DeAnne Gabel - Senior Director-Investor Relations Ben Baldanza - President, Chief Executive Officer and Class III Director Edward Christie - Chief Financial Officer & Senior Vice President

Duane Pfennigwerth - Evercore ISI Savanthi Syth - Raymond James & Associates, Inc. Michael Linenberg - Deutsche Bank Securities, Inc. Helane Becker - Cowen & Co. LLC. Julie Yates - Credit Suisse Securities David Fintzen - Barclays Capital, Inc. Joseph DeNardi - Stifel Dan McKenzie - Buckingham Research Stephen Trent - Citi Steve O'Hara - Sidoti & Company Andrew Didora - Bank of America Hunter Keay - Wolfe Research David Simpson - Barclays Michael Derchin - Sterne Agee CRT

Welcome to the Third Quarter 2015 Earnings Conference Call. My name is Ellen, and I'll be your operator for today's call. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session. I will now turn the call over to DeAnne Gabel. Ms. Gabel, you may begin.

Thank you, Ellen and welcome to Spirit Airlines' third quarter 2015 earnings conference call. Presenting today will be Ben Baldanza, Spirit's Chief Executive Officer; and Ted Christie, our Chief Financial Officer. Also joining us for the Q&A session today are Thomas Canfield, our General Counsel; John Bendoraitis, our Chief Operating Officer; Ted Botimer, our Senior VP of Network and Revenue Management, and other members of our senior leadership team. This call is being recorded and simultaneously webcast. A replay of this call will be archived on our website for 60 days. Today's discussion contains forward-looking statements that 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 and are based on information currently available and/or management's belief as of today, October 27, 2015, and are subject to significant risks and uncertainties that could cause actual results to differ materially from those reflected in the forward-looking statements, including the information under the caption Risk Factors included in our Annual Report on Form 10-K and Quarterly Reports on Form 10-Q. We undertake no duty to update any forward-looking statements. In comparing results today, we will be adjusting all periods to exclude special items. Please refer to our third quarter 2015 earnings press release for further details regarding our assumptions for the reconciliation to the most directly comparable GAAP measure. And with that, here is Ben.

Thanks, DeAnne and thanks to everyone for joining us. I want to start by thanking our team members who contributed to our record third quarter results. Despite a very challenging revenue environment our team used lower cost to deliver high returns, which emphasizes the resiliency of our model. For the third quarter 2015, we reported net income of $97.3 million or $1.35 per diluted share and a pre-tax margin of 26.9%, an excellent result especially considering our average total fare decreased 13.1% year-over-year. The competitive environment has been getting justifiable attention recently and before we go into particulars for the quarter let me briefly comment on that. In some of our markets we continue to see very low prices from all competitors, including legacies. We think that may continue, perhaps for longer than people expect. At Spirit we will continue adjusting to market conditions while keeping foremost in our mind our company’s long-term future and competitive advantage. We have steered Spirit through some diverse challenging environments over the years, fuel spikes, a global recession, various competitive capacity incursions, a labor strike, and also some more recent times when conditions allowed us to perform to the upside. Through all of those periods we have made continual adjustments, but we have avoided knee-jerk gyrations in reaction to current conditions. Instead we have taken an active approach while keeping a focus on what will allow us to compete effectively in the longer term, keeping costs low, improving reliability and offering great low prices to the many people who need them. I will share a few thoughts in my closing remarks regarding how we think about our long-term strategy and what that might mean in terms of earnings. Now back to our third quarter performance, the decline in total revenue per passenger segment for the third quarter 2015 was primarily driven by a 20.8% decrease in ticket revenue per passenger segment. The decline in ticket revenue per passenger segment was attributable to lower fare levels in our markets, driven by increased competitive pressures, as well as a higher percentage of our markets being under development compared to the same period last year. Non-ticket revenue remained stable, declining only 1.2% year-over-year on a per segment basis of $53.39. The decrease in non-ticket revenue was primarily attributable to the outsourcing of the company’s onboard catering to a third-party provider under a revenue share agreement as well as slightly lower bag revenue per segment. These declines were partially offset by higher per segment convenience charges compared to the same period last year. Total revenue per ASM decreased 17.5% year-over-year. About 40% of the RASM decline was attributable to the ramp of our growth, and about 60% driven by price compression in a number of our markets. As for operations, our system wide controllable completion factor that is excluding weather-related cancellations was 99.4%, and our on-time percentage averaged about 70%. In the third quarter we launched service between Los Angeles and Baltimore, Kansas City and Atlanta, and between Atlanta and Boston and Fort Myers. We are very pleased with the performance of the new routes launched so far this year. Thus far in 2015 we have added service on 38 new routes and next year we are planning to add about 20 new routes. About half of our capacity growth next year is attributable to the run rate of new markets launched in 2015. With that, here's Ted to tell you about our great cost performance in the quarter, low cost matter, and no one is more focused on low-cost than Spirit.

Thanks, Ben. And again, thanks to all of you for joining us today. I want to thank our team members for doing a great job managing costs, and keeping us on track to deliver full year 2015 CASM ex-fuel down approximately 6% year-over-year. For the third quarter 2015 CASM ex-fuel decreased 9% year-over-year to $0.0539. Compared to the third quarter last year the decrease in CASM ex-fuel was driven primarily by lower aircraft rent per ASM, and lower labor expense per ASM. The decrease in aircraft rent per ASM was driven by a change in the mix of leased and purchased aircraft. As the company increases its percentage of owned aircraft, we will continue to produce lower unit costs associated with our fixed aircraft expense. Labor expense per ASM in the third quarter 2015 was lower compared to the same period last year primarily due to scale benefits from overall growth and from larger gauge aircraft. As of September 30, 2015 we have spent approximately $99 million of the $100 million share repurchase authorization approved last December, repurchasing approximately 1.5 million shares, and our unrestricted cash balance as of September 30 was $749 million. As mentioned in our earnings release this morning, our Board has authorized the company to repurchase up to an additional $100 million in value of Common Stock. We ended the third quarter with 76 aircraft in the fleet, including three new 228-seat A321 aircraft, which delivered during the quarter. Also during the third quarter 2015, we issued our inaugural EETC in the amount $576.6 million. Proceeds from this EETC will be used to finance three aircrafts scheduled for delivery in the fourth quarter of 2015 and 12 aircraft scheduled for delivery in 2016. Turning now to our fourth quarter 2015 cost guidance, we estimate our fuel price per gallon for the fourth quarter will be $1.66, protected approximately 23% of our fourth quarter volume using out-of-the-money jet fuel call options, which allow us to participate 100% in the movement down in fuel price. More details will be provided in the investor update filed later today. Capacity is expected to be up 31% in the fourth quarter for an increase of 30% for the full year 2015. For the fourth quarter 2015, we estimate our CASM, ex-fuel, will be down approximately 5.5% year-over-year with the largest drivers of the decrease coming from lower aircraft rent per ASM and capacity increases Outpacing increases in salaries, wages and benefits. Partially offsetting these benefits is higher depreciation and amortization, driven by accelerated depreciation of heavy maintenance events related to lease aircrafts scheduled to return to lessors beginning next year. This pressure will be a headwind throughout 2016 as well. We aren’t yet prepared to give CASM ex-fuel range for 2016, but I will discuss the puts and takes. First, it should be noted that only a minority of our non-fuel costs are indirect, and thus benefit from increased scale. This is why running a good airline is so critical, and why we so intensely manage the indirect overhead expenses. Second and primarily for that reason there is no linear correlation between the percent of capacity growth and the change in ex-fuel unit costs. We describe 2015 as a step function year for CASM ex-fuel. Contributing to this were several initiatives achieved in late 2014, which had a full run rate benefit in 2015, including a modified and extended credit card agreement, a revamped [Indiscernible] spare part supply and repair agreement, and the benefits from renegotiating and extending leases on certain aircraft and engines. We will continue to benefit from those initiatives in 2016, that their value is already included in the run rate from this year. We are currently targeting capacity growth to be approximately 20% next year. While lower relative utilization puts overall pressure on unit cost economics, it should help us to improve our operational reliability. The benefits of running a better operation should mitigate this cost pressure. In addition to the accelerated depreciation related to the aircraft returns I mentioned, next year we will also have cost headwinds from return conditions related to these aircraft, which will show up in the aircraft rent line as supplemental rent. As for tailwinds, we will see additional benefits of bringing more aircraft on the balance sheet, and we will see continued benefit from overall growth and growing those larger gauge aircrafts. In conclusion, even though we anticipate the year-over-year percent change in CASM ex-fuel for 2015 to be non-repeatable and we face considerable headwind pressures, I remain confident that the trajectory of our CASM ex-fuel will continue to be stable to declining throughout our growth cycle. With that, here is Ben.

Thanks, Ted. In an investor update last week we previewed that we were lowering our revenue forecast for the fourth quarter. Prices in the markets we serve are low and we don't expect that to change in the foreseeable future. Based on our view of October and bookings for the remainder of the year, we expect the year-over-year unit revenue decline in the fourth quarter will be greater than the year-over-year unit revenue decline we experienced in the third quarter. Together with the cost estimate that Ted provided, our guidance for fourth quarter operating margin is approximately 17.5%. Regarding the full year [2016], we are still working through our plan for the year and don't have specific guidance to share at this time. We are anticipating that from a pricing perspective the first quarter will look a lot like the fourth quarter, and we won’t lap the price structure changes we experienced in the summer until the second half of next year. This could indicate that we will make less money next year than we did this year. It is just too soon to know for certain. Are we reacting to this environment? Yes, of course we are. However, we believe it is in the best interest of our shareholders to use a scalpel versus a chainsaw such that we maintain the long-term value of our franchise. Our long-term goal is and always has been to be a high growth carrier earning mid-teens margins and delivering high returns. Clearly as we have demonstrated, we will take advantage of short-term opportunities to earn margins higher than mid-teens when conditions permit. However at our core we are an earning story, and growth is a great lever for us to increase earnings over time. You could imagine a set of circumstances, where our margin percentage would be higher as a smaller airline, but our math suggests that drive significantly less overall earnings, which is not in our shareholders interest. Just because we can earn margins this high during favorable periods, it does not mean we are going to say no to growth opportunities if we can deliver margins in line with our long-term story. Our costs are lower than ever. Our planes are full even with others matching our fares more aggressively, our addressable market has grown, and we have improved our customer’s understanding and acceptance of our business model. We remain focused on leveraging the strengths of our business model while offering the lowest fares in the marketplace. In any economic environment, there is a segment of customers that demand the lowest price and we have built our model to uniquely serve that segment profitably. Now back to DeAnne.

Thank you Ben and Ted. Ellen we are now ready to take questions from the analysts. We do ask that you limit yourself to one question with one follow-up. If you have additional questions you are welcome to place yourself back in the queue and we will allow for additional questions as time permits.

Thank you. [Operator Instructions] Our first question is from Duane Pfennigwerth with Evercore ISI.

Hi, thanks. Good morning.

Good morning.

Regarding the lease returns, can you just remind us, the number and type of aircraft that you plan to return in 2016, and if that plan changed over the course of the last 3 to 6 months, or in other words did the number of aircraft you plan to retire next year increase?

Hi, Duane. It didn’t change. We plan to return – there is three airplanes going back in 2016. Those are all 319s. There are also aircrafts. You can see this on our schedule online. There are some airplanes that start returning in 2017, and the way we evaluate lease returns is over a broader calendar window than just 12 months. So we are always kind of looking forward beyond that and so it is a mix of what is happening next year as well as the year beyond, and maybe a little bit beyond that too.

Okay, and then Ben can you just remind us what your average frequency is in the large markets that you serve, and as the model has evolved, have you been tempted to increase your frequency advantage to be more relevant to maybe the business traveler or as a competitive response?

Duane I don't have that exact number, but it is – it is about – it is 1.0 low. It is a little over for the segment. There is only I think – I think that is only a single market that we fly over twice a day, or maybe a couple of markets – just a couple of markets twice a day, two or three. We have no interest in increasing frequency as a broader strategy. We size our markets based on what we think we can stimulate with lower fare. We add capacity to meet that demand. And generally that is what we want to serve in the marketplace. That means some markets are large enough that they justify more than a single frequency, but that is usually from the outset. So as we grow we are likely to add more – do what we do in more places but not do it more in the places we already are.

Thanks and then just lastly, as you look at, bundling initiates in the industry where they are kind of unbundling their products with some new technology and offering, at a low fare price point, have you considered going in the other direction and perhaps offering a higher fare with some of the ancillaries bundled and thanks for taking the questions?

Thanks Duane. We have looked at different ways we can sort out merchandize our fares to customers. We like the full choice approach that customers can choose to pay for what they use and not pay for what they don’t use. However, if we could find ways for them to select common features more easily, we would certainly look to that sort of thing. But we are not fiercely looking at a world where we would charge, a fully bundled significantly higher fare just for customers who might want everything in the [palate]. There is actually very few customers who buy everything that we sell. The advantage of our model is they pick and choose what they want.

Thanks Ben.

The next question is from Savanthi Syth with Raymond James.

Hi, good morning. Just I noticed on your components of pricing pressure this quarter, you mentioned that the – I think the low pricing environment was about 60%, what Dallas not a part of that. I know in the past you provided Dallas as a component of that, has kind of the pressure from other capacity additions in Dallas now kind of gone away?

Dallas is included in that 60%. But we have decided not to break Dallas out anymore as part of the overall price pressure for a couple of reasons. We have not grown Dallas since 2013, and we are actually a smaller percentage of Dallas today in the city than we were a couple of years ago as a result of, the two largest carriers in Dallas have grown individually greater than Spirit’s capacity in the last two years. And as we grow in other areas Dallas becomes a little bit smaller percentage of our total. So we are looking at sort of a price dilutive environment across the US and we just bundle that all into one thing. There is no particular shining star looking at Dallas.

That is helpful. And then just as the kind of the ancillary components, should that then be subsiding here as we got into kind of fourth quarter and beyond just as the outsourcing portion starts to anniversary here?

Yes, once we lap that structural change to outsource the catering, we will lap that and that will be helpful. We continue to see ancillary as an important piece of our business that is a strong and largely stable segment of the revenue stream even while the ticket prices are volatile, and we continue to look at initiatives to help that side of the business.

And one last question, just a follow up to that first portion, the new routes, have you seen a difference, I mean historically I think when you guys provided the table it looked like maybe new route margins were, somewhere around kind of 10 percentage points lower than kind of mature routes, is it – does that still hold and is that the kind of tailwind we can expect next year?

Yes, that absolutely holds in terms of the new route development. The new routes that we added in 2015 are spooling very well, and consistent with what we have done in the past.

All right, great. Thank you.

The next question is from Mike Linenberg with Deutsche Bank.

Hi, good morning everyone. I have two questions. Ben, you mentioned that some of the pressure was due to the percentage of markets under development, I'm not sure if you gave that number, what is that this quarter and what was that number a year ago?

We said that about 40% of the current RASM decline is due to our own market growth and 60% due to price compression in other markets.

No, but what percentage of your ASMs are under development this year and what was it last year?

It is about 30% this year and last year it was around 20%, 21%, 22%, something like that.

Perfect. And then just my second question, you talk about improving reliability and over this last quarter, I mean the numbers were better than what we saw in the prior quarter, and I know the prior quarter you had a lot of weather, but when you look at sort of where you stack up relative to the industry, you are still – you are still down at the lower level, and I am curious about what that impact is on a cost and revenue basis. I know Ted indicated that 2016 maybe a potential good guide would be just running an improved operations and that could mitigate some of the cost pressures. I mean, what do you think like even in this quarter alone, what points of CASM ex-fuel or even points of RASM since I'm sure there is probably some associated reaccommodation cost that is weighing down on your numbers or weighing down on the revenues?

Yes, let me give a generic answer, then Ted can talk specifically about how the numbers might be affected, but the thin nature of our schedule as we talked about in one of the earlier questions creates a bit of a challenge when there is tight weather or other issues going on, and we run a very high utilization model, and high utilization model, flying the planes many hours a day, generally more than our competitors allows us to offer lower fares more profitably, but it puts pressure on things and what we need to do and what we believe we can do is get better at running – maintaining high utilization although maybe a little lower next year than this year, we are thinking about that now in terms of that balance, and we believe that we don't have to completely sort of throw out the operation in terms of running a high utilization low fare model. We think we can balance it a little better and that is what we are working on for our 2016 plan. I don’t know if Ted wants to comment.

And Mike, we – there is direct expense associated with operational disruption that flows through our other operating line most notably in the form of what you said which was like trip interruption to our customers, we have to move them on an another airline. It gets expensive for Spirit because of what Ben said. We don't have frequency in the market we serve. And so we end up pushing customers to other airlines and quite frankly buying tickets. And so that gets very expensive for us and we are talking about millions of dollars a year and so the bucket that we tackle is going after that as best we can without sacrificing the overall benefits of the model associated with high utilization. And so the dials we twist, they are fine movements. We are not talking about massive gyrations in the way the airline is structured, but those fine movements we look to the interplay. Saving the money here, but providing a better more reliable operation, which is, we believe has halo effects throughout the cost structure that are difficult to quantify on an individual basis. But you can see in the form of over time with your crews and what is happening on the ground and that sort of thing. And quite frankly there is probably a little benefit on the revenue side as well. So, we are not structurally changing the airline, we are just looking to optimize.

Okay, all right. Very good. Thank you.

The next question is from Helane Becker with Cowen.

Thanks very much operator. Hi everybody. Thanks for your time. Can I – I just want to follow up on Mike’s question with respect to the operation because I sort of thought two years ago you guys went on this program with maintenance based, a maintenance based on the mid-continent kind of trying to deliver a better product, then to the customer for these issues, what happened in the past one year that caused these issues to come back?

It's a little bit – it is not really the same thing in a sense. I mean, as the company has grown, I mean we are a 45% bigger company now than we there then. And what we have done is the initial changes that we made a couple of years ago were to reflect the fact that we were no longer just an East Coast carrier, and that meant setting up maintenance basis, pilot basis in the mid-US and on the West Coast, and that was to provide better service to our fleet, even though they may not come back to Fort Lauderdale everyday. We also then, implemented the change that was the FAR 117 change that changed some of the way we could use our pilots a little bit and that has been an effective thing, but in 2015 we set a very aggressive plan, and we pushed for a higher utilization plan than the prior year with more airplanes and we have gotten caught a couple of times because of weather and some other things that we weren’t as fully prepared to handle as we could. We have learnt from that and we are adjusting our operation to help ensure that we don’t think that will happen again.

Okay, great. And then just as a follow-up, another follow-up question, do you have a long-term target on what percent of your ASMs you would want under development at any given time?

Well, our fleet plan has us – and we like our fleet plan. That plan has us growing at 15% to 20% a year and so that would suggest that that is worth the number of ASMs that are going to be in envelopment at any given time. Now we are finishing the year here when we grew more than that, but that was a function of timing as much as anything. And so next year will be sort of a low-20% growth year again or 20% growth year again next year. And so that is sort of a good way to think about what our development will be for the long-term.

Okay, so we should always think that whatever capacity growth you are doing with all be in new markets?

Yes, I think that is generally…

The vast majority of it.

The vast majority, that is right.

Okay, okay. Well, thanks I will get back in the queue because I have more questions.

The next question is from Julie Yates with Credit Suisse.

Good morning. Thanks for taking my questions.

Hi Julie.

Hi Julie.

As you think about future growth, has the current pricing environment changed the types of markets that are most attractive to you?

No, not really. The reality is we serve a discretionary traveler, who may choose to fly or not fly based on whether the price is high or low at the particular time they are making their trip, and they are generally comparing whether or not to fly versus another large discretionary purchase they may choose to make. So in that world, to find the most number of those people you look where they are the most number of people, and that tends to be in larger cities. So our business model is a big city, the big city kind of model because in big cities you find everything. You have business, you have leisure, you have visiting friends and relatives, you have rich people, you have less rich people, and there is everything, and it is just – our model works really well in that kind of environment. So we certainly look at the current environment and that determines where we will fly our planes most certainly, but the set of markets that we choose from is generally going to be from in and among the larger cities in the US.

Got it, okay. Ted and then one for you, is there any initial guidance that you can offer on interest expense for 2016 just to make sure that consensus is fully capturing the full run rate for 2015 and then how many aircraft you will be financing in 2016?

Sure. It will be on our investor update, which will come out just after the call. But what we are thinking 2016 gross interest expense of around $50 million, but then we have the cap benefit just like we had this year of about 15, so net 35 is what we are looking at for next year.

Got it, okay. And then when you talk about pressures in ’16, how should we think about what you are embedding for labor, I don't think you specifically called it out, but you have got I think two big contracts open?

Yes, when we are in open negotiations we don't really forecast what is happening with those as we think about. When we offer guidance, which we haven’t formally done yet as it relates to 2016, assuming those contracts remain open, they will not be included in that. And that is just the way we will look at that while we are open.

Okay, got it. Thank you.

The next question is from David Fintzen with Barclays.

Hi, good morning everyone.

Hi David.

For Ben, I am trying to square kind of two comments you have made, which is 60% of the competitive pricing, part of the RASM decline is competitive pricing and then the sort of scalpel versus chainsaw comment. I mean if that 60% is fairly widespread around the system, then how does the scalpel kind of address that problem or is that just an acknowledgement that within the network there is just not a lot you can do to sort of get past some of this competitive pricing?

Well, David we watch our numbers very closely and we make active decisions about where to fly our planes based on the return that we are earning from our asset base, and so absolutely we are earning at a lower rate right now because of lower prices in our markets than we were when the prices were higher. But that doesn't suggest that there is a lot more money to be made by just wholesale, pulling up a big chunk of the operation and putting it somewhere else. So what the scalpel means is thinking as diligently and where there is much [Indiscernible] as we ever do about how much capacity to put in each market, how to flow the airplanes so that they can drive the lowest cost with highest utilization, and we are building the network for the long-term. We expect, we understand sort of what we believe that the market for the ULCC business model is, in Europe it is 20% of the market. Maybe it is that big in the US, maybe it is a little smaller. I don't know. But it is a lot bigger than the amount of $0.055 capacity that is flying in the US. So I think it is important for our investors and it is important for the business over the long-term to build our positions in the places we need to build. And as long as we're earning what we believe are reasonable returns in those markets, that's we're going to keep doing.

Okay. And then, maybe if I think to more in the past, when you've seen competitive encourage in I think at about places like Lauderdale a few years ago. You are fairly quick on a route level to move things around. It feels like this time you maybe not been as quick on a route level. Out there as you've got bigger, are there infrastructure limits in some of like Chicago, at Dallas, etcetera. So, especially if you kind of spread crew bases in it and spaces it around that force you to kind of keep a certain amount of flying in the bigger cities. Does that limit your ability to move things around?

No. In fact, I think I don’t think I'd agree with you that we've been less active. I mean, in Fort Lauderdale, when we say basically JetBlue go from 2035 today to 7085 today. We adjusted our capacity but we didn’t wholesale pull out of a whole bunch of markets and dramatically change the gauge and things like that. We change some things, we stopped flying. We start finding mass operates only because the taxes went to a $135 a passenger. And maybe some places we find twice a day, we went to once a day. But I would say that was a little bit of a scalpel approach and for Lauderdale still the largest individual operation with our system and produces very high margins for us. So, that was a good approach. And I think if you look at what we've done in other places, outside, we have the same kind of adjustments. I mentioned earlier in the call, that we've not grown Dallas since 2013. I mean, Dallas would have grown, but for some of the other environment things we've seen there. And so, I think we're being as active with the rest of the system as we have in places we've seen. And certainly, we put our crew in maintenance bases where we want to fly. We don’t fly because we have a crew at maintenance base there, where we can move the crew at maintenance base, if we have to. We set up the crew at maintenance bases to support the flying that we believe will be long-term accretive for our shareholders. Now, I will say that we certainly do buy us some of our growth toward places where we know we have a long term ability and desire to sort of be. So, in places like Dallas and Chicago, and Houston and Los Angeles and others, we're building positions in those cities because we believe long-term that's going to provide very good returns for shareholders to do that.

Okay. I appreciate that, I'll hop back in the queue.

Thanks.

Then next question is from Joseph DeNardi with Stifel.

Right, thank you. Good morning. Ben, I'm wondering if you could just talk about in terms of load factor trends on some of the new markets versus mature, what you're seeing there. And then when do load factors kind of bought them out? I mean, are you still -- is the model still catching up to the pricing environment or I mean when should we expect load factor start to stabilize?

I think our load factors are generally pretty stable in the mid 80's. The new markets operate one or two points a little below that, generally, but they spool pretty quickly up to the sort of system average. We charge, we price to fill the airplane. So, generally, we are going to try to run high loads because especially with our ancillary revenue strength, it's a revenue optimal decision for the airline to be full. We don't carry high revenue customers. So, there's not the tradeoff that some airlines have. Maybe it’s better that I take the risk that seat might be empty, because I might sell a $500 ticket. We never have that decision at the airline. So, we always will choose to sell when there is an active sale available there to drive our load factor high. So, basically we're going to run in the mid 80s as a system because that's how we priced the product to run.

Okay. And then, I just wanted to make sure I think you said there are only maybe a handful of markets that you serve more than one time to daily. If that's the --.

More than two times daily, its.

More than two times daily, okay. And then I think the business model to this point has been to kind of stimulate your own demand when you go into a market. So, I am just curious what happens when you don't stimulate your demand and you maybe you take share from others. Is that acceptable to you, do you stay in that market or is that an indication that you need to move capacity elsewhere, so that you are not competing with somebody else?

We don't have data that suggests that that's happening. I mean, we are generally if you look at market before Spirit flue and flue in the market and after the fare goes down a little bit and the traffic goes up a little bit, and we carry an amount equal to that. If you look in places we found, I mean, other carriers have grown as much or more than Spirit in their passenger count and in their seat count. So, we don't see situations where we're stealing share. The market defined is number of passenger flying, is larger because of Spirit.

Okay. I will get back in the queue, thank you.

The next question is from Dan McKenzie with Buckingham Research.

Good morning, guys. Ben, the investor question I am getting is on Spirit's opportunity set, 500 markets. And one of the things we're beginning to hear on some of the calls is that some of the larger airports are going to be gate constrained next year. So, Los Angeles, Chicago, how do we think about Spirit's growth over a multi-year period just given some of the physical constrains across United States and also just in the context of the price compression we are seeing today?

Well, there is certainly our gate and other constrains in airports around the country. Then other New York airports and Washington, Reagan, and smart controls other large airports; many of them have limited gate availability in such. However, Spirit is good for airports. We pay our bills on time, we bring a lot of people in. We don't feed our customers, so the confectionaries like us in the airports. Right. And so the reality is we're working aggressively with the major airports in the US to find ways overtime that we can build the positions where we are and the other thing is we don't need that much space. We fly eight to 10 flights on every gate we fly. So, we can add 10 frequencies a day with one more gate; that's not a lot of airlines who are willing to do that but we're not connecting, we are not nor the simplicity of our product allows us to do that. So, the reality is for the size of market that we believe the ULCC business model can attract independent from what the 85% plus carriers in the U.S. are going to carry, we believe that's going to make us sort of a little different size in each city, based on the size of the city, but the ability for us to sort of meet that capacity overtime we believe is reasonable.

Understood. Okay. And then, just another question to follow-up on Mike's question earlier with respect to the operations, what are the matrix, so on time, completion, and base. And I guess what I am really asking is how much of a CASM headwind is here in 2015 because just referring back to the commentary that was potentially going to help the CASM tailwind next year is because you slow the growth.

Hey, Dan, it's Ted. As we mentioned at our second quarter call, we had a tough June that hit the company from an expense perspective as well as we lost ASMs during that period, which was both of those factors, both the direct expenses as well as the lower denominator inflated the unit measure. So, that that acted like a headwind this year and our objective is to create that into a tailwind next year, which is helpful as we think about those headwind pressures that we face going into 2016, which outlined my comments around accelerated depreciation and supplemental rent. And so, we –- I don't know if we got specific with dollars in the second quarter, but we oh yes we did think that it was about $15 million in the second quarter hit us in direct expenses both interrupted trip as well as overtime and those kind of things. Some of that money you may or may not have in any given quarter because we're not going to be perfect in our execution just based on what we know about how the airline is built. So, some of that we hope access the tailwind next year. I mean, that's the objective in trying to turn that into tailwinds and help us offset those headwinds next year.

Got it. So, did the matrix improve in the third quarter relative to the second quarter, then?

They do.

I see, okay. Thank you.

Yes.

The next question is from Stephen Trent with Citi.

Hi, good morning everybody and thanks for taking my question. Most of have been answered but just quick ones if I may. Could you refresh my memory as to if you thought you needed to what extent you could -- delay some of your aircraft deliveries?

Hey Stephen, it's Ted.

Hi, Ted.

How are you? Our aircraft order is a firm order with our manufacturer as is the case with basically everybody in the industry, which means that those aircraft are coming and we've committed to them. And clearly, our objective by the way is to deliver every one of those airplanes and fly it under our model. We're looking forward to having those come online. To directly answer your question, given the fact they are from commitments to the manufacturer. There is no contractual right or obligations from the manufacturer to differ. There is always negotiation ability between ourselves and one of our major suppliers as we think about flexibility going forward and quite frankly we've exercised some of that today. In that, our firm delivery schedule has moved in the three and a half years I've been here both forward and backward. So, those always exist. Every airline deals with it exactly that way. But to reiterate again, we have no objectives to do anything of the sort right now. We view our delivery stream right now as very digestible and correct for the airline.

Okay, Ted, very helpful. And just very quickly, if you might not be able to tell us but when you mentioned some of the price pressure and some of your routes, any kind of broad sense as to whether it's primarily coming from the legacy carriers or if there is another source, another major source?

Stephen, its basic supply and demand. There is just more seats flying and to fill for the industry, I'm talking about, there is more seats everywhere. Larger carriers have grown as well as our own growth. And to fill those seats you need a little lower price to fill those seats and that's what's happening around the U.S. as bigger carriers are growing in this environment as well as the smaller carriers. So, that's it's just a supply demand issue.

The good news is that our supply is appropriately cost built to carry that traffic.

That's right. In a low price revenue environment which we're in now and we expect to continue as we said, it's good to be the $5.05, [ex fuel cabin guy].

Great, very helpful, guys. I will skip back in line.

The next question is from Steve O'Hara with Sidoti & Company. Steve O'Hara: Hi, good morning.

Hi, Steve. Steve O'Hara: Hi. I guess, I'm just wondering maybe to play devil's advocate, why not push the envelope on growth? I mean, it looks like your margins are going to be, it looks like at least in the fourth quarter ahead of your peers and I'm just wondering if you think it sends the wrong signal in terms of future growth, that after a little bit of pressure and maybe a lot of pressure, I guess, that you guys kind of maybe change your strategy in a way that's maybe more favorable to your peers?

Well, thanks for that contrarian view. And, but next year a 20% growth year on a bigger base, we're a bigger airline now than we've ever have been, is still pretty heady growth and if it's a lot to deliver that and produce the kind of and maintain sort of our focus on things. And so to try to grow meaningfully faster than that, it would be hard to sort of accelerate new equipment, put the financing in place for that or to take unused or older equipment would add complications to things. So, we can certainly affect our growth by dialing utilization up or down, certainly would be some minor changes of whether an airplane retires or at least gets extended, we can make some changes in that. But beyond that, we like the sort of growth path of the airline. The sort of 15% to 20% a year growth we think it's stable. The company can handle that growth well. We can train the people we need, develop the markets we need with that and we think that's kind of the right growth path for the airline. Steve O'Hara: Okay. And then, I mean, it looks like your margin should be ahead of peers I mean at least in the current environment, is it may be a better way to think about it in terms of you guys being maybe instead of a 1000 basis points above everybody, maybe you're 400 basis points above kind of the legacy carriers or 200 basis points. I mean, is that kind of the way to think about margins going forward and then maybe you see some expansion as fuel prices go up actually in terms of margin or versus competitors, I guess, in terms of the margin as fuel prices go up?

They do. Directionally, I think what you're saying makes sense, although the reality is as we sit here today it's really hard to say what 2016 is going to look like. The revenue environment is volatile. It's a difficult revenue environment and we expect that to continue. So, relatively small change in that environment, in either direction could make the numbers look a lot different. So, overall, I mean, I think you're right, I think we're -- our business tends to perform at better average margin than the rate at which we over perform has shrunk in a lower field price environment, that’s the nature. Steve O'Hara: Okay. All right, thank you.

The next question is from Andrew Didora with Bank of America.

Hi, Andrew.

Hey, good morning everyone. I’m just curious in light of how the pricing pressures that we’ve been hearing about. Can you give us a sense for how your RASM has been in peak versus off-peak periods? And I guess it’s probably much more difficult given your utilization levels, but is there any sort of opportunity in the near term to maybe shift around some capacity to more peak flying time versus off-peak?

Well, it’s a weird thing to tie this back to operations in a sense, but one of the reasons we have some challenges with some of our operations as we flew a very heavy high utilization schedule during the peak. So, we have by us, the schedule, even though on an annual average where high utilization carrier were higher than that average in peak periods and lower than that average in off-peak period. So, we fly more in July than we do in September and then that’s because the economics suggest that. So, on the margin, it’s the, the question is how much can we push it in the peak and maintain the operational integrity, that sort of the challenge we play, to increase in the off-peak were generally not be at sort of the best RASM performance, if we believe it would be earnings accretive, we might still do that but that’s going to put pressure on unit revenue if we did that.

Exactly. In fact, we did that in the third and fourth quarter of last year.

Last year, we tried.

We set utilization up in the off-peak, we saw earnings momentum from that but it is rather dilutive and we evaluate that along with what Ben said which is utilization in the peak and trying to make sure that we run new airline, we want to run in the peak.

I mean, when you think about it, there are multiple aspects of our business model that are by their nature RASM dilutive. We put more seats on our planes than our competitors. We fly our planes more hours per day and such and those, both of those things tend to push.

And our gauges walking up.

And our gauges walking up. All those things tend to put pressure on the RASM, which is why we look at RASM but we said multiple times and it’s not the only thing you can look at in a growth career to forecast the earnings or to determine success.

Got it. And any sense, means, there are any sense you can give us in terms of how that RASM performance has been peak versus off-peak?

Generally, it’s higher because you can in the peak because you have the ability to sell some higher fare. I mean, the question is what percentage of the plane is the lowest fare on the plane, and in off-peak it might be close to a 100% as that lowest fare, and at the peak it might be 85% as that lowest fare. And that extra 15% that's a dollar higher than the lowest fare, that pumps the RASM. Well, it's --.

Yes.

That's the whole difference and it's --.

I think, Andrew, if you look at our absolute numbers over the last few years and you see the movement between peak and off-peak, I'm talking about not year-over-year change but just absolute numbers. You can kind of see what happens in our shift between off-peak flying and peak flying on year revenue. And although we did a few things last year to kind of increase utilization in the off-peak which may have been more dilutive than normal, nonetheless you can see the kind of seasonality affected that.

Okay, fair enough. And then my last question, given the movement of stock and everything, you now have only 25% to 30% of your market cap sitting in cash. I know you put in the new buyback program just recently, but any thoughts around potentially accelerating any of that in a near term usage of this cash, would be helpful. Thanks.

Yes. I think we've been relatively consistent about the way we view our cash balance. We view that amongst other things to be a strategic asset of the company. We use it for a variety of different reasons which I've outlined before, as it relates to flexibility and financing and making sure that we're keeping cost low by keeping an available asset that we can use to lever our vendors and that sort of thing. But at the same time we deploy it in ways that we think are accretive to our shareholders and investing in assets of a variety of types is one way to do that. We buy airplanes. We buy spare engines and equipment and we buy our stock. And we are continuing to all of those things and so the incremental authorization is just merely a continuation of that long term strategy.

Okay, great. Thanks, guys.

The next question is from Savi Syth with Raymond James.

Hi, yes, Savi.

Hey, thanks Ben, for the second question here. Ted, just a question on the next year on the cost side. I know you're now looking for the -- kind of ranges here, but with the update in that's going on with all the A321's coming in, how should we think about maybe the kind of improvement to fuel efficiency and then that made the contribution to unit cost?

Yes, it's good point Savi, because we talk so much about ex-fuel. We neglect to pay attention to the 30% open in the room, but nonetheless we pay attention to it over here. There is a benefit as you up gauge for two reasons. One is new equipment obviously is more fuel efficient than the average and so that's going to provide assistance and the 321 and we've said this about the 320 and the 321, both of which are about 10% more efficient than its predecessor or its smaller airplane that includes the fuel as a component of that. So, they are a better on a unit basis burner than the smaller gauge and that's helpful, that's the tailwind to burn. Of course, offsetting that is we have an ageing fleet and they go through a variety of cycles of engine overhauls. Meaning, when it goes through an overhaul, it kind of refreshes it both from a maintenance perspective as well as the fuel burn perspective, but in there you got general degradation, fuel burn offsetting that. So, it's helpful. But you'll see from as we think about when we get to gallons in our guide, we'll be able to take that more into account for you.

All right. Right, thank you.

Okay.

The next question is from Hunter Keay with Wolfe Research.

Hi, Hunter.

Hi. Hey, Ben, how are you doing? Thank you. So, I know this has probably been a frustrating and challenging year for you guys and always you had to mitigate with investors and the stock and I'm sure getting tired of answering same questions about what other airlines are doing. So, did you feel like there is a little bit of lack of control here as it relates to your investment story and is there a way that you guys can maybe retake control of the story, whether that's even showing over the nimbleness in the network with new planes around, that be targeting a lower sustainable margin and hitting the numbers or just figure out a way to stop talking about other airlines for the first 15, 20 minutes at investor meetings when you have them?

Thanks, Hunter. We're focused on Spirit and we're focused on the long-term growth of our company building a long-term sustainable franchise that will provide good returns to shareholders over that long-term. And we just assume that every other company, airline or not, thinks the same way. And that's right. So, we've taken a little change obviously in our most recent guidance and what we've said even on this call. Right. We're talking about the environment as we see it. We're not making expectations that the macro environment is going to improve. What we're saying is how do we run our airline successfully in the current environment. How do we deploy our capital, how do we continue our growth to push to keep our cost in control and to keep pushing low fares out to consumers in a way that that is good for those consumers. And that allows all people who want to travel in the U.S. to travel and that's what we're going to keep doing. So, we are pretty nimble. I think we are pretty nimble. And I think that we're frustrated obviously that the company has lost half its value in the last -- in the stock drop. And that's frustrating to us and we know it's frustrating to people who've held the stock during that time. But we believe that the way to address that is by running a really good company making smart decisions and building the long-term franchise. And if you look at other growth companies in lots of industries over a long-term period they all have had periods of 12 months where the growth and things didn't necessarily line up perfectly but you look over a period of time and they've been good long sustainable growth earnings kind of stories and that's what we believe Spirit is and will be overtime.

So, Ben, I think you may've made a comment in the past, just two quick more from me, that the highest margin, the best margin that Spirit could do is the highest margin you can do. Please feel free to disagree with that if I got that wrong but I thought you said that. If you did say that, which is by the way very logical thing to say for any businessman, do you still believe it to be true though? Is maybe the best margin for Spirit, something maybe a little bit lower that you could do in the best case scenario?

Well, I think we could for some short-term periods produce higher percentage margins, if we were to radically change some piece of the business. We could have not grown as much this year and maybe some aspects of the margin might have improved, I'm not sure if they would have, the cost would have been higher too, right. But the reality is we believe from the time we IPO'd the company, we talked about ourselves being a 28% grower and mid-teens kind of margin performer, which we think is sort of a nice combination of growth in return. Generally, it does outperform what the airline industry typically does in all field environments. And we believe that that sort of where things are. We're not going to say no to 14%, 15%, 16% growth opportunities just because in the short-term we might be producing over 20%. That's not good long-term for the franchise. That wouldn't position us properly in the big cities we need to be in. So, we're going to look for -- so, I guess the answer is though hard to say what best is but the --

Yes, I hear you, think I hear that.

The right margin for the company is the margin that over the long-term can support the growth story and produce the best earning story overtime.

Right. I'm with you, I think that's a good answer and I do. One more on the CASM next guide. I know you guys don’t want to be specific on the CASM next guide, but I think without being specific, what we're running the risk here of the analyst committee putting on estimates again that you're going to miss throughout the course of the year and that's how stocks move down when estimates are being cut. So, can you give us sort of like based on the wording in the release, should we assume that flat CASM ex-fuel is sort of a worst case scenario at a high end of the bracket, absent any weather or regular operation stuff or other operational issues. Should -- I just want to make sure that we try to avoid a situation where we're going to have to continually haircut numbers again as we move along the year because people aren't going to buy your stock I think in volume, till we know stock cutting estimates.

Hey Hunter, it's Ted. I think the way we talk about long-term unit cost guide has always been flat to declining, which implies that there is a worst case and a best case in that. And so, we manage the company that way. I will, just to throw some data points at you, for the last three years, the company has declined its unit cost every year. In 2013, it was down about one, in 2014, it was down about one and last this year we think it's going to be down about six. And we've alluded to that fact being a step function year, and being I think in my comments they've been said non-repeatable in some respects. And so, when you think about that kind of trend in being down one feels more like what we target or at least what we think about, especially on a 20% growth year. We've always going to try to outperform and do better and that sort of thing. But flat or stable to declining, does by itself give you at least on one end, a book end and the other end kind of benefit.

And do let me add that if you look at 2014, that was a low 20% growth year for the company versus 2013. And we guided initially that CASM was going to be up a little bit because of headwinds of funding the growth for the next year and things like that. And we ended up producing 1% lower cap, I mean, that year, even though we guided to the fact that there were going to be a lot of headwinds and we might actually see a short-term increase in CASM even though we still expected a long-term CASM story to be a good one. Next year is a growth year more like last year, rather than this year. And while as Ted said they're not linearly correlated, the reality is this year was an exception in that sense. And so, I think that's commentaried 2014, when you look at 2014, that's more like sort of what next year is going to look like in terms of the growth profile of the company.

Okay, I get it. Thank you, very much for the time. I truly appreciate it.

Thanks, Hunter.

The next question is from David Simpson with Barclays.

Hey, thanks for the follow-up. For looking at this environment, its low oil weakest economy, pretty high capacity growth in the industry. Does that argue maybe that you need to be more aggressive in sort of seasonality in your schedule. I mean, is that environment where you come at maybe take a little bit of a page from [indiscernible] and necessarily park airplanes like they do, but sort of more being more mindful of cuts and influence in 4Q?

It's a good comment. We think we are pretty aggressive on that. We do have a seasonal schedule. We talk about annual kinds of numbers on utilization and such, but the month-by-month variant is actually quite high through the year for us. We fly a number of the things we fly, we fly only seasonally, where even some stations are only open seasonally for us. So, we tend to think of ourselves as a real seasonal kind of operator. And generally when we can make more money by flying more in the peak and less in the off-peak, we'll do that, when we could be accretive, fly more in the off-peak, we'll do that too.

Because you don’t feel we're in an environment or maybe marginal revenue, since now, even the fuel's so low, marginal revenue in off-peaks is now lower than certain marginal cost?

Well, absolutely not.

Yes.

And ticket revenues are down, but ancillary stable and that's -- no, that's absolutely not the case. I mean, we're --.

Okay, and good. Thank you, I appreciate the color.

Thanks.

The next question comes from Joseph DeNardi with Stifel.

Hey, Ben.

Hi.

Just a follow-up on, I think you mentioned that possibly next year you guys could earn less money than this year. I'm just wondering what the kind of the context of that is if the pricing environment kind of stays the way that it is now, do you see that as possible or does the pricing environment need to deteriorate more for that to kind of come into play?

Well, the current pricing environment is highly dilutive right now and it's an aggressive competitive environment. And if you -- we don't start lapping some of those changes to late next year. So, if you just run that map, you could see the kind of results like we said maybe we could make less money next year. The crystal ball is just really cloudy though. We just don't know what's right now, and that's why we're not putting a formal guide out for 2016 yet. But we're not going to build, we're certainly not going to guide to an optimistic upside and we're certainly not going to build our plan to something that we hope will happen. We're going to look at the current environment and structure our airline to be as profitable as we can be within that environment.

Okay. Yes, I mean, I understand you only have so much visibility but you did say that first quarter maybe looks a lot like fourth quarter from a RASM standpoint, I think. So, does second quarter look like first quarter if you don't start to lap some of these until much later in the year, just trying to Hunter's point kind of get expectations as in line as we can?

We said that the price structure in the first quarter look like the fourth quarter. We didn't make a comment about RASM change.

Yes, that's right. And so you have got -- Joe, its Ted. You've got unit revenue changes that happen throughout the course of 2015 that we in staggered forms lap throughout the year. Really at the very end of the fourth quarter of 2014, but mostly into the first quarter of 2015 was one additional capacity was added in the Dallas market and the pricing of that capacity took effect. So, you start to see some of the lap of that in the early part of 2016, however, then we saw another kind of change in the overall pricing environment in the summer, but we really don't lap until the latter part of the third quarter. So, it's even though the environment remains to Ben's point remain stable there are different comps year-over-year and that's why we say it's a bit cloudy still. It's a challenge to translate that anymore than that but you should see the same pressures that we face today we believe we will face going forward into the at least the first half of next year. There are some positive comp stuff that you lap in that period that help offset some of that but not the vast majority of it.

That's right.

Okay. Thank you, Ben and Ted.

Thanks, Joe.

And our next question is from Michael Derchin with Sterne Agee CRT.

Hi. I just want a follow-up on the heavy maintenance headwind for next year. Is that going to be spread out by quarter or is that going to be kind of a lumpy type of cost?

Hey Mike, it's Ted. I think, I would think about it as being a little smoother than lumpy. The airplanes next year that return happen in the kind of second and third quarter I think or the early part of the third quarter and the second quarter. So, those can create expense that may act quite frankly they kind of run off the run rate when you get to the latter half of the year but then we still have stuff happening in 17 and 18 that kind of takes its place. So, I don't know that I would expect it to be lumpy, I think it's smoother than that.

Okay, thank you.

Allen, we have time for one more question.

Our final question for today comes from Steve O'Hara with Sidoti & Company. Steve O'Hara: Hi, good morning. Thanks for taking the follow-up.

Sure. Steve O'Hara: I was just wondering, I mean, in terms of as your growth starts to slow these routes mature and assuming I don't know what you want to assume for fuel but I mean as does the route maturation process outweigh the cost pressures that you will see from the ageing of the aircraft and then slowing growth? If you could just talk about that maybe long-term, do you see that the RASM improvement in a normalized environment, let's say, outweighing some of the cost pressures you might see just from the overall ageing of the fleet or wage pressures?

Let me try to address that and then Ted will certainly want to make some comments as well. We have said that we believe that we can maintain a flat to declining unit revenue story through our growth period.

CASM.

I mean, CASM, I'm sorry, I mean, CASM through our growth period. And that's because the growth helps mitigate natural cost increases due to ageing labor, ageing airplanes and higher airport cost, things like that. Our growth if you look just at [2016] versus 2015, our growth is slowing from 30% to 20% but the growth rate of the airline is not slowing over the next couple of years if you think of the sort of the multi-year growth rate of 15% to 20%. That's what we said we are going to grow, that's what we are growing. In any given year that number might be higher or lower than that. But so, the growth rate of the airline isn't slowing right now and that growth is what help support that CASM outlook.

I think, that's right. And the maturation of the business, overtime, means that the growth is helping us from unit cost perspective go through that maturation process. So, there are plenty of other airlines that are obviously much larger than us and have, that are much more mature that do that trade that you just described Steve which is they have a low growth model. They assume that revenues will offset whatever cost pressures they have in order to maintain their margins. And I'm talking about decades from now you could be having that conversation about Spirit but we're not in that spot right now. We are in the spot where we're growing and that's providing unit cost benefit to the business and the maturation of our markets are a piece of that but our objective remains the same which is to drive lower cost and deliver those kind of mid-teens margin with that growth, overtime, and we think that's the best answer for our shareholders. Steve O'Hara: Okay. And, so that implies that any positive pressure on RASM is going to be very accretive to the bottom-line?

Well, we certainly seen that. Steve O'Hara: Yes.

Over the last couple of years we saw that for sure, right.

Right, absolutely. Stephen O'Hara: Okay, thank you.

Okay. Thank you all and this concludes the call. Thank you all for adhering to our one question one follow-up and back in the queue. That was very impressive. And we'll talk to you all next quarter.

Thank you, ladies and gentlemen. This concludes today's conference. Thank you for participating. You may now disconnect.