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  • Spirit's Odd Financial Filings (And The DOT's Odd Standards)
    Posted by Andrew Compart 4:34 PM on Aug 22, 2012

    I recently wrote some stories, based on U.S. airline financial filings with the U.S. Transportation Department, to analyze their operating profits by region--for services to Latin America and the Atlantic and Pacific regions. But I did not include Spirit Airlines in the Latin America story, even though that region is a major point of emphasis for the South Florida-based low-cost carrier. 

    Here's why: My calculations for Spirit  based on its Form 41 financial filings show essentially identical operating margins for its domestic and Latin America services for every quarter since the carrier began services to the region in 2005. For all but two of those 27 quarters through first quarter 2012, the operating margin is exactly the same when rounded to the second decimal point.

    Obviously, that is not very likely to be an accurate portrayal of what actually is happening. Actually, I do not feel any hesitation in declaring it impossible. But when I contacted the Transportation Department's Bureau of Transportation Statistics (BTS) about this, I discovered there is nothing wrong with how Spirit is reporting its numbers, from the department's perspective.

    "Airlines are required to use a standard methodology," a BTS spokesman told me. " The methodology must be consistent from year-to-year and it must be consistent across all reports." But it does not matter, he said, what methodology it uses. For example, it could use block hours to allocate its revenue and expenses between regions, or something else.

    "You would have to ask [Spirit officials] what they use," he added.

    Spirit, for the record, never responded to my request for an explanation.

    Of course, this standard severely limits the usefulness of the Form 41 reporting for comparing results by region across airlines, since each could be using different methodology. At least the data still can be used to spot regional trends for each individual airline, since each one has to stick with one methodology, but it sure would be nice to have a single standard.









    Tags: tw99, DOT, Spirit

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