95.4		95.4		—		—
Short-term investment securities	105.9		105.9		—		—
Assets held for sale	2.5		—		—		2.5
Total assets	$	1,400.9	$	1,398.4	$	—	$	2.5
Derivative liability	$	40.2	$	—	$	40.2	$	—
Total liabilities	$	40.2	$	—	$	40.2	$	—

	Fair Value Measurements as of December 31, 2021
	Total		Level 1		Level 2		Level 3
	(in millions)
Cash and cash equivalents	$	1,333.5	$	1,333.5	$	—	$	—
Restricted cash	95.4		95.4		—		—
Short-term investment securities	106.3		106.3		—		—
Assets held for sale	2.5		—		—		2.5
Total assets	$	1,537.7	$	1,535.2	$	—	$	2.5
Total liabilities	$	—	$	—	$	—	$	—

The Company had no transfers of assets or liabilities between any of the above levels during the six months ended June 30, 2022 and the year ended December 31, 2021.

The Company's Valuation Group, which reports to the Chief Financial Officer, is made up of individuals from the Company's Treasury and Corporate Accounting departments. The Valuation Group is responsible for the execution of the Company's valuation policies and procedures. The Valuation Group compares the results of the Company's internally developed valuation methods with counterparty reports at each balance sheet date, assesses the Company's valuation methods for accurateness and identifies any needs for modification.

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Debt and Other Obligations

6 Months Ended

Jun. 30, 2022

Debt Disclosure [Abstract]

Debt and Other Obligations

Debt and Other Obligations

As of June 30, 2022, the Company had outstanding public and non-public debt instruments.

Revolving credit facility due in 2024

As of June 30, 2022 and December 31, 2021, the Company had $240.0 million undrawn and available under its revolving credit facility due 2024. Any amounts drawn on this facility are included in long-term debt and finance leases, less current maturities on the Company's condensed consolidated balance sheets. This facility matures on March 30, 2024.

Convertible senior notes due 2025

On May 12, 2020, the Company completed the public offering of $175.0 million aggregate principal amount of 4.75% convertible senior notes due 2025 ("convertible notes due 2025").

Noteholders may convert their notes at their option only in the following circumstances: (1) during any calendar quarter commencing after the calendar quarter ending on June 30, 2020 (and only during such calendar quarter), if the last reported sale price per share of the Company’s common stock exceeds 130% of the conversion price for each of at least 20 trading days (whether or not consecutive) during the 30 consecutive trading days ending on, and including, the last trading day of the immediately preceding calendar quarter; (2) during the five consecutive business days immediately after any five consecutive trading day period (such five consecutive trading day period, the “measurement period”) in which the trading price per $1,000 principal amount of notes for each trading day of the measurement period was less than 98% of the product of the last reported sale price per share of the Company’s common stock on such trading day and the conversion rate on such trading day; (3) upon the occurrence of certain corporate events or distributions on the Company’s common stock; and (4) at any time from, and including, February 18, 2025 until the close of business on the second scheduled trading day immediately before the maturity date. As of June 30, 2022, the notes may be converted by noteholders through September 30, 2022.

Upon conversion, the Company will pay or deliver, as the case may be, cash, shares of the Company’s common stock or a combination of cash and shares of common stock, at the Company’s election. Based on the terms of the Frontier Merger Agreement executed on February 5, 2022 (the Frontier Merger Agreement date), upon conversion of any convertible notes due 2025 through the closing or termination of the Frontier Merger, the conversion value, including the principal amount, will be paid all in shares of the Company's common stock. The initial conversion rate is 78.4314 shares of voting common stock per $1,000 principal amount of convertible notes (equivalent to an initial conversion price of approximately $12.75 per share of common stock). The conversion rate will be subject to adjustment in some events but will not be adjusted for any accrued and unpaid interest. On July 27, 2022, the Frontier Merger Agreement was terminated; however, on July 28, 2022, the Company entered into the Merger Agreement with JetBlue. Based on the terms of the Merger Agreement with JetBlue, upon conversion of any convertible notes due 2025 through the closing or termination of the Merger Agreement with JetBlue, the conversion value, including the principal amount, will be paid all in shares of the Company's common stock.

During the second quarter of 2022, $2.8 million of the Company's convertible notes due 2025 were converted to 217,226 shares of the Company's voting common stock. As of June 30, 2022, the Company had recorded $2.7 million, net of issuance costs and common stock, in additional paid-in-capital on its condensed consolidated balance sheets as of June 30, 2022 related to the conversion of these notes. Since the notes are currently convertible in accordance with the terms of the indenture governing such notes, the Company had $25.4 million recorded within current maturities of long-term debt and finance leases on its condensed consolidated balance sheets as of June 30, 2022 related to its convertible notes due 2025. As of June 30, 2022, the if-converted value exceeds the principal amount of the convertible notes due 2025 by $18.8 million and $19.5 million using the average stock price for the three and six months ended June 30, 2022, respectively.

Convertible senior notes due 2026

On April 30, 2021, the Company completed the public offering of $500.0 million aggregate principal amount of 1.00% convertible senior notes due 2026 ("convertible notes due 2026").

Noteholders may convert their notes at their option only in the following circumstances: (1) during any calendar quarter commencing after the calendar quarter ending on June 30, 2021 (and only during such calendar quarter), if the last reported sale price per share of the Company’s common stock exceeds 130% of the conversion price for each of at least 20 trading days (whether or not consecutive) during the 30 consecutive trading days ending on, and including, the last trading day of the immediately preceding calendar quarter; (2) during the five consecutive business days immediately after any five consecutive trading day period (such five consecutive trading day period, the “measurement period”) in which the trading price per $1,000 principal amount of notes for each trading day of the measurement period was less than 98% of the product of the last reported sale price per share of the Company’s common stock on such trading day and the conversion rate on such trading day; (3) upon the occurrence of certain corporate events or distributions on the Company’s common stock; (4) if the Company calls such notes for redemption; and (5) at any time from, and including, February 17, 2026 until the close of business on the second scheduled trading day immediately before the maturity date. As of June 30, 2022, the notes did not qualify for conversion by noteholders through September 30, 2022.

Based on the terms of the indenture, the Company will have the right to elect to settle conversions in cash, shares of the Company’s common stock or a combination of cash and shares of common stock. However, upon conversion of any notes, the conversion value will be paid in cash up to at least the principal amount of the notes being converted. Based on the terms of the

Frontier Merger Agreement executed on February 5, 2022 (the Frontier Merger Agreement date), upon conversion of any convertible notes due 2026 through the closing or termination of the Frontier Merger, the conversion value, including the principal amount, will be paid all in cash. The conversion value will be determined over an observation period consisting of 40 trading days, will be paid in cash up to at least the principal amount of the notes being converted. The initial conversion rate is 20.3791 shares of voting common stock per $1,000 principal amount of convertible notes (equivalent to an initial conversion price of approximately $49.07 per share of common stock). The conversion rate will be subject to adjustment in some events but will not be adjusted for any accrued and unpaid interest. On July 27, 2022, the Frontier Merger Agreement was terminated; however, on July 28, 2022, the Company entered into the Merger Agreement with JetBlue. Based on the terms of the Merger Agreement with JetBlue, upon conversion of any convertible notes due 2026 through the closing or termination of the Merger Agreement with JetBlue, the conversion value, including the principal amount, will be paid all in cash.

The notes will be redeemable, in whole or in part (subject to certain limitations described below), at the Company’s option at any time, and from time to time, on or after May 15, 2024 and on or before the 40th scheduled trading day immediately before the maturity date, at a cash redemption price equal to the principal amount of the notes to be redeemed, plus accrued and unpaid interest, if any, to, but excluding, the redemption date, but only if the last reported sale price per share of the Company's common stock exceeds 130% of the conversion price for a specified period of time. However, the Company may not redeem less than all of the outstanding notes unless at least $150.0 million aggregate principal amount of notes are outstanding and not called for redemption as of the time the Company sends the related redemption notice.

As a result of the settlement terms stipulated by the Frontier Merger Agreement, as of the Frontier Merger Agreement date, the notes no longer qualify for the derivative accounting scope exception provided under ASC 815. As such, the Company was required to bifurcate the fair value of the conversion option of the convertible senior notes due 2026 as a derivative liability as of the Frontier Merger Agreement date with subsequent changes in fair value recorded in earnings.

As of February 5, 2022, the Company recorded the fair value of the embedded derivative of $49.5 million as a derivative liability within deferred gains and other long-term liabilities and a debt discount within long-term debt and finance leases, less current maturities on its condensed consolidated balance sheets. The debt discount will be amortized through interest expense, using the effective interest rate method, over the remaining life of the instrument. Since the notes are currently not convertible in accordance with the terms of the indenture governing such notes, the Company had $456.8 million, net of the related unamortized debt discount of $43.2 million, recorded within long-term debt and finance leases, less current maturities on the Company's condensed consolidated balance sheets as of June 30, 2022 related to its convertible notes due 2026. For additional information, refer to Note 11, Fair Value Measurements.

Long-term debt is comprised of the following:

	As of				As of
	June 30, 2022		December 31, 2021		June 30, 2022		December 31, 2021
	(in millions)				(weighted-average interest rates)
8.00% senior secured notes due 2025	$	510.0	$	510.0	8.00	%	8.00	%
Fixed-rate loans due through 2039 (1)	1,159.1		1,223.5		3.52	%	3.52	%
Unsecured term loans due in 2031	136.3		136.3		1.00	%	1.00	%
Fixed-rate class A 2015-1 EETC due through 2028	289.6		300.6		4.10	%	4.10	%
Fixed-rate class B 2015-1 EETC due through 2024	52.0		56.0		4.45	%	4.45	%
Fixed-rate class C 2015-1 EETC due through 2023	69.5		75.2		4.93	%	4.93	%
Fixed-rate class AA 2017-1 EETC due through 2030	193.3		200.3		3.38	%	3.38	%
Fixed-rate class A 2017-1 EETC due through 2030	64.4		66.8		3.65	%	3.65	%
Fixed-rate class B 2017-1 EETC due through 2026	53.4		55.8		3.80	%	3.80	%
Fixed-rate class C 2017-1 EETC due through 2023	85.5		85.5		5.11	%	5.11	%
Convertible notes due 2025	25.4		28.2		4.75	%	4.75	%
Convertible notes due 2026	500.0		500.0		1.00	%	1.00	%
Long-term debt	$	3,138.5	$	3,238.2
Less current maturities	350.9		208.2
Less unamortized discounts, net	92.1		54.9
Total	$	2,695.5	$	2,975.1

(1) Includes obligations related to one aircraft recorded as a failed sale leaseback. Refer to Note 9, Leases for additional information.

During the three and six months ended June 30, 2022, the Company made scheduled principal payments of $52.4 million and $96.8 million, respectively, on its outstanding debt obligations. During the three and six months ended June 30, 2021, the Company made scheduled principal payments of $234.8 million and $370.7 million, respectively, on its outstanding debt obligations.

At June 30, 2022, long-term debt principal payments for the next five years and thereafter are as follows:

	June 30, 2022
	(in millions)
remainder of 2022	$	96.2
2023	336.6
2024	222.1
2025	723.8
2026	731.1
2027 and beyond	1,028.7
Total debt principal payments	$	3,138.5

Interest Expense

Interest expense related to long-term debt and finance leases consists of the following:

	Three Months Ended June 30,				Six Months Ended June 30,
	2022		2021		2022		2021
	(in thousands)
8.00% senior secured notes (1)	$	10,461	$	13,541	20,921		$	30,975
Fixed-rate term loans	10,485		10,746		21,169		21,649
Unsecured term loans	340		282		676		481
Class A 2015-1 EETC	2,954		3,178		6,001		6,453
Class B 2015-1 EETC	575		664		1,191		1,369
Class C 2015-1 EETC	856		997		1,773		2,053
Class AA 2017-1 EETC	1,640		1,759		3,278		3,514
Class A 2017-1 EETC	591		634		1,182		1,267
Class B 2017-1 EETC	510		556		1,022		1,113
Class C 2017-1 EETC	1,092		1,092		2,171		2,171
Convertible notes (2)	(3,024)		1,749		199		3,827
Revolving credit facilities	—		562		—		1,733
Finance leases	16		24		34		48
Commitment and other fees	418		604		955		1,032
Amortization of deferred financing costs	3,210		3,274		7,432		6,783
Total	$	30,124	$	39,662	$	68,004	$	84,468

(1) Includes $0.3 million and $0.5 million of accretion and $10.2 million and $20.4 million of interest expense for the three and six months ended June 30, 2022, respectively. Includes $0.3 million and $0.8 million of accretion and $13.2 million and $30.2 million of interest expense for the three and six months ended June 30, 2021, respectively.

(2) Includes $3.8 million and $6.3 million of amortization of the discount for the convertible notes due 2026, $1.6 million and $3.2 million of interest expense for the convertible notes due 2025 and 2026 offset by $8.4 million and $9.3 million of favorable mark to market adjustments for the convertible notes due 2026 for the three and six months ended June 30, 2022, respectively. Includes $1.7 million and $3.8 million of interest expense for the convertible notes due 2025 and 2026 for the three and six months ended June 30, 2021, respectively.

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Basis of Presentation (Policies)	6 Months Ended
	Jun. 30, 2022
Organization, Consolidation and Presentation of Financial Statements [Abstract]
Basis of Accounting	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.
Use of Estimates	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.

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Revenue (Tables)

6 Months Ended

Jun. 30, 2022

Revenue from Contract with Customer [Abstract]

Schedule of Revenue Disaggregation

The following table shows disaggregated operating revenues for the three and six months ended June 30, 2022 and 2021.

	Three Months Ended June 30,				Six Months Ended June 30,
	2022		2021		2022		2021
	(in thousands)
Operating revenues:
Fare	$	703,778	$	369,691	$	1,122,196	$	543,978
Non-fare	644,093		476,816		1,175,419		752,864
Total passenger revenues	1,347,871		846,507		2,297,615		1,296,842
Other	18,772		12,802		36,343		23,746
Total operating revenues	$	1,366,643	$	859,309	$	2,333,958	$	1,320,588

Operating revenues by geographic region as defined by the DOT are summarized below:

	Three Months Ended June 30,				Six Months Ended June 30,
	2022		2021		2022		2021
	(in thousands)
DOT—Domestic	$	1,165,746	$	770,800	$	1,993,200	$	1,177,964
DOT—Latin America	200,897		88,509		340,758		142,624
Total	$	1,366,643	$	859,309	$	2,333,958	$	1,320,588

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Loss per Share (Tables)

6 Months Ended

Jun. 30, 2022

Earnings Per Share [Abstract]

Computation of Basic and Diluted Loss per Common Share

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

 

	Three Months Ended June 30,				Six Months Ended June 30,
	2022		2021		2022		2021
	(in thousands, except per-share amounts)
Numerator
Net loss	$	(52,406)	$	(287,863)	$	(247,109)	$	(400,184)
Denominator
Weighted-average shares outstanding, basic	108,697		105,258		108,639		101,537
Effect of dilutive shares	—		—		—		—
Adjusted weighted-average shares outstanding, diluted	108,697		105,258		108,639		101,537
Loss per share
Basic loss per common share	$	(0.48)	$	(2.73)	$	(2.27)	$	(3.94)
Diluted loss per common share	$	(0.48)	$	(2.73)	$	(2.27)	$	(3.94)

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Accrued Liabilities (Tables)

6 Months Ended

Jun. 30, 2022

Payables and Accruals [Abstract]

Schedule of Accrued Liabilities Included in Other Current Liabilities

Other current liabilities as of June 30, 2022 and December 31, 2021 consist of the following:

	June 30, 2022		December 31, 2021
	(in thousands)
Salaries, wages and benefits	$	156,025	$	142,893
Federal excise and other passenger taxes and fees payable	122,040		77,409
Fuel	94,151		55,103
Airport obligations	83,149		85,772
Aircraft maintenance	39,193		39,178
Interest payable	23,719		24,526
Aircraft and facility lease obligations	22,049		23,049
Other	38,337		32,824
Other current liabilities	$	578,663	$	480,754

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Leases (Tables)

6 Months Ended

Jun. 30, 2022

Leases [Abstract]

Schedule of Finance Lease Maturities

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 June 30, 2022. The table does not include commitments that are contingent on events or other factors that are currently uncertain or unknown.

	Finance Leases		Operating Leases
			Aircraft and Spare Engine Leases		Property Facility Leases		Other		Total Operating and Finance Lease Obligations
	(in thousands)
Remainder of 2022	$	421	$	141,250	$	2,882	$	79	$	144,632
2023	465		279,258		5,763		13		285,499
2024	215		267,172		3,885		—		271,272
2025	117		252,230		1,212		—		253,559
2026	38		225,970		964		—		226,972
2027 and thereafter	—		1,904,800		142,174		—		2,046,974
Total minimum lease payments	$	1,256	$	3,070,680	$	156,880	$	92	$	3,228,908
Less amount representing interest	56		944,235		132,754		1		1,077,046
Present value of minimum lease payments	$	1,200	$	2,126,445	$	24,126	$	91	$	2,151,862
Less current portion	665		164,532		4,572		91		169,860
Long-term portion	$	535	$	1,961,913	$	19,554	$	—	$	1,982,002

Schedule of Operating Lease Maturities

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 June 30, 2022. The table does not include commitments that are contingent on events or other factors that are currently uncertain or unknown.

	Finance Leases		Operating Leases
			Aircraft and Spare Engine Leases		Property Facility Leases		Other		Total Operating and Finance Lease Obligations
	(in thousands)
Remainder of 2022	$	421	$	141,250	$	2,882	$	79	$	144,632
2023	465		279,258		5,763		13		285,499
2024	215		267,172		3,885		—		271,272
2025	117		252,230		1,212		—		253,559
2026	38		225,970		964		—		226,972
2027 and thereafter	—		1,904,800		142,174		—		2,046,974
Total minimum lease payments	$	1,256	$	3,070,680	$	156,880	$	92	$	3,228,908
Less amount representing interest	56		944,235		132,754		1		1,077,046
Present value of minimum lease payments	$	1,200	$	2,126,445	$	24,126	$	91	$	2,151,862
Less current portion	665		164,532		4,572		91		169,860
Long-term portion	$	535	$	1,961,913	$	19,554	$	—	$	1,982,002

Schedule of Lease Cost

The table below presents information for lease costs related to the Company's finance and operating leases:

	Three Months Ended June 30,				Six Months Ended June 30,
	2022		2021		2022		2021
	(in thousands)
Finance lease cost
Amortization of leased assets	$	188	$	176	$	375	$	345
Interest of lease liabilities	16		24		34		48
Operating lease cost
Operating lease cost (1)	65,430		52,632		128,681		104,774
Short-term lease cost (1)	9,551		7,076		19,808		14,091
Variable lease cost (1)	50,128		50,511		98,723		88,661
Total lease cost	$	125,313	$	110,419	$	247,621	$	207,919

(1) Expenses are classified within aircraft rent and landing fees and other rents on the Company's condensed consolidated statements of operations.

The table below presents lease terms and discount rates related to the Company's finance and operating leases:

	June 30, 2022		June 30, 2021
Weighted-average remaining lease term
Operating leases	14.1 years		13.7 years
Finance leases	2.2 years		2.9 years
Weighted-average discount rate
Operating leases	5.80	%	5.92	%
Finance leases	4.60	%	4.91	%

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Commitments and Contingencies (Tables)

6 Months Ended

Jun. 30, 2022

Commitments and Contingencies Disclosure [Abstract]

Employee Groups and Status of the Collective Bargaining Agreements

The table below sets forth the Company's employee groups and status of the collective bargaining agreements as of June 30, 2022.

Employee Groups	Representative	Amendable Date (1)	Percentage of Workforce
Pilots	Air Line Pilots Association, International ("ALPA")	February 2023	27%
Flight Attendants	Association of Flight Attendants ("AFA-CWA")	September 2021	46%
Dispatchers	Professional Airline Flight Control Association ("PAFCA")	October 2023	1%
Ramp Service Agents	International Association of Machinists and Aerospace Workers ("IAMAW")	November 2026	3%
Passenger Service Agents	Transport Workers Union of America ("TWU")	February 2027	2%

(1) Subject to standard early opener provisions.

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Fair Value Measurements (Tables)

6 Months Ended

Jun. 30, 2022

Fair Value Disclosures [Abstract]

Carrying Amount and Estimated Fair Value, Long-term Debt

The carrying amounts and estimated fair values of the Company's long-term debt at June 30, 2022 and December 31, 2021 were as follows:

	June 30, 2022				December 31, 2021				Fair Value Level Hierarchy
	Carrying Value		Estimated Fair Value		Carrying Value		Estimated Fair Value
	(in millions)
8.00% senior secured notes	$	510.0	$	468.4	$	510.0	$	530.4	Level 3
Fixed-rate term loans	1,159.1		1,041.4		1,223.5		1,262.6		Level 3
Unsecured term loans	136.3		111.0		136.3		146.4		Level 3
2015-1 EETC Class A	289.6		271.5		300.6		311.1		Level 2
2015-1 EETC Class B	52.0		50.3		56.0		56.4		Level 2
2015-1 EETC Class C	69.5		67.7		75.2		74.0		Level 2
2017-1 EETC Class AA	193.3		175.2		200.3		203.3		Level 2
2017-1 EETC Class A	64.4		57.4		66.8		65.8		Level 2
2017-1 EETC Class B	53.4		47.5		55.8		53.6		Level 2
2017-1 EETC Class C	85.5		83.7		85.5		84.1		Level 2
4.75% convertible notes due 2025	25.4		53.3		28.2		55.6		Level 2
1.00% convertible notes due 2026	500.0		452.0		500.0		432.5		Level 2
Total long-term debt	$	3,138.5	$	2,879.4	$	3,238.2	$	3,275.8

Schedule of Assets and Liabilities Measured at Fair Value on a Recurring Basis

Assets and liabilities measured at gross fair value on a recurring basis are summarized below:

	Fair Value Measurements as of June 30, 2022
	Total		Level 1		Level 2		Level 3
	(in millions)
Cash and cash equivalents	$	1,197.1	$	1,197.1	$	—	$	—
Restricted cash	95.4		95.4		—		—
Short-term investment securities	105.9		105.9		—		—
Assets held for sale	2.5		—		—		2.5
Total assets	$	1,400.9	$	1,398.4	$	—	$	2.5
Derivative liability	$	40.2	$	—	$	40.2	$	—
Total liabilities	$	40.2	$	—	$	40.2	$	—

	Fair Value Measurements as of December 31, 2021
	Total		Level 1		Level 2		Level 3
	(in millions)
Cash and cash equivalents	$	1,333.5	$	1,333.5	$	—	$	—
Restricted cash	95.4		95.4		—		—
Short-term investment securities	106.3		106.3		—		—
Assets held for sale	2.5		—		—		2.5
Total assets	$	1,537.7	$	1,535.2	$	—	$	2.5
Total liabilities	$	—	$	—	$	—	$	—

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Debt and Other Obligations (Tables)

6 Months Ended

Jun. 30, 2022

Debt Disclosure [Abstract]

Schedule of Long-term Debt

Long-term debt is comprised of the following:

	As of				As of
	June 30, 2022		December 31, 2021		June 30, 2022		December 31, 2021
	(in millions)				(weighted-average interest rates)
8.00% senior secured notes due 2025	$	510.0	$	510.0	8.00	%	8.00	%
Fixed-rate loans due through 2039 (1)	1,159.1		1,223.5		3.52	%	3.52	%
Unsecured term loans due in 2031	136.3		136.3		1.00	%	1.00	%
Fixed-rate class A 2015-1 EETC due through 2028	289.6		300.6		4.10	%	4.10	%
Fixed-rate class B 2015-1 EETC due through 2024	52.0		56.0		4.45	%	4.45	%
Fixed-rate class C 2015-1 EETC due through 2023	69.5		75.2		4.93	%	4.93	%
Fixed-rate class AA 2017-1 EETC due through 2030	193.3		200.3		3.38	%	3.38	%
Fixed-rate class A 2017-1 EETC due through 2030	64.4		66.8		3.65	%	3.65	%
Fixed-rate class B 2017-1 EETC due through 2026	53.4		55.8		3.80	%	3.80	%
Fixed-rate class C 2017-1 EETC due through 2023	85.5		85.5		5.11	%	5.11	%
Convertible notes due 2025	25.4		28.2		4.75	%	4.75	%
Convertible notes due 2026	500.0		500.0		1.00	%	1.00	%
Long-term debt	$	3,138.5	$	3,238.2
Less current maturities	350.9		208.2
Less unamortized discounts, net	92.1		54.9
Total	$	2,695.5	$	2,975.1

(1) Includes obligations related to one aircraft recorded as a failed sale leaseback. Refer to Note 9, Leases for additional information.

Schedule of Maturities of Long-term Debt

At June 30, 2022, long-term debt principal payments for the next five years and thereafter are as follows:

	June 30, 2022
	(in millions)
remainder of 2022	$	96.2
2023	336.6
2024	222.1
2025	723.8
2026	731.1
2027 and beyond	1,028.7
Total debt principal payments	$	3,138.5

Schedule of Interest Expense, Long-term Debt

Interest expense related to long-term debt and finance leases consists of the following:

	Three Months Ended June 30,				Six Months Ended June 30,
	2022		2021		2022		2021
	(in thousands)
8.00% senior secured notes (1)	$	10,461	$	13,541	20,921		$	30,975
Fixed-rate term loans	10,485		10,746		21,169		21,649
Unsecured term loans	340		282		676		481
Class A 2015-1 EETC	2,954		3,178		6,001		6,453
Class B 2015-1 EETC	575		664		1,191		1,369
Class C 2015-1 EETC	856		997		1,773		2,053
Class AA 2017-1 EETC	1,640		1,759		3,278		3,514
Class A 2017-1 EETC	591		634		1,182		1,267
Class B 2017-1 EETC	510		556		1,022		1,113
Class C 2017-1 EETC	1,092		1,092		2,171		2,171
Convertible notes (2)	(3,024)		1,749		199		3,827
Revolving credit facilities	—		562		—		1,733
Finance leases	16		24		34		48
Commitment and other fees	418		604		955		1,032
Amortization of deferred financing costs	3,210		3,274		7,432		6,783
Total	$	30,124	$	39,662	$	68,004	$	84,468

(1) Includes $0.3 million and $0.5 million of accretion and $10.2 million and $20.4 million of interest expense for the three and six months ended June 30, 2022, respectively. Includes $0.3 million and $0.8 million of accretion and $13.2 million and $30.2 million of interest expense for the three and six months ended June 30, 2021, respectively.

(2) Includes $3.8 million and $6.3 million of amortization of the discount for the convertible notes due 2026, $1.6 million and $3.2 million of interest expense for the convertible notes due 2025 and 2026 offset by $8.4 million and $9.3 million of favorable mark to market adjustments for the convertible notes due 2026 for the three and six months ended June 30, 2022, respectively. Includes $1.7 million and $3.8 million of interest expense for the convertible notes due 2025 and 2026 for the three and six months ended June 30, 2021, respectively.

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Merger (Details) - Subsequent Event - USD ($) $ / shares in Units, $ in Millions	Jul. 28, 2022	Jul. 27, 2022
Frontier Merger Agreement
Business Acquisition [Line Items]
Termination agreement		$ 25.0
JetBlue Airways
Business Acquisition [Line Items]
Merger consideration, price per share (in dollars per share)	$ 33.50
Approval prepayment amount price per share (in dollars per share)	2.50
Additional approval prepayment amount price per share (in dollars per share)	0.10
Approval prepayment maximum share price threshold (in dollars per share)	$ 1.15
Business acquisition, breakup fee	$ 94.2
Payment to be received upon termination of merger agreement, antitrust regulatory clearance not approved	70.0
Payment to be received by stockholders' upon termination of merger agreement, antitrust regulatory clearance not approved	$ 400.0

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Revenue (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2022	Jun. 30, 2021	Jun. 30, 2022	Jun. 30, 2021	Dec. 31, 2021
Disaggregation of Revenue [Line Items]
Total operating revenues	$ 1,366,643	$ 859,309	$ 2,333,958	$ 1,320,588
Air traffic liability	561,705		561,705		$ 382,317
DOT—Domestic
Disaggregation of Revenue [Line Items]
Total operating revenues	1,165,746	770,800	1,993,200	1,177,964
DOT—Latin America
Disaggregation of Revenue [Line Items]
Total operating revenues	200,897	88,509	340,758	142,624
Total passenger revenues
Disaggregation of Revenue [Line Items]
Total operating revenues	1,347,871	846,507	2,297,615	1,296,842
Fare
Disaggregation of Revenue [Line Items]
Total operating revenues	703,778	369,691	1,122,196	543,978
Non-fare
Disaggregation of Revenue [Line Items]
Total operating revenues	644,093	476,816	1,175,419	752,864
Other
Disaggregation of Revenue [Line Items]
Total operating revenues	$ 18,772	$ 12,802	$ 36,343	$ 23,746

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Loss on Disposal (Details) $ in Thousands	3 Months Ended			6 Months Ended
	Jun. 30, 2022 USD ($) aircraft	Mar. 31, 2022 USD ($) aircraft_engine	Jun. 30, 2021 USD ($) aircraft	Jun. 30, 2022 USD ($) aircraft	Jun. 30, 2021 USD ($) aircraft
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items]
Loss on disposal of assets	$ 10,636		$ 189	$ 22,188	$ 1,306
Impairment of long-lived assets to be disposed of		$ 6,600
Number of impaired spare engine related to loss on disposal | aircraft_engine		1
Loss on sale-leaseback transaction	$ 10,200		$ 200	$ 14,500	$ 200
Number of aircraft related to loss | aircraft	4		2	7	2
Auxiliary Power Units
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items]
Loss on disposal of assets					$ (1,100)

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Special Charges (Credits) (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2022	Jun. 30, 2021	Jun. 30, 2022	Jun. 30, 2021	Sep. 30, 2022
Unusual or Infrequent Item, or Both [Line Items]
Special charges (credits)	$ 18,004	$ (115,002)	$ 33,567	$ (291,940)
Payroll Support Program 2 and 3, Grant, CARES Act
Unusual or Infrequent Item, or Both [Line Items]
Special charges (credits)		99,300		255,800
Payroll Support Program 2
Unusual or Infrequent Item, or Both [Line Items]
Severance costs and costs for voluntary separations		600		1,400
CARES Act Employee Retention Credit
Unusual or Infrequent Item, or Both [Line Items]
Special charges (credits)		$ 16,300		$ 37,500
Frontier Merger Agreement and Jetblue Unsolicited Proposal
Unusual or Infrequent Item, or Both [Line Items]
Legal, advisory and other fees	10,400		21,500
Frontier Merger Agreement
Unusual or Infrequent Item, or Both [Line Items]
Retention bonus recorded	$ 7,600		$ 12,100
Frontier Merger Agreement | Subsequent Event
Unusual or Infrequent Item, or Both [Line Items]
Percentage of target retention bonus to be paid upon merger failure or abandonment					50.00%

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Loss per Share (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands	3 Months Ended				6 Months Ended
	Jun. 30, 2022	Mar. 31, 2022	Jun. 30, 2021	Mar. 31, 2021	Jun. 30, 2022	Jun. 30, 2021
Numerator
Net loss	$ (52,406)	$ (194,703)	$ (287,863)	$ (112,321)	$ (247,109)	$ (400,184)
Denominator
Weighted-average shares outstanding, basic (in shares)	108,697		105,258		108,639	101,537
Effect of dilutive shares (in shares)	0		0		0	0
Adjusted weighted-average shares outstanding, diluted (in shares)	108,697		105,258		108,639	101,537
Loss per share
Basic loss per share (in dollars per share)	$ (0.48)		$ (2.73)		$ (2.27)	$ (3.94)
Diluted loss per share (in dollars per share)	$ (0.48)		$ (2.73)		$ (2.27)	$ (3.94)

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Short-term Investment Securities (Details) - USD ($)	3 Months Ended		6 Months Ended
	Jun. 30, 2022	Jun. 30, 2021	Jun. 30, 2022	Jun. 30, 2021	Dec. 31, 2021
Debt Securities, Available-for-sale [Line Items]
Short-term investment securities	$ 105,920,000		$ 105,920,000		$ 106,313,000
Realized gain (loss) on available-for-sale securities	0	$ 0	0	$ 0
Accumulated other comprehensive loss	894,000		894,000		532,000
Available-for-sale Securities
Debt Securities, Available-for-sale [Line Items]
Short-term investment securities	105,900,000		$ 105,900,000		106,300,000
Weighted-average fixed rate			0.30%
Unrealized loss on investment securities, net of deferred taxes	173,000	(13,000)	$ 435,000	(6,000)
Deferred taxes on unrealized (loss) gain on investment securities	51,000	$ 4,000	127,000	$ 2,000
Accumulated other comprehensive loss	$ (478,000)		$ (478,000)		$ (43,000)

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Accrued Liabilities (Details) - USD ($) $ in Thousands	Jun. 30, 2022	Dec. 31, 2021
Payables and Accruals [Abstract]
Salaries, wages and benefits	$ 156,025	$ 142,893
Federal excise and other passenger taxes and fees payable	122,040	77,409
Fuel	94,151	55,103
Airport obligations	83,149	85,772
Aircraft maintenance	39,193	39,178
Interest payable	23,719	24,526
Aircraft and facility lease obligations	22,049	23,049
Other	38,337	32,824
Other current liabilities	$ 578,663	$ 480,754

XML

Leases - Narrative (Details)	6 Months Ended
	Jun. 30, 2022 USD ($) aircraft aircraft_engine agreement	Dec. 31, 2019 USD ($) a residential_building_unit
Lessee, Lease, Description [Line Items]
Number of spare engines owned | aircraft_engine	22
Number of spare engines unencumbered | aircraft_engine	1
Number of spare engines pledged as collateral | aircraft_engine	21
Number of aircraft and engine master lease agreements with maintenance reserves as collateral | agreement	1
Area of land | a		8.5
Land | $		$ 41,000,000
Noncancellable short-term operating lease, payments, remainder of year | $	$ 3,200,000
Noncancellable short-term operating lease, payments, year one and beyond | $	$ 0
Aircraft
Lessee, Lease, Description [Line Items]
Failed aircraft sale leaseback	1
A320 Family | Aircraft
Lessee, Lease, Description [Line Items]
Number of aircraft held	180
Number of aircraft owned	105
Number of capitalized aircraft or engine purchased off lease	33
Aircraft
Lessee, Lease, Description [Line Items]
Number of aircraft under sale-leaseback transactions	7
Aircraft | A320 Family
Lessee, Lease, Description [Line Items]
Number of leased assets financed under operating leases	74
Aircraft | Minimum
Lessee, Lease, Description [Line Items]
Operating leases, term	8 years
Aircraft | Maximum
Lessee, Lease, Description [Line Items]
Operating leases, term	18 years
Other Leased Equipment and Property
Lessee, Lease, Description [Line Items]
Area of land | a		2.6
Number of units in residential building expected to be built | residential_building_unit		200
Other Leased Equipment and Property | Maximum
Lessee, Lease, Description [Line Items]
Operating leases, term	99 years	99 years
Spare Engines
Lessee, Lease, Description [Line Items]
Number of engines purchased with cash | aircraft_engine	2
Number of leased assets financed under operating leases | aircraft_engine	12
Leased Computer And Office Equipment | Minimum
Lessee, Lease, Description [Line Items]
Finance leases, term	4 years
Leased Computer And Office Equipment | Maximum
Lessee, Lease, Description [Line Items]
Finance leases, term	5 years

XML

Leases - Finance and Operating Lease Maturities (Details) - USD ($) $ in Thousands	Jun. 30, 2022	Dec. 31, 2021
Finance Leases
Remainder of 2022	$ 421
2023	465
2024	215
2025	117
2026	38
2027 and thereafter	0
Total minimum lease payments	1,256
Less amount representing interest	56
Present value of minimum lease payments	1,200
Less current portion	665
Long-term portion	535
Operating Leases
Less current portion	169,195	$ 158,631
Long-term portion	1,981,467	$ 1,751,351
Total Operating and Finance Lease Obligations
Remainder of 2022	144,632
2023	285,499
2024	271,272
2025	253,559
2026	226,972
2027 and thereafter	2,046,974
Total minimum lease payments	3,228,908
Less amount representing interest	1,077,046
Present value of minimum lease payments	2,151,862
Less current portion	169,860
Long-term portion	$ 1,982,002
Finance Lease, Liability, Statement of Financial Position [Extensible Enumeration]	Long-Term Debt and Lease Obligation, Including Current Maturities	Long-Term Debt and Lease Obligation, Including Current Maturities
Finance Lease, Liability, Current, Statement of Financial Position [Extensible Enumeration]	Current maturities of long-term debt, net and finance leases	Current maturities of long-term debt, net and finance leases
Finance Lease, Liability, Noncurrent, Statement of Financial Position [Extensible Enumeration]	Long-term debt, net and finance leases, less current maturities	Long-term debt, net and finance leases, less current maturities
Aircraft and Spare Engine Leases
Operating Leases
Remainder of 2022	$ 141,250
2023	279,258
2024	267,172
2025	252,230
2026	225,970
2027 and thereafter	1,904,800
Total minimum lease payments	3,070,680
Less amount representing interest	944,235
Present value of minimum lease payments	2,126,445
Less current portion	164,532
Long-term portion	1,961,913
Property Facility Leases
Operating Leases
Remainder of 2022	2,882
2023	5,763
2024	3,885
2025	1,212
2026	964
2027 and thereafter	142,174
Total minimum lease payments	156,880
Less amount representing interest	132,754
Present value of minimum lease payments	24,126
Less current portion	4,572
Long-term portion	19,554
Other
Operating Leases
Remainder of 2022	79
2023	13
2024	0
2025	0
2026	0
2027 and thereafter	0
Total minimum lease payments	92
Less amount representing interest	1
Present value of minimum lease payments	91
Less current portion	91
Long-term portion	$ 0

XML

Leases - Lease Costs (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2022	Jun. 30, 2021	Jun. 30, 2022	Jun. 30, 2021
Finance lease cost
Amortization of leased assets	$ 188	$ 176	$ 375	$ 345
Interest of lease liabilities	16	24	34	48
Operating lease cost
Operating lease cost	65,430	52,632	128,681	104,774
Short-term lease cost	9,551	7,076	19,808	14,091
Variable lease cost	50,128	50,511	98,723	88,661
Total lease cost	$ 125,313	$ 110,419	$ 247,621	$ 207,919

XML

Leases - Weighted Average Lease Terms and Discount Rates (Details)	Jun. 30, 2022	Jun. 30, 2021
Weighted-average remaining lease term
Operating leases	14 years 1 month 6 days	13 years 8 months 12 days
Finance leases	2 years 2 months 12 days	2 years 10 months 24 days
Weighted-average discount rate
Operating leases	5.80%	5.92%
Finance leases	4.60%	4.91%

XML

Commitments and Contingencies - Aircraft-Related Commitments and Financing Arrangements (Details) $ in Millions	Jun. 30, 2022 USD ($) aircraft aircraft_engine	Aug. 31, 2020
Aircraft-Related Secured Debt
Interest Commitments
Interest commitments, remainder of fiscal year	$ 46.2
Interest commitments, 2023	64.6
Interest commitments, 2024	53.3
Interest commitments, 2025	45.8
Interest commitments, 2026	38.3
Interest commitments, 2027 and thereafter	$ 90.3
Secured Debt | 8.00% Senior Secured Notes Due 2025
Interest Commitments
Stated interest rate percentage	8.00%	8.00%
Non-Aircraft-Related Secured Debt, Unsecured Debt And Convertible Debt
Interest Commitments
Interest commitments, remainder of fiscal year	$ 24.5
Interest commitments, 2023	48.4
Interest commitments, 2024	48.4
Interest commitments, 2025	45.4
Interest commitments, 2026	5.9
Interest commitments, 2027 and thereafter	$ 14.0
A320 and A321
Aircraft Rent Commitments For Future Aircraft Deliveries
Number of delivered aircraft with secured debt financing commitments | aircraft	73
Aircraft and Related Flight Equipment
Committed Expenditures
Committed expenditures, remainder of fiscal year	$ 507.3
Committed expenditures, 2023	906.9
Committed expenditures, 2024	999.8
Committed expenditures, 2025	1,060.7
Committed expenditures, 2026	1,349.9
Committed expenditures, 2027 and thereafter	872.8
Non-aircraft Related Commitments
Committed Expenditures
Committed expenditures, remainder of fiscal year	34.3
Committed expenditures, 2023	21.7
Committed expenditures, 2024	18.1
Committed expenditures, 2025	18.1
Committed expenditures, 2026	17.5
Committed expenditures, 2027 and thereafter	$ 19.2
PurePower PW1100G-JM Engine
Unrecorded Unconditional Purchase Obligation [Line Items]
Number of spare aircraft engines ordered | aircraft_engine	14
Airbus
Unrecorded Unconditional Purchase Obligation [Line Items]
Future aircraft to be received | aircraft	113
Number of aircraft to be delivered, remainder of fiscal year | aircraft	10
Number of aircraft to be delivered, 2023 | aircraft	17
Airbus | Remainder of 2022
Unrecorded Unconditional Purchase Obligation [Line Items]
Number of aircraft with secured debt financing commitments scheduled for delivery | aircraft	10
Airbus | 2022 Through 2027
Unrecorded Unconditional Purchase Obligation [Line Items]
Number of aircraft without secured financing commitments scheduled for delivery | aircraft	103
Third Party Lessor | A320 Family
Aircraft Rent Commitments For Future Aircraft Deliveries
Operating lease payments expected for aircraft to be delivered, remainder of fiscal year	$ 18.0
Operating lease payments expected for aircraft to be delivered, 2023	110.8
Operating lease payments expected for aircraft to be delivered, 2024	188.9
Operating lease payments expected for aircraft to be delivered, 2025	217.9
Operating lease payments expected for aircraft to be delivered, 2026	217.9
Operating lease payments expected for aircraft to be delivered, 2027 and thereafter	$ 1,861.5
Third Party Lessor | 2022 Through 2024 | A320 and A321
Unrecorded Unconditional Purchase Obligation [Line Items]
Future aircraft to be received | aircraft	40

XML

Commitments and Contingencies - Litigation and Assessments And Credit Card Processing Arrangements (Details) - USD ($)	3 Months Ended
	Mar. 31, 2022	Jul. 19, 2022	Jun. 30, 2022	Dec. 31, 2021
Restricted Cash and Cash Equivalents Items [Line Items]
Internal revenue service federal excise taxes	$ 34,900,000
Recognized a loss contingency	$ 0
Maximum potential exposure to cash holdbacks from credit card processors			$ 632,500,000	$ 371,800,000
Subsequent Event
Restricted Cash and Cash Equivalents Items [Line Items]
Internal revenue service federal excise taxes		$ 27,500,000
Credit Card Holdbacks
Restricted Cash and Cash Equivalents Items [Line Items]
Restricted cash holdbacks			$ 0	$ 0

XML

Commitments and Contingencies - Employees (Details)		6 Months Ended
	Feb. 21, 2022	Jun. 30, 2022 employeeGroup	May 31, 2022 employee
Concentration Risk [Line Items]
Number of employees included n union application (approximately) | employee			600
Transport Workers Union of America ("TWU")
Concentration Risk [Line Items]
Collective bargaining arrangement, term	5 years
Unionized Employees Concentration Risk | Number of Employees, Total
Concentration Risk [Line Items]
Number of union-represented employee groups | employeeGroup		5
Company's employees covered under collective bargaining agreements percentage		79.00%
Unionized Employees Concentration Risk | Number of Employees, Total | Air Line Pilots Association, International ("ALPA")
Concentration Risk [Line Items]
Company's employees covered under collective bargaining agreements percentage		27.00%
Unionized Employees Concentration Risk | Number of Employees, Total | Association of Flight Attendants ("AFA-CWA")
Concentration Risk [Line Items]
Company's employees covered under collective bargaining agreements percentage		46.00%
Unionized Employees Concentration Risk | Number of Employees, Total | Professional Airline Flight Control Association ("PAFCA")
Concentration Risk [Line Items]
Company's employees covered under collective bargaining agreements percentage		1.00%
Unionized Employees Concentration Risk | Number of Employees, Total | International Association of Machinists and Aerospace Workers ("IAMAW")
Concentration Risk [Line Items]
Company's employees covered under collective bargaining agreements percentage		3.00%
Unionized Employees Concentration Risk | Number of Employees, Total | Transport Workers Union of America ("TWU")
Concentration Risk [Line Items]
Company's employees covered under collective bargaining agreements percentage		2.00%

XML

Fair Value Measurements - Long-term Debt (Details) - USD ($) $ in Millions	Jun. 30, 2022	Dec. 31, 2021	Aug. 31, 2020	May 12, 2020
Debt Instrument [Line Items]
Carrying Value	$ 3,138.5	$ 3,238.2
Secured Debt | 8.00% senior secured notes
Debt Instrument [Line Items]
Stated interest rate percentage	8.00%		8.00%
Carrying Value	$ 510.0	510.0
Fixed-rate term loans
Debt Instrument [Line Items]
Carrying Value	1,159.1	1,223.5
Unsecured term loans | Payroll Support Program, CARES Act
Debt Instrument [Line Items]
Carrying Value	136.3	136.3
2015-1 EETC Class A
Debt Instrument [Line Items]
Carrying Value	289.6	300.6
2015-1 EETC Class B
Debt Instrument [Line Items]
Carrying Value	52.0	56.0
2015-1 EETC Class C
Debt Instrument [Line Items]
Carrying Value	69.5	75.2
2017-1 EETC Class AA
Debt Instrument [Line Items]
Carrying Value	193.3	200.3
2017-1 EETC Class A
Debt Instrument [Line Items]
Carrying Value	64.4	66.8
2017-1 EETC Class B
Debt Instrument [Line Items]
Carrying Value	53.4	55.8
2017-1 EETC Class C
Debt Instrument [Line Items]
Carrying Value	$ 85.5	85.5
Convertible notes | 4.75% convertible notes due 2025
Debt Instrument [Line Items]
Stated interest rate percentage	4.75%			4.75%
Carrying Value	$ 25.4	28.2
Convertible notes | 1.00% convertible notes due 2026
Debt Instrument [Line Items]
Stated interest rate percentage	1.00%
Carrying Value	$ 500.0	500.0
Estimated Fair Value
Debt Instrument [Line Items]
Estimated Fair Value	2,879.4	3,275.8
Estimated Fair Value | Level 3 | Secured Debt | 8.00% senior secured notes
Debt Instrument [Line Items]
Estimated Fair Value	468.4	530.4
Estimated Fair Value | Level 3 | Fixed-rate term loans
Debt Instrument [Line Items]
Estimated Fair Value	1,041.4	1,262.6
Estimated Fair Value | Level 3 | Unsecured term loans | Payroll Support Program, CARES Act
Debt Instrument [Line Items]
Estimated Fair Value	111.0	146.4
Estimated Fair Value | Level 2 | 2015-1 EETC Class A
Debt Instrument [Line Items]
Estimated Fair Value	271.5	311.1
Estimated Fair Value | Level 2 | 2015-1 EETC Class B
Debt Instrument [Line Items]
Estimated Fair Value	50.3	56.4
Estimated Fair Value | Level 2 | 2015-1 EETC Class C
Debt Instrument [Line Items]
Estimated Fair Value	67.7	74.0
Estimated Fair Value | Level 2 | 2017-1 EETC Class AA
Debt Instrument [Line Items]
Estimated Fair Value	175.2	203.3
Estimated Fair Value | Level 2 | 2017-1 EETC Class A
Debt Instrument [Line Items]
Estimated Fair Value	57.4	65.8
Estimated Fair Value | Level 2 | 2017-1 EETC Class B
Debt Instrument [Line Items]
Estimated Fair Value	47.5	53.6
Estimated Fair Value | Level 2 | 2017-1 EETC Class C
Debt Instrument [Line Items]
Estimated Fair Value	83.7	84.1
Estimated Fair Value | Level 2 | Convertible notes | 4.75% convertible notes due 2025
Debt Instrument [Line Items]
Estimated Fair Value	53.3	55.6
Estimated Fair Value | Level 2 | Convertible notes | 1.00% convertible notes due 2026
Debt Instrument [Line Items]
Estimated Fair Value	$ 452.0	$ 432.5

XML

Fair Value Measurements - Narrative (Details) - USD ($) $ in Millions	3 Months Ended	6 Months Ended
	Jun. 30, 2022	Jun. 30, 2022	Feb. 05, 2022	Aug. 31, 2020
Control Agreements For Interest And Fee Payments
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Restricted cash	$ 20.4	$ 20.4
Secured Debt | 8.00% Senior Secured Notes Due 2025
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Stated interest rate percentage	8.00%	8.00%		8.00%
Convertible notes | 1.00% convertible notes due 2026
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Stated interest rate percentage	1.00%	1.00%
Fair value of the embedded derivative			$ 49.5
Derivative liability fair value adjustment	$ 8.4	$ 9.3
Standby Letters of Credit | Secured Debt
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Letters of credit, limit, amount	85.0	85.0
Restricted cash	75.0	75.0
Letter of credit facility, amount outstanding	$ 26.2	$ 26.2

XML

Fair Value Measurements - Assets and Liabilities Measured on Recurring Basis (Details) - Fair Value, Recurring - USD ($) $ in Millions	Jun. 30, 2022	Dec. 31, 2021
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Cash and cash equivalents	$ 1,197.1	$ 1,333.5
Restricted cash	95.4	95.4
Short-term investment securities	105.9	106.3
Assets held for sale	2.5	2.5
Total assets	1,400.9	1,537.7
Derivative liability	40.2
Total liabilities	40.2	0.0
Level 1
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Cash and cash equivalents	1,197.1	1,333.5
Restricted cash	95.4	95.4
Short-term investment securities	105.9	106.3
Assets held for sale	0.0	0.0
Total assets	1,398.4	1,535.2
Derivative liability	0.0
Total liabilities	0.0	0.0
Level 2
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Cash and cash equivalents	0.0	0.0
Restricted cash	0.0	0.0
Short-term investment securities	0.0	0.0
Assets held for sale	0.0	0.0
Total assets	0.0	0.0
Derivative liability	40.2
Total liabilities	40.2	0.0
Level 3
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Cash and cash equivalents	0.0	0.0
Restricted cash	0.0	0.0
Short-term investment securities	0.0	0.0
Assets held for sale	2.5	2.5
Total assets	2.5	2.5
Derivative liability	0.0
Total liabilities	$ 0.0	$ 0.0

XML

Debt and Other Obligations - Narrative (Details)			3 Months Ended		6 Months Ended
	Apr. 30, 2021 USD ($) day $ / shares shares	May 12, 2020 USD ($) day $ / shares shares	Jun. 30, 2022 USD ($) shares	Jun. 30, 2021 USD ($)	Jun. 30, 2022 USD ($)	Jun. 30, 2021 USD ($)	Feb. 05, 2022 USD ($)	Dec. 31, 2021 USD ($)
Debt Instrument [Line Items]
Convertible debt conversions			$ 2,705,000
Long-term debt			3,138,500,000		$ 3,138,500,000			$ 3,238,200,000
Long-term debt and capital leases, less current maturities			2,695,500,000		2,695,500,000			2,975,100,000
Less unamortized discounts, net			92,100,000		92,100,000			54,900,000
Repayments of long-term debt			$ 52,400,000	$ 234,800,000	$ 96,800,000	$ 370,700,000
Convertible notes due 2025 | Convertible notes
Debt Instrument [Line Items]
Principal amount		$ 175,000,000
Stated interest rate percentage		4.75%	4.75%		4.75%
Convertible debt, conversion price threshold		130.00%
Number of trading days required for conversion price threshold | day		20
Number of consecutive days required for trading days for conversion price threshold | day		30
Number of consecutive business days for conversion price threshold | day		5
Number of consecutive trading days measurement period | day		5
Trading price threshold per principal amount portion		98.00%
Shares conversion rate per portion of principal amount (in shares) | shares		78.4314
Principal amount portion for trading price threshold		$ 1,000
Conversion price (in dollars per share) | $ / shares		$ 12.75
Notes converted amount			$ 2,800,000
Debt conversion, converted (in shares) | shares			217,226
Convertible debt conversions			$ 2,700,000
Long-term debt			25,400,000		$ 25,400,000			28,200,000
Debt instrument, convertible, liquidation preference, during period, value			$ 18,800,000		$ 19,500,000
1.00% convertible notes due 2026 | Convertible notes
Debt Instrument [Line Items]
Principal amount	$ 500,000,000
Stated interest rate percentage			1.00%		1.00%
Convertible debt, conversion price threshold	130.00%
Number of trading days required for conversion price threshold | day	20
Number of consecutive days required for trading days for conversion price threshold | day	30
Number of consecutive business days for conversion price threshold | day	5
Trading price threshold per principal amount portion	98.00%
Shares conversion rate per portion of principal amount (in shares) | shares	20.3791
Principal amount portion for trading price threshold	$ 1,000
Conversion price (in dollars per share) | $ / shares	$ 49.07
Long-term debt			$ 500,000,000.0		$ 500,000,000.0			500,000,000.0
Number of trading days before maturity redemption allowed | day	40
Minimum aggregate principal amount outstanding required for redemption	$ 150,000,000
Fair value of the embedded derivative							$ 49,500,000
Long-term debt and capital leases, less current maturities			456,800,000		456,800,000
Less unamortized discounts, net			43,200,000		43,200,000
Revolving credit facilities | Revolving credit facility due in 2024 | Line of Credit
Debt Instrument [Line Items]
Line of credit facility, remaining borrowing capacity			$ 240,000,000		$ 240,000,000			$ 240,000,000

XML

Debt and Other Obligations - Schedule of Long-term Debt (Details) $ in Millions	Jun. 30, 2022 USD ($) aircraft	Dec. 31, 2021 USD ($)	Aug. 31, 2020	May 12, 2020
Debt Instrument [Line Items]
Long-term debt	$ 3,138.5	$ 3,238.2
Less current maturities	350.9	208.2
Less unamortized discounts, net	92.1	54.9
Long-term debt and capital leases, less current maturities	$ 2,695.5	2,975.1
Aircraft
Debt Instrument [Line Items]
Failed aircraft sale leaseback | aircraft	1
8.00% senior secured notes due 2025 | 8.00% Senior Secured Notes Due 2025
Debt Instrument [Line Items]
Stated interest rate percentage	8.00%		8.00%
Long-term debt	$ 510.0	$ 510.0
Weighted-average interest rate	8.00%	8.00%
Fixed-rate loans due through 2039
Debt Instrument [Line Items]
Long-term debt	$ 1,159.1	$ 1,223.5
Weighted-average interest rate	3.52%	3.52%
Unsecured term loans due in 2031 | Payroll Support Program, CARES Act
Debt Instrument [Line Items]
Long-term debt	$ 136.3	$ 136.3
Weighted-average interest rate	1.00%	1.00%
Fixed-rate class A 2015-1 EETC due through 2028
Debt Instrument [Line Items]
Long-term debt	$ 289.6	$ 300.6
Weighted-average interest rate	4.10%	4.10%
Fixed-rate class B 2015-1 EETC due through 2024
Debt Instrument [Line Items]
Long-term debt	$ 52.0	$ 56.0
Weighted-average interest rate	4.45%	4.45%
Fixed-rate class C 2015-1 EETC due through 2023
Debt Instrument [Line Items]
Long-term debt	$ 69.5	$ 75.2
Weighted-average interest rate	4.93%	4.93%
Fixed-rate class AA 2017-1 EETC due through 2030
Debt Instrument [Line Items]
Long-term debt	$ 193.3	$ 200.3
Weighted-average interest rate	3.38%	3.38%
Fixed-rate class A 2017-1 EETC due through 2030
Debt Instrument [Line Items]
Long-term debt	$ 64.4	$ 66.8
Weighted-average interest rate	3.65%	3.65%
Fixed-rate class B 2017-1 EETC due through 2026
Debt Instrument [Line Items]
Long-term debt	$ 53.4	$ 55.8
Weighted-average interest rate	3.80%	3.80%
Fixed-rate class C 2017-1 EETC due through 2023
Debt Instrument [Line Items]
Long-term debt	$ 85.5	$ 85.5
Weighted-average interest rate	5.11%	5.11%
Convertible notes | Convertible notes due 2025
Debt Instrument [Line Items]
Stated interest rate percentage	4.75%			4.75%
Long-term debt	$ 25.4	$ 28.2
Weighted-average interest rate	4.75%	4.75%
Convertible notes | Convertible notes due 2026
Debt Instrument [Line Items]
Stated interest rate percentage	1.00%
Long-term debt	$ 500.0	$ 500.0
Weighted-average interest rate	1.00%	1.00%
Less unamortized discounts, net	$ 43.2
Long-term debt and capital leases, less current maturities	$ 456.8

XML

Debt and Other Obligations - Future Maturities (Details) $ in Millions	Jun. 30, 2022 USD ($)
Debt Disclosure [Abstract]
remainder of 2022	$ 96.2
2023	336.6
2024	222.1
2025	723.8
2026	731.1
2027 and beyond	1,028.7
Total debt principal payments	$ 3,138.5

XML

Debt and Other Obligations - Interest Expense (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2022	Jun. 30, 2021	Jun. 30, 2022	Jun. 30, 2021	Aug. 31, 2020
Debt Instrument [Line Items]
Commitment and other fees	$ 418	$ 604	$ 955	$ 1,032
Amortization of deferred financing costs	3,210	3,274	7,432	6,783
Total	30,124	39,662	68,004	84,468
Accretion expense			521	753
Amortization of debt discount			6,346	0
8.00% senior secured notes due 2025
Debt Instrument [Line Items]
Accretion expense	300	300	500	800
Interest expense	$ 10,200	13,200	$ 20,400	30,200
8.00% senior secured notes due 2025 | 8.00% Senior Secured Notes Due 2025
Debt Instrument [Line Items]
Stated interest rate percentage	8.00%		8.00%		8.00%
Interest expense	$ 10,461	13,541	$ 20,921	30,975
Fixed-rate term loans
Debt Instrument [Line Items]
Interest expense	10,485	10,746	21,169	21,649
Unsecured term loans | Payroll Support Program, CARES Act
Debt Instrument [Line Items]
Interest expense	340	282	676	481
Class A 2015-1 EETC
Debt Instrument [Line Items]
Interest expense	2,954	3,178	6,001	6,453
Class B 2015-1 EETC
Debt Instrument [Line Items]
Interest expense	575	664	1,191	1,369
Class C 2015-1 EETC
Debt Instrument [Line Items]
Interest expense	856	997	1,773	2,053
Class AA 2017-1 EETC
Debt Instrument [Line Items]
Interest expense	1,640	1,759	3,278	3,514
Class A 2017-1 EETC
Debt Instrument [Line Items]
Interest expense	591	634	1,182	1,267
Class B 2017-1 EETC
Debt Instrument [Line Items]
Interest expense	510	556	1,022	1,113
Class C 2017-1 EETC
Debt Instrument [Line Items]
Interest expense	1,092	1,092	2,171	2,171
Convertible notes
Debt Instrument [Line Items]
Interest expense	(3,024)	1,749	199
Convertible notes | Convertible Debt Due In 2025 And 2026
Debt Instrument [Line Items]
Interest expense	1,600		3,200
Convertible notes | Convertible notes due 2026
Debt Instrument [Line Items]
Interest expense		1,700		3,800
Amortization of debt discount	3,800		6,300
Offset of market-to-market adjustment	8,400		9,300
Convertible notes | Convertible Debt Due in 2025
Debt Instrument [Line Items]
Interest expense		1,700		3,827
Revolving credit facilities
Debt Instrument [Line Items]
Interest expense	0	562	0	1,733
Finance leases
Debt Instrument [Line Items]
Interest expense	$ 16	$ 24	$ 34	$ 48

XML

Label	Element	Value
Accounting Standards Update [Extensible Enumeration]	us-gaap_AccountingStandardsUpdateExtensibleList	Accounting Standards Update 2020-06 [Member]