Spirit Airlines faces unit revenue and cost pressure ahead of a growth spike in 2015

Beneath Spirit Airlines' favourable 1Q2014 financial performance was an uncharacteristic decline in passenger ticket revenues driven by various factors including a hefty uptick in average stage length.

At the same time Spirit faces added cost pressure throughout 2014 driven by new US flight duty rules for pilots and preparation for a ramp-up for hefty growth during 2015, when capacity will increase by roughly 30%.

Spirit's rationale is that it has ample (and presumably) profitable growth opportunities that remain untapped, underpinned by its estimate of accounting for merely 5% of US seats at the end of the decade. Given its steady financial outperformance and the effects of US consolidation, for the moment Spirit can afford the benefit of the doubt, filling a vacuum as it charges forward with its ultra low-cost strategy.