Investor Presentation September 16, 2020 Disclaimer 2 - - PowerPoint PPT Presentation

Investor Presentation

September 16, 2020

2

Disclaimer

Forward-Looking Statements in this presentation and certain oral statements made from time to time by representatives of the Company contain various forward- looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended (the Securities Act), and Section 21E of the Securities Exchange Act of 1934, as amended (the Exchange Act) which are subject to the “safe harbor” created by those sections. Forward-looking statements are based on our management’s beliefs and assumptions and on information currently available to our management. All statements other than statements of historical facts are “forward-looking statements” for purposes of these provisions. In some cases, you can identify forward-looking statements by terms such as “may,” “will,” “should,” “could,” “would,” “expect,” “plan,” “anticipate,” “believe,” “estimate,” “project,” “predict,” “potential,” and similar expressions intended to identify forward-looking statements. Forward-looking statements include, without limitation, statements regarding the Company's intentions and expectations regarding revenues, capacity and passenger demand, additional financing, capital spending, operating costs, hiring, and stakeholders, vendors and government support, as well as statements regarding the Company’s restatement and amendment to its previously filed 10-K and remediation of its material weakness. Such forward-looking statements are subject to risks, uncertainties and other important factors that could cause actual results and the timing of certain events to differ materially from future results expressed or implied by such forward-looking statements. Furthermore, such forward-looking statements speak only as of the date of this release. Except as required by law, we undertake no obligation to update any forward-looking statements to reflect events or circumstances after the date of such statements. Risks or uncertainties (i) that are not currently known to us, (ii) that we currently deem to be immaterial, or (iii) that could apply to any company, could also materially adversely affect our business, financial condition, or future results. Additional information concerning certain factors is contained in the Company's Securities and Exchange Commission filings, including but not limited to the Company's Annual Report on Form 10-K, Quarterly Reports on Form 10-Q, and Current Reports on Form 8-K. All forward-looking statements attributable to us or persons acting on our behalf are expressly qualified in their entirety by the cautionary statements set forth or referred to above. Forward-looking statements speak only as of the date of this presentation. You should not put undue reliance on any forward-looking statements. Company has used non-GAAP financial measures in this presentation, including Adjusted EBITDAR, Adjusted EBITDAR Margin, and CASM ex Fuel. Adjusted financial measures refer to financial information adjusted to exclude from financial measures prepared in accordance with accounting principles generally accepted in the United States ("GAAP") items identified in this presentation. The Company believes that the presentation of adjusted financial results provides additional information on comparisons between periods including underlying trends of its business by excluding certain items that affect overall comparability. The non-GAAP financial measures contained herein have limitations as analytical tools and should not be considered in isolation or in lieu of an analysis of our results as reported under U.S. GAAP. These non-GAAP measures should be evaluated only on a supplementary basis in connection with our U.S. GAAP results, including those reported in

• ur consolidated financial statements and related notes thereto contained in our Annual Report on Form 10-K/A for the year ended December 31, 2019.

Reconciliations of the non-GAAP financial measures to GAAP financial measures used in this presentation are available in the appendix to this presentation.

Company Overview

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Spirit at a Glance

• Largest ultra low-cost carrier in the United States
• ffering low, unbundled base fares to value-conscious

customers

• Broad, largely U.S. domestic network focused on

point-to-point flying for cost efficiency and

• perational flexibility
• Serves 23 of the Top 25 U.S. metros, many large U.S.

leisure markets and 27 destinations in Latin America and the Caribbean(1)

• Almost entirely leisure / VFR(3) customer base
• Uniform fleet of young, fuel-efficient Airbus A320

family aircraft

~35mm Passengers Served in 2019 More than 600 Daily Flights(1) 75 Destinations Served Across the U.S., the Caribbean and Near Latin America(2) 2019A Revenue / EBITDAR (Margin): $3,831mm / $927mm (24%)

Key Facts Overview

1. As of December 31, 2019. 2. As of September 2020. Includes international destinations not currently serving due to COVID-19 restrictions, announced new destinations where service has not yet begun, and seasonal destinations. 3. Visiting Friends & Relatives.

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Differentiated From Rest of U.S. Airline Industry

Operating Margin Consistently among the best in the U.S. Industry; profitable at very low fares Cost Advantage Industry-leading cost structure and large relative cost advantage; potential to widen cost advantage relative to peers during COVID-19 Balance Sheet Strong liquidity pre COVID-19 bolstered by recent cost reduction, capital preservation, government support, and capital markets initiatives Focus on Leisure / VFR Focus on price sensitive leisure and VFR demand which has proven to be resilient and we expect to rebound first post COVID-19 Strong Track Record Extensive track record of consistent revenue growth and profitability

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Spirit: Largest ULCC in the Americas

• 75 destinations
• Diversified network; primarily low

frequency, point-to-point

• Heavily weighted towards young VFR

demographic

• Large domestic network; serve 23 of

the Top 25 U.S. metros, and many large U.S. leisure markets

• Domestic network enhanced with

service to destinations in Latin America and the Caribbean

• 1. As of September 2020. Includes international destinations not currently serving due to COVID-19 restrictions, announced new destinations where service has not yet begun, and seasonal destinations.

90%

Domestic Flights(1) (100% in the Americas)

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Providing Choice and Savings

Brand New Fleet & Seats Select Unbundled Product Offerings

Spirit’s focus on ancillary products allows customers to pay only for what they need or want, which minimizes their total fare and maximizes revenue for Spirit

In-flight Food & Beverage Priority Boarding Seat Selection & Upgrades Phone Booking Checked Luggage Online Booking Carry-on Baggage Ticket Printing

Standard Seat BIG FRONT SEATTM

• Ergonomic headrest with plush memory foam
• Sleek Spirit-branded aesthetic with yellow and

black stitching

• Memory foam also in the seat cushion for comfort

and thigh support

• Padded with ultra-light weight foam that adds

comfort without increasing weight, maintaining high fuel efficiency

• Ergonomically-designed lumbar support
• Middle seats provide an extra inch of width

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• Kiosks enabled with self-bag tagging
• Launched first self bag drop machine – will roll out further in

2020 and 2021

• Launched biometric facial recognition
• Improve guest throughput
• Reduce wait times
• Increase connectivity

Improving our Guest Experience

Airport Experience Booking Experience

• New Modernized Website
• Updated ancillary combo options and merchandising
• Launched new hotel/ car provider to provide improved content
• Enhanced Mobile App
• Facilitates touchless experience
• Push notifications to promote seats
• Launched WhatsApp and Apple Business Chat for Seamless

Communications

• New texting and messaging solution allows guests to ask

questions, modify travel and make reservations

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50% 55% 60% 65% 70% 75% 80% 85% 90% 95% 100%

Jan-20 Feb-20 Mar-20 Apr-20 May-20 Jun-20 Jul-20 Aug-20 YTD Aug-20

50% 55% 60% 65% 70% 75% 80% 85% 90% 95% 100%

Jan-20 Feb-20 Mar-20 Apr-20 May-20 Jun-20 Jul-20 Aug-20 YTD Aug-20

Operational Performance

1. Arrivals within 14 minutes of scheduled arrival time as reported by the Department of Transportation. 2. Percentage of domestic scheduled flights (as defined by the D.O.T.) completed. 3. April 2020 operational performance was negatively impacted by the dramatic schedule changes following the onset of the COVID-19 pandemic. 4. Industry Jun, July, August and YTD August 2020 are based on preliminary data.

Completion Factor(2) D.O.T. On-Time %(1)

Industry Excluding Spirit

• Consistently achieving among the best operational performance
• Spirit achieved 1st place ranking in both On-Time performance and Completion Factor (as

measured by the DOT) for March, May, and June 2020

(4) (4)

(3) (3)

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Focused on the VFR and Leisure Customer

VFR and Leisure Customers want good direct service at the absolute lowest fare as they are paying for the ticket themselves

Spirit’s Core Value Proposition Spirit offers the highest value proposition by combining best-in-class reliability metrics with the lowest prices in the markets we serve

The absolute lowest fares (and total prices, including all ancillaries)(1) Flights to and from top destinations and major airports Flying the youngest fleet in the U.S. with stylish interiors Providing good service with leading on-time performance

1. Among Top 9 public U.S. carriers.

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Leisure Flying Is Less Cyclical than Business

(18%) (12%) (6%) (0%) 6% Q1 08 Q2 08 Q3 08 Q4 08 Q1 09 Q2 09 Q3 09 Q4 09 Q1 10 Q2 10 Q3 10 Q4 10 Q1 11 Q2 11 Q3 11 Q4 11 Q1 12 Q2 12 Q3 12 Q4 12 Leisure Trips Business Trips

Leisure vs. Business Travel in the U.S. During the Great Recession

(Y-o-Y Growth) Source: IHS Global Insights & Oxford Economics.

• Business travel is more impacted by a

recession as companies cut headcount (fewer employees equals fewer flights)

• Vacationers continue to travel and ULCCs

benefit in a recession as consumers trade down to lower fare flights

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Poised for a Recovery with VFR / Leisure Focus

• The typical Spirit customer is a cost conscious leisure traveler
• Historically, lower-fare leisure / VFR travel is the first to come back after an economic

downturn

• Spirit’s industry-leading low-cost structure and leisure / VFR focus positions it well to recover

earlier than most carriers

• Emphasis on high-density seating positions Spirit to return to profitability faster than other

carriers

• With zero exposure to transatlantic and transpacific flights, Spirit is sheltered from future

travel restrictions

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Spirit’s Relative Cost Advantage has Grown

16% 31% 75% 107% 74% 50% 67% 112% 123% 126% 0% 20% 40% 60% 80% 100% 120% 140%

FY2012 FY2019

• Our relative cost advantage allows

us to offer a price point below the current average selling fare, stimulate demand, and earn our target margins

• Competitors may match our price

point on a minority of their seats to fill their excess capacity, but to do so on a majority of their seats is acutely dilutive to their results Spirit’s Relative Cost Advantage Has Grown

S-L Adjusted CASM – Ex Fuel % Higher than Spirit(1)

• 1. Cost data based on public company reports for the twelve months ended 12/31/12 and 12/31/2019. Excludes special items and non-airline expenses for all carriers. Seat weighted stage length

adjusted to 1000 miles. Formula = CASM multiplied by (airline stage length/1000)^0.5. Stage length based on published schedules for twelve months ended 12/31/2019.

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How Spirit Keeps Costs Down

What We Do What We Don’t Do



Fly old aircraft – our fleet is the youngest in the U.S. with an average age of 5.9 years(1), our fleet is 31% more fuel efficient than the industry average(2)



Fly to secondary airports – we fly to where our customers want to go which are typically the key airports in each market



Provide poor service – our on-time performance is among the best in the U.S. airline sector

 Point-to-point itineraries  Uniform fleet  High seat density and asset utilization  Very low overhead costs  Unbundled fares (i.e., charge for seat

assignments, bags, etc.)

1. Fleet age as of 2019 year-end. 2. Based on 2019 ASMs/gallon; industry average based on pubic U.S. airlines, excluding Spirit.

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Young Uniform Airbus Fleet

5.9 8.0 9.9 10.6 11.0 12.0 14.0 14.9 15.6

Airbus A320ceo (64)

 Premier single-aisle jetliner with short-to- medium-haul capabilities  Seating capacity: 182  Seating configuration: 174 Y / 8 BFS(2)  Average age: 5.2 years

Airbus A319 (31)

 Ideal for new routes  Seating capacity: 145  Seating configuration: 135 Y / 10 BFS(2)  Average age: 13.3 years

Airbus A321 (30)

 Largest aircraft for high density routes  Seating capacity: 228  Seating configuration: 220 Y / 8 BFS(2)  Average age: 3.0 years

Airbus A320neo (29)

 Youngest aircraft in Spirit’s fleet with industry-leading fuel efficiency  Seating capacity: 182  Seating configuration: 174 Y / 8 BFS(2)  Average age: 1.2 years

Fleet Summary – 154 Total Aircraft(1) Young Uniform Fleet Drives Low Costs

• Uniformity allows Spirit to interchange aircraft and flight crews based on

route demand and capacity without incurring significant additional costs

• Young uniform fleet of A320 family aircraft maximizes cost effective use of

facilities while reducing maintenance costs

• Airbus planes are optimal for maximizing real estate on aircraft (high seat

density)

Youngest Fleet in the U.S.(1)

Source: Company filings. 1. Fleet age as of 2019 year-end, current fleet as of Q2 2020. 2. Y equivalent to Standard seat; BFS equivalent to Big Front Seat. (Average Fleet Age)

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24.2% 20.5% 19.4% 17.8% 16.5% 15.3% SAVE DAL LUV JBLU UAL AAL 126% 123% 112% 67% 50% AAL UAL DAL JBLU LUV

Spirit Outperforms Against Primary Competitors

• Adj. EBITDAR Margin(2)
• Adj. EBITDAR(3) / Avg. Aircraft(4) ($ in millions)

Stage-Length Adjusted CASM (Ex Fuel)(1) Advantage

• Our cost advantage allows us to profitably price at levels

below competitors’ breakeven fare

• Higher cost carriers subsidize matching low domestic

fares with high corporate and long-haul international yields

• Well positioned for quick recovery given low exposure to

business and long-haul international travel

Note: Data as of the year ended 12/31/2019. Peer financial information derived from public filings. 1. Excludes special items and reported non-airline expenses for all carriers. Seat weighted stage length adjusted to 1000 miles. Formula = CASM multiplied by (airline stage length/1000)^0.5. Seat weighted stage length based on published schedules for twelve months ended 12/31/2019. See Appendix for reconciliation detail to most comparable GAAP measure for Spirit. 2.

• Adj. EBITDAR Margin is a Non-GAAP financial measure. Non-GAAP financial measures are reconciled to the most directly comparable GAAP financial measures in the appendix.

3.

• Adj. EBITDAR is a Non-GAAP financial measure. Non-GAAP financial measures are reconciled to the most directly comparable GAAP financial measures in the appendix.

4. Peer average aircraft figures include all mainline and regional aircraft.

$7.2 $6.9 $6.4 $5.8 $5.6 $4.5 DAL SAVE UAL LUV JBLU AAL

2019 stage-length adjusted CASM (ex fuel) for peers was ~96% higher than Spirit on average

Recent Developments

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COVID-19: Business Impact & Response

Capacity & Fleet Adjustments Cost Reduction & Working Capital Initiatives Financing & Liquidity Employees & Customers

• Significantly reduced capacity across the network: 3Q20E (32%) y/y, 4Q20E (34%) y/y
• Negotiated with Airbus to defer aircraft deliveries, with 4 and 9 deliveries pushed from 2020 & 2021, respectively, to 2022 and beyond
• Company-wide hiring freeze (except essential personnel) and offering voluntary unpaid leave to employees
• Reached agreements with pilot and flight attendant unions to avoid furloughs effective 10/1/20; cost savings in-line with what would

have been achieved had the furloughs not been avoided

• Reduced salaries of executives and board members
• Reduced planned capital spending in 2020 through a combination of cancellations and deferrals
• In discussions with lessors, lenders, and other significant vendors around payment deferrals
• Borrowed $180m available under the 2020 secured revolving credit agreement
• Received $335m under the Payroll Support Program
• Raised $362m through a joint common stock and convertible notes offering
• Announced ATM program for up to 9mm shares
• Priced $850m private offering of Senior Secured Notes secured by brand and loyalty subsidiaries (closing expected 9/17/20)
• Current unencumbered tangible assets of approximately $600m
• Enhanced aircraft cleaning procedures and flexible seating onboard aircraft
• Providing PPE to team members and requiring guests to wear masks
• Offering future flight credits with extended expiration dates to customers with impacted travel plans

19 $1,234 $2,430

$33

$178 $155 $830

6/30/2020 Liquidity Remaining Payroll Support Program Tax Relief Benefits ATM Program Expected net proceeds of private offering Pro forma liquidity

Bolstering Liquidity Through Recent Initiatives

• Assuming the $850m private offering secured by our brand and loyalty subsidiaries closes, we do not plan to

participate in the Government Loan Program under the CARES Act

• Average daily cash burn for 3Q20 is estimated to be at the better end of our previous guidance range of $3-$4m

and the average daily cash burn for 4Q20 is expected to be slightly better than that Total Liquidity ($ in millions)

1. Excludes $30m of restricted cash. 2. Reflects benefits from income and federal excise tax relief provisions of CARES Act expected to be received during second half of 2020. There is no guarantee that we receive all of any of the benefits we expect to receive under the CARES Act. 3. Assumes max offering price of $17.35/share and issuance of full amount under the program. 4. Offering is anticipated to close on 9/17/20. (2) (1) (3) (4)

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Cash Burn Positions Spirit Well to Manage the Downturn

• Source: Company filings.
• Note: Cash burn for Spirit defined as the sum of net operating cash outflows, debt service, fleet capex net of financing and pre-delivery deposit payments. It does not include the impact of any financings, capital raises, or the funds from PSP. Other

carriers provide definitions in their respective filings. – Based on expected cash burn in Q3 (midpoint if range provided) or most recent number reported – assumes one month is 30 days; Spirit based on current cash burn of $3mm/day. – Expected cash burn in Q3 (midpoint if range provided) or most recent number reported on an annualized basis divided by 2019 ASMs; Spirit based on current cash burn of $3mm/day.

Monthly Cash Burn(1)

$30 $90 $96 $200 $240 $600 $750 $810 $1,250

Based on extremely low demand figures and no furloughs

Spirit expects to be among the first major carriers to consistently generate free cash flow again

Cash Burn per ASM(2)

2.3¢ 2.6¢ 3.2¢ 3.6¢ 3.7¢ 4.6¢ 4.6¢ 5.3¢ 5.7¢

($ in millions)

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Key Strengths

Lowest Unit Cost Base in the U.S. Airline Sector Well Positioned to Manage the Downturn and Lead the Recovery Proven Ancillary Revenue Model Focus on Resilient VFR / Leisure Customers Improving Brand Image Continued Strong Liquidity Position Best Performing Airline in the U.S. 1 2 3 4 5 7 6

Appendix

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Non-GAAP Reconciliations: CASM Ex-Fuel

Full Year 2019

(in thousands except CASM data in cents) Total operating expenses, as reported 3,329,489 $ Special items (1) Supplemental rent credit (530) Special charges 717 Loss on disposal of assets 17,350 Total special items (1) 17,537 Adjusted operating expense (2) 3,311,952 $ Fuel expense 993,478 $ Adjusted operating expense ex fuel (3) 2,318,474 $ Available seat miles (ASMs) 41,783,001 Cost per ASM (CASM) - GAAP 7.97 Adjusted CASM (2) 7.93 Adjusted CASM ex fuel (3) 5.55

• Adj. CASM ex fuel S-L Adjusted to 1000 mi (3)

5.55

• 1. See Description of Special Items for more details.
• 2. Excludes special items.
• 3. Excludes special items and fuel.

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Non-GAAP Reconciliations: Adjusted EBITDAR

• 1. See Description of Special Items for more details.
• 2. Excludes special items.
• 3. Excludes supplemental rent adjustments 2019 for liability accrued in prior years related to certain maintenance reserves and return conditions that were no longer probable (these

amounts are included in special items adjustment). Full Year 2019

(in thousands except CASM data in cents) Revenue, as reported 3,830,536 $ Operating expenses, as reported 3,329,489 $ Special items (1) Supplemental rent credit (530) Special charges 717 Loss on disposal of assets 17,350 Total special items (1) 17,537 Adjusted operating expense (2) 3,311,952 $ Operating income, as reported 501,047 $ Adjusted Operating income (2) 518,584 $ Depreciation and amortization 225,264 $ Aircraft rent (3) 183,139 $ EBITDAR 909,450 $ Adjusted EBITDAR (2) 926,987 $ EBITDAR margin 23.7% Adjusted EBITDAR margin (2) 24.2%

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Non-GAAP Reconciliation: Description of Special Items

1.

Operating special items include loss on disposal of assets, special charges, and other items. Special items for 2019 includes (i) supplemental rent adjustments for liability accrued in prior years related to certain maintenance reserves and return conditions that were no longer probable; (ii) amounts related to the write-off of aircraft related credits resulting from the exchange of credits negotiated under the new purchase agreement with Airbus S.A.S. (“Airbus”) executed during the fourth quarter of 2019; and (iii) amounts primarily related to the disposal of excess and obsolete inventory partially offset by gains on aircraft sale-leaseback transactions.