Welcome to the Spirit Airlines Fourth Quarter 2011 Earnings Call. My name is John, and I will be your operator for today's call. [Operator Instructions] I will now turn the call over to Ms. Deanne Gabel. Ms. Gabel, you may begin.

Thank you, John, and thanks to all of you for joining us today, and welcome to Spirit Airlines' fourth quarter 2011 earnings conference call. Presenting today will be Ben Baldanza, Spirit's President and Chief Executive Officer; David Lancelot, our Chief Financial Officer. Also joining us are Chief Marketing Officer, Barry Biffle; Chief Operating Officer, Tony Lefebvre; General Counsel, Thomas Canfield; and Jim Lynde, Senior VP of Human Resources. Ben and David will discuss our fourth quarter results and current business trends. We will then open the call for questions from analysts followed questions from the media. Our remarks today during this conference call will contain forward-looking statements, which represent the company's current expectations or beliefs concerning future events and financial performance. Forward-looking statements are not a guarantee of future performance or results. Forward-looking statements with respect to future events are based on information available at the time those statements are made and or management's belief as of today, February 16, 2012, and are subject to significant risks and uncertainties that could cause actual results and performance to differ materially from those reflected in the forward-looking statements, including the information under the caption Risk Factors included in our 10-Q for the period ending September 30, 2010. We undertake no duty to update any forward-looking statements. In our remarks today, we [indiscernible] fourth quarter full year 2011 to fourth quarter full year 2010 results, adjusting all periods for pro forma items and excluding unrealized hedge gains and losses of special items. Please refer to our fourth quarter 2011 earnings press release for further details regarding our assumptions for pro forma results and for the reconciliations to the most directly comparable GAAP measure for non-GAAP measures discussed. Unless otherwise noted, when we discuss our results for the fourth quarter of full year 2011, we will be excluding special items such as restructuring and termination fees, loss and disposal of assets, unrealized mark-to-market losses on field hedges. Again, these special items, as well as our pro forma adjustments, are detailed in our earnings release. And now, over to Ben. B. Baldanza: Thanks, Deanne, and thanks, everyone, joining us on the call today. We finished 2011 with a strong fourth quarter. I want to thank all the hard-working Spirit team members for all that we accomplished, not only in the fourth quarter but throughout all of 2011. In 2011, we successfully grew our company, grew our customer base and once again achieved an industry-leading EBITDAR margin. During 2011, we successfully completed our IPO, which significantly improved our balance sheet, allowing us to focus our energy on finding innovative ways to further improve the business model and on delivering returns for our stockholders. For the full year, we grew our top line revenues by 37.1% to $1.1 billion and generated a pro forma net profit of $95.5 million, more than double our pro forma 2010 result, despite a more than 35% increase in our economic fuel price per gallon. Turning now to our fourth quarter details, our net income for the fourth quarter was $23.9 million, or $0.33 per diluted share. We achieved an operating margin of 13.8% and an EBITDAR margin of 25.8%. Total operating revenue increased 26.7% year-over-year to $273.9 million, primarily driven by increased passenger volumes and increases in both ticket and non-ticket revenue per passenger. Our load factor for the fourth quarter increased 1.1 points to 85.4%. We continue to be pleased with the performance of our routes and the rate at which our low-fare, transparent pricing model is attracting a growing base of customers. Speaking of a growing base, earlier today, we announced that we'll be adding new service to Denver, Colorado, starting May 3. New routes will include nonstop service between Denver in our four largest bases, Las Vegas, Dallas, Chicago and Fort Lauderdale. Our ancillary revenue per segment in the fourth quarter increased to over $48, up 15% year-over-year. We've experienced continued growth for many of our non-ticket initiatives. And as we've expanded into new markets, we have broadened the population base for ancillary offerings such as our $9 Fare Club subscription service, and our free Spirit affinity credit card program. Non-ticket revenue is a large part of what makes our business model successful. Together with our low cost structure, non-ticket revenues allow us to offer low base fares that attract price-sensitive travelers who, in turn, can then choose which additional options they value and want to pay for. There are both revenue and cost benefits to our non-ticket strategy. On the revenue side, non-ticket revenue is generally less seasonal than ticket revenue. It is less elastic to changes in price and less subject to price wars. In addition, though, non-ticket fees provide economic incentives that drive low-cost behavior. For example, when we charge for bags, customers bring fewer bags, which in turn, means less infrastructure is needed, and we burn less fuel resulting in lower costs. We are focused on continuing to grow our ancillary revenue which will allow us to push our base fares even lower and stimulate even more demand. But like many things we do, looking outside the industry provides a better inspiration and benchmarking for this aspect of our business. Keeping prices low for our customers is one of our primary focuses. We and other airlines and some industry organizations have joined together to appeal certain aspects of recently implemented Department of Transportation rules. On January 26, 2012, we were fully compliant with the newest set of these DOT regulations, while becoming more public about our opposition. With the tax inclusives, or so-called full fare rule, requires airlines to quote fares including government imposed taxes and fees. That upfront bundling obscures how much goes to the government, and how much goes to the airline even though taxes and fees can be broken out later. Nobody ever bought a ticket at spirit.com without knowing their taxes before making a purchase. Combining taxes and fares hides the enormous tax burden consumers pay for air travel, and makes it possible for the government to raise taxes that will appear to customers like an airline price increase. Sometimes these taxes are more than the fare itself at Spirit. The news media, and in some ways, the government have misinformed people by saying things like the price you now see is the price you'll pay, and there'll be no more charges at the airport. These statements are simply not true for most travelers on any airline. Only government-mandated taxes and fees are being shown in the upfront fare now. All airlines operating in the U.S. offer multiple optional services for a fee, for things like early boarding, bags, seat assignment, overweight baggage, pets and unaccompanied minors. These optional services will certainly make the final price different than this new first price seen. We've also introduced a DOT Unintended Consequences fee to initially cover the cost of the 24-hour hold rule. This rule, like much legislation, was put in place without taking the cost to consumers into consideration, a cost the government needs to consider when designing new regulations. I believe Spirit can and will compete effectively despite these new rules. Of course, we can never know how much our revenue would be increasing without these rules. Spirit's model has proven to be resilient through many external challenges. And although we strongly believe these rules penalize the consumer, I'm confident that we will overcome this burdensome hurdle as well. For the first quarter 2012, we are expecting capacity to be up 17.8% year-over-year, with our average days length down about 5% to 912 miles. For the full year, we expect capacity to be up 23% year-over-year. We ended 2011 with 37 aircraft and we'll be taking delivery of 7 aircraft in 2012. We have 7 aircraft scheduled for delivery in 2013 and 2014, with 10 coming in 2015. At the end of 2011, we announced an order for 75 new aircraft, 30 classic A320s and 45 A320neos, for delivery between 2016 and 2021. These additional aircraft provide growth capacity, as well as give us flexibility in our fleet plan to replace some of the aircraft in our current fleet, who have lease expirations between 2017 and 2020. Last week, we announced the opening of our new crew and maintenance base at Las Vegas McCarran Airport. Last Vegas provides an excellent central location for our West Coast operation, which we've been expanding over the past year. We continue to have regularly scheduled joint meetings with our flight attendants, supported by a federal mediator, and we are progressing with our negotiations. With that, I'll turn the call over to David to discuss our cost performance.

Thanks, Ben. In the fourth quarter, our total operating expenses increased $41.2 million, of which $24.8 million was due to higher fuel costs. Our economic fuel cost per gallon in the fourth quarter increased more than 29% year-over-year and our fuel volume increased 4.5%. Excluding fuel, our CASM increased 8.2% year-over-year, primarily driven by a shorter-stage length and an increase in labor expense, partly due to higher incentive comp and pilot training cost during the quarter. For the first quarter of 2012, we estimate our ex-fuel CASM will be up 5.3% to 6.2% as compared to the first quarter in 2011, with primary drivers being depreciation and amortization and maintenance cost. A shorter stage length has been mentioned as also contributing to the year-over-year increase. Our stage length will be down about 5.1% year-over-year in the first quarter. If you held the stage length constant, the first quarter 2011, our ex-fuel CASM would be up 1% to 2%. We have 28 aircraft and our fleet that will be delivered within a 33-month time period, and they are now approaching heavy maintenance cycle which has driven an increase in our depreciation and amortization or ASM. And as a reminder, we used the deferred method of accounting for maintenance, which means all of our heavy maintenance events will be amortized over the life of the cycle of the event. Maintenance expense is increasing because our fleet is aging, which is driving more unscheduled events. Just a few housekeeping items. Regarding the full year of 2012, depreciation and amortization is estimated to be approximately $20 million, which is an increase of about $13 million year-over-year due to those heavy maintenance events we just discussed. Aircraft rent is estimated to be $142 million in 2012. And turning now to fuel, we estimate that our first quarter economic fuel price will be $3.28 per gallon. Like we said before, our greatest risk -- our greatest exposure is fuel prices which is -- are inside our booking curve or close thereto, and to help mitigate this, we have layered on short-term hedges for the first quarter in 2012. We have approximately 41% of our first quarter hedged of our expected fuel volume, with copious [ph] collars. Additional details are in the investor update that we filed earlier this morning. Our cash position remains strong and we ended 2011 with $343 million in unrestricted cash. During 2011, we generated $171 million of cash flow from operations, of which approximately $73 million of that was related to the decrease in restricted cash levels given back by the credit card processors. 2011 was an exciting year for our company and we are pleased with the results that we were able to achieve. That said, we will continue to challenge ourselves to increase efficiencies and further lower our cost structure to maximize our results. With that, I'll give it back over to Ben. B. Baldanza: Thanks, David. As I've commented before, the Spirit model is different from most other airline models. Spirit is not for all travelers, and we don't pretend that it is. Our product is our price. For people who wish to spend as little as possible on their travel, we offer them the opportunity to save money with low fares, and only pay for the extras they want. It's that simple. As we grow, we remain committed to giving our customers the power to save by offering low base fares. We're also committed to growing profitably and delivering a return our stockholders should expect. With that, I'll leave it to Deanne.

Thanks, Ben and David. With that, we are ready to begin our question-and-answer session for the analysts. John, if you go ahead and queue the first question, please.

[Operator Instructions]. Our first question comes from Ray Neidl from Maxim Group.

Yes, basically, your announcement of new service out of Denver to 4 cities, does that have anything to do with a carrier that seems to be weakened in Denver? Do you see an opportunity there to help take out some competition there? And basically, it looks like you're building up Denver. Why did you put your new crew base in Las Vegas instead of maybe putting it in Denver? B. Baldanza: Well, Ray, this is Ben. We don't really look at other airlines when we decide what to do. We look for opportunities where we see the Spirit model can provide differentiation in the market, a lower fare point that maybe is currently offered in the market for the different product that we offer. And we saw Denver to these 4 cities as being open to that kind of new opportunity. So it wasn't the dynamics going on there, or the carriers operating there that drove it. It was the macroeconomic environment of the fare level, the cost of -- for travelers and an option that we didn't really feel they had in Denver. Denver's, starting out with 4 cities, and that's great, but we've been growing Las Vegas as well, and we're flying Las Vegas to Denver and we've been growing Chicago and Dallas as well, so Las Vegas was just a good central point to place crews to support the whole West Coast operation. That doesn't suggest what may or may not happen over time as the airline continues to grow, but they're kind of 2 separate decisions about the place to put the crews, and the Denver thing was all about the current economics in Denver to the 4 places we're flying.

Okay, and that sounds reasonable. Another thing is, you've been quite vocal on the new government taxes and rules and regulations, which is good, especially when you're in the right, which you are. But do you have to be careful about maybe picking a fight with your regulator, maybe it would've been better off working through the ATA, or they call it, Airlines for America now? B. Baldanza: Well, we're a direct seller principally, as you know, Ray. I mean, a large percentage of our travel books through our website and through our call center. And the frequent Spirit traveler travels a couple of times a year, doesn't travel a couple of times a month, like sort of a business frequent traveler might. So we felt it was very important to speak directly to our consumers about this change, because there was a pretty good chance when they came to our website, following the change, maybe that hadn't even been looking for travel for the last 3, 6 months or even a year. So we thought it was very important to be loud upfront, to let them know something has changed, our fares haven't gone up, there's a new way we have to display fares and that's what happened. We are in litigation with the DOT now, along with Southwest and Allegiant, and the arguments against this legislation that we've put in that lawsuit are documented in that lawsuit. We've said nothing to the public in terms of our -- the way we talk about this that is inconsistent with that. So we don't -- we've not done anything to try to sort of antagonize anyone. We're just putting our case forward through the courts. We did it through the, with the DOT and to our consumers, at the time of -- the law changed. We needed to let them know how things had changed, so they would know how to interpret our new fares.

Okay, good. That sounds reasonable. And then finally, correct me if I'm wrong, it seems like you're pulling capacity down in Fort Lauderdale. If that's the case, what are you doing with that? Is that some of the capacity you're putting into the West?

Well, we're not really pulling -- this is Barry Biffle. Hey, Ray. We're not really pulling capacity per se from Fort Lauderdale. There's a future remains [ph] that we've done, most notably last year. I think it's more just a situation we're not growing in Fort Lauderdale like we're growing the rest of our network. I think that's the better gauge. And the reality is, is it's just we see a better opportunity. Now again, Denver that Ben just spoke about, we are going to fly that from Fort Lauderdale, and we see opportunities from Chicago, Dallas and Las Vegas to Denver, as well as Fort Lauderdale, but we just don't see the growth rate at the profit margins that we believe make sense for us and our investors.

Ray, this is David Lancelot. I guess the whole -- to sum it up on whether it's Denver or Fort Lauderdale, we're flexible and we move aircraft where we make the most money, and that can be season in, season out. We're not enslaved with market share within any one market because we know that we can go put aircraft in the target hurdles that we've identified and generate, try to generate these historical returns with.

Our next question comes from Hunter Keay from Wolfe Trahan.

So, hey Ben, I'd like to get your take on hedging. It just doesn't -- hedging still doesn't seem like it's consistent with your strategy, and through the culture of your company, you guys do things differently, very contrarian in nature. Your ultimate goal is to keep cost down, I mean, you have more cash in your balance sheet than you even know what to do with. Why not use that balance sheet to absorb the risk and keep the premium cost off the P&L? B. Baldanza: Well, Hunter, since we've IPO-ed, and since the company's balance sheet has changed as a result, our risk profiles have changed in a couple of ways. And so now we do hedge, but we tend to hedge relatively short term out. If you buy a ticket from us today and the price spikes over the next week before you travel, we eat that difference, and that's where we don't try to protect against. But outside, sort of the next 90 days or 120 days or so, our ability to adjust our network with capacity or price are things -- is very high. So now we've changed our approach to hedging to basically protect the near-in booking curve and then mirror to that and -- because we know the business model is flexible enough to adjust beyond that, and that's kind of our hedging position today, and that's what we've laid in place and that's what we actively are sort of pursuing to get.

Okay. And as we think about the shorter stage length coming online in the first quarter, if we can assume that kind of runs through the year, your capitalization also comes down. Is there going to be a point where you're going to be able to increase the average number of daily turns? You're obviously a volume-driven model with the fees. As that stage lengths gets shorter, and maybe you can squeak out an extra turn or so out of each aircraft, should we maybe anticipate a proportionate sort of outperformance growth on the fee revenue as you can work in more turns to get more utilization out of the aircraft as the stage length decreases? B. Baldanza: Well, certainly, as the stage length decrease, the ability to get an extra turn could be created and that might generate some more ancillary revenue. What we try to do, however, is we try to generate the, you try to maximize the net income of the airline, which could mean shortening the stage, it could mean, we don't know for sure exactly for the rest of the year whether the trend for the first quarter is going to continue through. It's going to depend on some of the opportunities that come up. Fort Lauderdale, Denver, for example, which it is just now due to the longer haul than our average, Denver and Vegas is a little shorter than our average, so as we continue to modify the network and bring on the airplanes that are coming this year, the stage length will move in some ways, but not necessarily shorter. The way we look at the fee revenue, I -- is -- we don't have a particular goal at Spirit to raise the fee revenue with the non-ticket revenue. We have a goal to maximize net income, and so we will do things that try to raise the ancillary or non-ticket as we can, because we believe when we can trade off a $1 of base fare for $1 of ancillary, it's good for us for a number of reasons, like I mentioned in my talk on both the revenue and cost side. But we tend to look at total RASM and total revenue per passenger, which is their fare, plus their fees. And for the modelers out there, I would suggest that probably a better way to think about Spirit is what is total revenue per passenger, because as the ancillary moves, it's going to affect the way we think about what our base fare should be. So we kept thinking of them -- we can't think of them as 2 step separate things. And so at the end of the day, whether the stage got shorter and whether that would drive more ancillary, would have to be weighed against whether that's going to produce more money for the company than maybe keeping the stage the same and doing something different.

I would just add -- this is Barry Biffle. I would just add, Ben's exactly right. On the planning side, we just look at how much revenue and how much profit we get from the plane. And when we build out a line of flying, that's all we're looking at. It's really, the stage is almost irrelevant. At the moment, we do deploy the aircraft for the season, that's all it is.

Our next question comes from Jim Parker from Raymond James.

David, a question for you regarding the outlook for profit margins. Of course, you give us some pretty good capacity guidance and we're all looking to work down to the bottom line and you've shown nice margin improvement. What do you see over the next year or so as far as -- should we assume that margins will continue to improve if fuel stays where it is?

Well, Jim, I -- we don't -- we can't give you forward-looking guidance on profit margins, but what I can tell you is, and we've talked about this many times with many of you on the call today, and I'll reiterate what Barry has said and what Ben has said, we have an internal hurdle that we look at. And if you look at our historical margins, and if you look at the standard deviation of those margins, say from '08 to till now, that's the range in which we look for. So when you look at 2011, for example, we had a pretax rollup of 28.5% and an after-tax return on capital of 17.7%, and we'll file our 10-K and you can get the makeup of how we get that. But that's really what we're targeting for on a go-forward basis. So I can't tell you today, looking out in 2011, if we're going to experience margin expansion or compression. We don't know what fuel's going to do, and it has a lot to do with how we react. So that's how we look at the business. I'm sorry I can't tell you exactly what we're looking at in terms of profit margin in 2011 on a go-forward basis, but that's our 2012, but that's how we view the business. B. Baldanza: This is Ben, Jim. But as we've told you and some others on the call, we are very confident in our ability to grow the airline without compressing margin, because we've identified a number of opportunities well beyond our aircraft order where we believe we could deploy capacity, lower the fare by 25% from the prevailing fares in the market and be able to reach the kind of historical margins we've reached.

Okay. And David, one more regarding -- you're opening a lot of new markets, and how much does it cost to -- for you generally to open a new market?

New markets don't cost us a lot. Most of the cost is -- comes in the facility charge of wiring and prep for entering the physical facility. Other than that, we've been able to achieve cost concessions from the airports in doing that. So the initial investment to enter a market has been relatively low for us. In fact, on average, it's been between $50,000 and $75,000 per opening in terms of cash out of pocket for us. So that's why we see, that's partly and why we see such quick returns within a market, and how we're able to generate the type of returns we do, growing 20% even if it is with a new market versus adding density to an existing market. B. Baldanza: And Jim, let me add, we have chosen not to fly some things because we haven't been able to make the airport cost work. So we will -- it'll drive our deployment decisions based on the total cost structure, but -- and we don't have a tolerance to sort of invest in a market and give it a long time to return. We expect returns quickly. We think shareholders expect returns quickly, and that's the kind of discipline we put on our planning.

And what about promotional expenditures when you enter a new market? B. Baldanza: Nothing sells better than cheap fares.

Our next question comes from Bill Greener for Morgan Stanley.

This is actually John filling in for Bill. Barry, I was hoping you could just give us a quarter-to-date update on demand trends and what you're seeing? And have you seen any change in behavior out of American, post its filing?

Okay, I guess there's a couple of questions in that. So in terms of quarter-to-date, as Ben mentioned, we're really excited about what we've seen in the recent performance, obviously, in the fourth quarter and we continue to see that strength at the kind of -- these levels coming through. But as far as like American, specifically since they filed, we haven't been able to pinpoint anything specific like big avoidance to American maybe flocking to us kind of thing. I don't want to -- in the past, you've seen carriers file bankruptcy and a big avoidance of those carriers. But I think a lot of consumers now either don't pay attention to the fact that their carrier's in bankruptcy or it's not just as big a deal. But I'm sure it is hurting them to a degree. But we're not seeing anything abnormal. Now to be fair, we are positioning ourselves, obviously, to grow in those markets. So when you're in a big growth mode, you don't know in a new market out of a DFW, for example, when you're in Month 3 of a new market or you're in Month 6, well what would it have looked like, because they're just simply not mature, if that makes sense. But there's nothing specific we've seen. What we know, obviously, things are going well.

Okay, great. And Ben, and maybe Barry, just when we think about the long-term trends in the industry historically, one of the things that the industry has struggled with is continuing to raise price in excess of inflation. And when we just think about, Ben, the comments you made on the power of non-fare revenue, and we think about the very, very long-term trend in what non-fare per passenger could look like, is there a world where non-fare revenue per passenger grows every year in excess of inflation after you've got all these initiatives behind you, just because it's fundamentally more inelastic than other revenue sources? Or are there competitive constraints or maybe systems constraints, yield management constraints, that make taking up a $15 ancillary revenue fee to $15.45, or something like that just practically difficult and impossible? B. Baldanza: Well, it's a good question, and the -- raising ancillary revenues is a focus of ours. However, raising ancillary revenues in part to add stability to the revenue stream, but also in part to lower the base fare is very important, because that drives more stimulation. Also, as I mentioned in the script, there's -- we see a very powerful cost driver in ancillary revenues as well. When you give customers the ability to save money by saying, if I behave in a certain way, I'll get a lower price, we tend to see lower cost behavior from our customers or behavior from our customers that allows us to process them at lower cost and pass that on to them that way. So it's really both a revenue and a cost play when we unbundle more and when we find more ways to drive non-ticket, whether in the long term, it will allow us to sort of maintain sort of a total price base fare plus ancillary that beats inflation, I guess is still yet to be seen. However, our base fares move in some ways, proportionate or as a function of how the ancillary moves. If ancillary grows more, or grows more quickly, we can have more leverage with base fare. If the ancillary doesn't grow as fast, the base fares won't move as much either. So we're really, again, like I said little earlier, we tend to manage to total revenue per passenger, and how that's split between ancillary and base will be a function of what we've been able to think of, and what we've been able to put in place.

I might just add to, this is Barry, in terms of Spirit and you think of Spirit uniquely, I wouldn't give the industry this, but when you think about non-ticket exceeding inflation, Spirit has 2 unique advantages. One, we talked about a moment ago about being a direct seller. Being a direct seller allows us to sell other parts of the travel. So when you think about your airfare being 1/3 or less of the total expenditure, the more we can sell of those other things, hotel, car and so forth. We can actually, not necessarily charge the customer any more money, they may not pay any more money, but we can actually generate more money. So that would actually exceed inflation. And then secondly, when you think about Spirit, and this is something unique to us, because we're not that big yet, and we don't have that much scope, take the Denver announcement today. If we have Fort Lauderdale, Chicago, Dallas, Fort Worth and Las Vegas, our 4 largest bases, we get added flights in and among those cities, and it wouldn't have generated one more $9 Fare Club member, 1 more Free Spirit card holder. But by adding Denver we add a major metro to city and that delivers it. So that -- those 2 things differentiate Spirit and our equity and it allows us, I think, to kind of exceed your inflation to your point. It makes us unique.

Our next question comes from Mike Linenberg from Deutsche Bank.

Just with respect to your capacity growth plans, you broke it out by quarter which is great, you can see that it accelerates through the year. How does that tie to the aircraft delivering per quarter?

We've got -- the delivery schedule is as follows. In the first quarter of 2013, or I'm sorry, 2012, we have 3. In the second quarter, we have 2, and these are all A320s. And then we have 2 more in the fourth quarter.

Okay. So it's 3, 2 and then 0, and then 2 in the fourth quarter?

Correct.

So then, if, just looking at this, is it -- I mean, I know you're going to be down 5% on the stage in the first part. As we move to the latter part of the year, is it higher utilization, i.e. through either more turns? Or do we maybe see this stage length stretch out a bit as we get to the latter part of the... B. Baldanza: It's 2, let me add 1 more. It also -- you've got 2 aircraft that delivered late in the fourth quarter of 2011. You're getting the full year impact of those aircraft as well. But then just due to the maintenance schedule, that's why you're seeing the acceleration because it's all geared towards offpeak, offpeak time.

Okay, great. And then my second question, this probably for Barry, as you build out the domestic network, you just recently added Phoenix. You launched -- you're launching a crew domicile in Vegas and then you announced Denver today. Clearly, it seems like your -- the density of your route network is kind of allows for more connectivity. Where has your connectivity been historically? And I know you've always had pretty good connectivity over Fort Lauderdale down to Latin America, but where is it, where is it sort of now and where do you think it heads? And as it, it's -- let's assume that it does increase, do we, does it start putting some downward pressure on total revenue per segment, which not, is not necessarily a bad thing, if you're driving a lot more segments, but is that some trend that we could see play out? How do you -- what can you say about that?

When you think about connections and really more one-stops, it -- so historically, we've been in the mid to upper single digits of our passengers are connecting itineraries, and we've talked about that a lot. That's been driven principally by -- I mean almost exclusively by Fort Lauderdale. There's a few kind of if you looked in you can go with the public data and see like, we've flown like, Boston, Myrtle, Myrtle, Fort Lauderdale. With some one-stops like that, that create more connections, if you will. But you're going to see more like that, where it's going to just be a one-stop, but we're not really building connections. I mean, if you look at the announcement today, I think we disclosed, we're going to connect Denver to 29 cities, but I can't imagine -- again, this is pure speculation, but I can't imagine that it would be any greater than -- it's going to be less than Fort Lauderdale, because we're simply not going to schedule, and there's no density of the schedule there. You've only got 6 flights. So you're just not going to build the connectivity that we've built in the gateway. So while we may have some one-stop flights in the itineraries, and you can talk to Tony, I mean, there was a question, a little discussion earlier about -- is Las Vegas is the right place, we really love Las Vegas because of the way that the planes get routed, and we can create some one-stops that actually are really good for the crew and so forth, and those will build some connections, but you're not going to see a growth of connections by the company. B. Baldanza: Mike, this is Ben. Let me sort of genericize that point, if I can a bit. One of the reasons that we're bullish on our growth, and one of the reasons we're confident in our ability to grow again, without margin compression is that we believe we can grow the airline without compromising the business model in any way. We don't believe we have to join an alliance, we don't have to change the way we sell the airline, we don't have to bring out a new airplane type and we don't have to change sort of our ratio of connect versus non-connect and have to start compromising aspects of the business model that drive the low-cost, the high productivity and the high utilization. And the way we've been growing the business, and with that adding of Denver and Vegas, and [indiscernible] at that, it doesn't change any of that. So the Spirit you see in a couple of years from now, structurally, should look very similar to the Spirit that you see today, in terms of high utilization, high productivity, low connectivity.

Perfect. And I just -- when I saw the press release today, it does definitely help your marketing as you enter that market to see that 29 connections to lots of different cities. But I guess, if anything, it's connections by accident, and that's a great model. B. Baldanza: And we'll be pricing 29. And it helps our frequent-flier program, but it's not a core part of our business.

Our next question comes from Duane Pfennigwerth from Evercore Partners.

On your non-ticket revenue in 4Q here, it feels like maybe you realized about 1/2 a quarter's impact from the increase in your passenger usage fee. Just wondering if there is any reason you wouldn't realize the full benefit here in 1Q. B. Baldanza: That's pretty astute of you, Duane. So no, that's absolutely right. It was implemented and we've disclosed, we don't disclose it constantly. But if you take our booking curve, and when we announced, yes, we did not see the full benefit of it, and you'll see that continue to grow as a result of that in the first quarter.

And do you still plan to go live with the boarding pass fee in 1Q? B. Baldanza: That is live now. That started a couple of weeks ago.

That's great. Just a network question. Vegas looks like it's about 10% of your network, I think, this quarter. How large of a base do you envision having there, over time? B. Baldanza: When you say how large, are you counting ASMs, departures...

Just relative to your scale today. B. Baldanza: It's really going to depend, Duane, on the opportunity cost to the airplane. Again, every new deployment that we have is a new shortation [ph] of the opportunities where that airplane going to make the most money, and if the most money's going to be made in adding a city, Las Vegas, that's what we'll do. If it's Fort Lauderdale, that's what we'll do, if it's a city not in our network yet, that's what we'll do. And so it's really going to be a function of, as capacity comes on line, and as new deployment opportunities become available, what's the next best place to put it. So we can't say exactly how Vegas will grow versus anywhere else in the network at this point, until the -- until we get closer and closer to growth, and then we see, near more near term, where is the growth is going to be?

Okay, appreciate that. And then just lastly on the fare increase activity last year, I think you took some, or participated in some increases in the March quarter last year. As we think about seasonality into the March quarter this year, can you just remind us when those fare increases really impacted your revenue? Because it feels like that would've been more of a 2Q impact based on the increased activity in the March quarter? B. Baldanza: Those started in January, so there was, I guess, some of a -- impact. But there was impact to the first quarter. I mean --because they did start back in January. It wasn't a late -- I mean it wasn't on March, right? Because those were -- there was a series of them, if you recall. It was basically almost every week for starting in January. And actually, it started -- some of them started back in December of 2010. But yes, there would've been a greater impact from the second.

Our next question comes from Helane Becker from Dahlman Rose.

So I just have a few questions. One, on just on the way we should think about the aircraft that are coming in, are they going to be -- now are you in a position to take more owned aircraft versus leased aircraft, and are there things you can do with respect to the -- to get the tax rate down?

We're going to continue to look at how we finance the aircraft. I will remind you that the 3 aircraft in the second quarter, or the first quarter and the 2 aircraft in the second are already financed with operating lease sale leaseback transactions. We are going to look to finance the 2 in the fourth quarter and then into '09, and we're going to look at all of our options. So yes, there is an opportunity to do that. Given the fact that, and then Ben mentioned this post the IPO, the profile of Spirit's balance sheet is significantly improved, and I think that there's avenues to take advantage of financing, both on the sales leaseback side and the debt side. So we'll continue to monitor that, and look at that. But it's just too early to tell what we'll finance out in the fourth quarter in 2013 at this point, or how we'll finance it.

Okay. So it's more, I mean, the bottom line is, is it's more a 2013 event, right then. And --

Yes. And look, we're going to look to do whatever is the cheapest cost of capital for us. So we'll continue to monitor it.

Okay. And then my other question is, do you -- like at Fort Lauderdale, where -- which is I guess is as close to a hub as you would have in your system, would you base a significant number of aircraft there? Or do they all just kind of run through the system, going from city to city?

This is Barry. So when you say base, you mean overnight?

Yes, I guess that's more of a question. Like, should I think about Fort Lauderdale as you have 50 aircraft going through there every night, whatever, 30 aircraft going through there every night versus 1 or 3 in Las Vegas, or should I just think about it as being well, no, you don't really do that. The aircraft are just where they overnight.

This is kind of a nuance to Spirit. It's like of like Ben taking the comment of -- it's totally non-ticket, let's look at just total revenue per passenger. The nuance of Spirit with -- as it relates to basing the aircraft, is we don't really think about basing them anywhere. The only thing that it's anchored to, is where we do the maintenance. And in this particular case, what we look for is the natural places that an airplane wants to terminate at night, and where it wants to originate. And we only need 1/3 of the aircraft to have maintenance. So what we look to do is either maintain them or fly them. But they don't sleep anywhere, really, without being maintained. And so, Fort Lauderdale, while we do a few of them, it's not a big concentration of where the planes are overnight. B. Baldanza: Fort Lauderdale, as a location, tends to be a bit more destination than it is origin also, which would also suggest we don't want a whole bunch of planes here first thing in the morning.

Got you, okay. And then, can I just ask a question about choosing -- you talked a lot about choosing Denver and where the next best place is for your aircraft, and obviously, a lot of opportunity versus aircraft. But you sort of have some hold in Latin America that you could presumably sell in Northern South America, that seem to be opportunities. Can you just discuss how you decide a Denver, a Las Vegas versus a Cancun or, I don't know, Mexico City or something like that? B. Baldanza: It's really simple, Helane. It's literally a forecast of what we think is going to generate more profitability for the airline. And if we thought that another Fort Lauderdale, Cancun or a Phoenix to Cancun would do better than a Denver to Las Vegas, then that's exactly what we would've added. But we don't put any emotion around dots on the map, number of flights from the city or anything like that. We literally sort every flying opportunity, project what revenues we think we'll generate from that, project what the cost will be, including how the crews will rotate, how the airplanes will rotate, how the maintenance's going to get done and everything, and we'll deploy the opportunities that we think make the most sense. And so there's nothing about -- there's nothing beyond net profits that drive the strategy of where to go.

But having said that, one thing, Helane, I mean we focused on Denver because of today. But last week, we did announce DFW to Tampa, and we also announced that we filed for DFW to Mexico City, the Toluca Airport. So there is some, it might have gotten missed, but we're in every country in Central America now, with the exception of Belize, and we fly to as many cities in Columbia as any other carrier. We're in Lima, and we also have recently filed to serve Ecuador as well. So we're -- I think we're still thinking about it. But again, like Ben said, at any given moment, we're going to file where the plane's going to make the most money at this given moment. B. Baldanza: The way we see it, our biggest hole in Latin America is Venezuela, where we don't have regulatory authority to fly.

Our next question comes from Gary Chase from Barclays Capital.

I wanted to say just a quick miss first, and then I got a couple, the -- wondered if there were going to be any operating disruptions from the runway construction in Fort Lauderdale? I think if memory serves, that's an April event? B. Baldanza: Yes, we're working with the airport on that, and the Terminal 4, where we operate is going to change as a result of the runway being built. The airport is giving us assurances that throughout the building, they will maintain capacity, but it's certainly going to affect our operations in some ways. But we're working with the airport through that transition, and we support the airport in its overall road plan, certainly.

Okay. But should we be thinking that the year or the metrics might behave a little bit abnormally in that period, or...

Okay, this is Tony. We're going to be losing 2 gates for the construction, but we have an alternative. We're going to be moving to Terminal 3. So I don't anticipate any operational disruptions as we go through the construction phase. It's been well planned out, and we have all the infrastructure we need to be able to support the growth of the -- near the building of the runway.

Okay. And I'm right about that time frame, right, Tony, though?

It's starting in July, is what it's scheduled for right now. It's when we would see the first impact, but that's the first preliminary run of the construction schedule.

Okay. And then, if I could ask Barry to help a little bit with the just the development of some of the new markets that are flying out of Chicago, and I'm thinking, New York, Detroit and Dallas, so you've got a little bit of experience there under your belt. Maybe you could talk to us about how those have spooled up versus your experience with some of your other destinations historically.

I don't think there's just one route, we won't get into specifics, and actually it's not one of the ones you mentioned, but there's only one route last year that we started out of the whole year that fell below expectations. So as far as those routes, we're very pleased with it. We've discussed this a lot, but these markets have done well. When we started them, they've reacted very well. And quite honestly, we're now -- not this quarter, but in the second quarter, as you know, those are the kinds of routes that you're going to really see a big benefit in the second and third quarters of the year. So I think we're still kind of -- those routes have not even seen their best days yet.

Yes, and Barry, I'm -- understood that they're not below expectations, but can you say whether or not -- I mean, are they -- were the expectations -- did you think it would take longer to spool? I know I'm just trying to get grounded in how some of that stuff is going -- feels a little bit different than the core of what you've done in the past? B. Baldanza: No. Although but again, this is Ben. No, we actually have pretty high expectations about what a market should do. When we go into a new market, we lower the fare from the prevailing fare. We choose that fare generally because it's lower than the prices in the market, so we set those prices where we believe we can be successful out of the gate. And we expect things to work pretty quickly. And we wouldn't have a difference -- a difference, I'm thinking about a Chicago market versus anywhere else for that.

Okay. And, Ben, any milestones that you can point to on the flight attendant side? B. Baldanza: Only the milestone of continuous negotiation. We've had -- we've, since our last call, we've had several, a couple of meetings, where more issues are being worked through and we see a generally collaborative nature of things in terms of trying to get something done. But we're not there yet, and there's more sessions scheduled, and we see an acceleration in the scheduling and we think that's really good. So beyond that, we see the process working the way it should.

Our final question comes from Hunter Keay from Wolfe Trahan.

So, I'd like to get your take on what you saw in the demand environment in 2011 after your IPO versus what you expected to see, and what the key differences were? I mean, I know you guys like to talk about PRASM, not to your RASM, but your yields did increase 13%, 2Q, 3Q, 4Q on a year-over-year basis, which is currently far above my own expectations. Have you found that you have more pricing power than you originally thought you would, and how much of that is attributable to the demand environment overall, versus the nature of your network?

Well thanks, John, this is Barry. If you think about we did last year, I mean we, clearly, we significantly outpaced what the industry did and I think that's where a lot of the surprise came from. But a lot of that had to do with, yes, there was some strength that everyone saw in fares, but we made a major change to the network in 2 phases. One of them was principally concentrated on the second quarter, which made the expansion into DFW and the Vegas starts. And then the third quarter, we shifted even more to Vegas, as well as Chicago, kind of the markets we just talked about with Gary. And those 2 moves were made not just from the growth of the aircraft, but also we did shift some capacity out of Florida, out of the Caribbean in some cases. And that, to Ben's point, that he kind of beat the drum on 4 or 5 times on this call, and I'll beat the drum again for you, we move airplanes where we think we can make money, and the most money, at any given moment in any given season. And we saw an opportunity in those markets, especially in the second and third quarter environment which those markets kind of really benefit, and that's what drove a lot of that. So were we pleasantly surprised that it did even better than we thought? Sure, but that's really what drove it, it was the network changes that we did, and that gets to the flexibility of our model and we're going to change our network as we see opportunities appear. I always want to say that we're the goal of more market.

We have no further questions at this time. This concludes the analyst Q&A. [Operator Instructions] To all other participants, thank you for joining us today. You may all disconnect.