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Spirit Airlines' CEO Discusses Q2 2012 Results - Earnings Call Transcript

We increased our operating margin by 1.5 points year-over-year to 16.3% and achieved an EBITDA margin of 27.6% for the second quarter. Over the last six quarters, we have achieved our target of growing the business 15% to 20% per year, without depressing our margin and we are confident we continue to do so for the next several years.

I want to thank the hard-working Spirit team, for their contribution to the success. Thanks to the efforts of everyone from the front-line to the flight maintenance crews, to our back-office, Spirit is a profitable, successful airline and I'm pleased to be part of your team.

Total operating revenue increased 25.5% year-over-year to $346.3 million on a capacity increase of 16.5% and a total operating yield increase of 9.1% year-over-year. Our ancillary revenue per passenger segment in the second quarter was $51.47, up 18.6% year-over-year, primarily due to per segment increases, in passenger convenience fee and bag fees.

We believe there are many opportunities ahead to expand the source of revenue. During the second quarter 2012, we launched nonstop service on ten new routes and last week we announced even more new city pairs that we plan to liberate from high pairs, including eleven new route that of Dallas/Fort Worth airport, bringing our total cities to be served for DFW to 26.

We continue to see smart value conscious consumers respond favorably to our low fares, as evidenced by both our new and mature markets performing well. This ongoing expense of the network is proving excellent for our margins, but it is also creating some cost pressures that Ted will comment on his remarks.

Looking ahead, we expect capacity to be up 22% year-over-year in the third quarter with our average state links down about 2% year-over-year to 890 miles. Fourth quarter capacity is expected to be up 30.2% with full-year 2012 capacity up 21.6%.

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