Spirit Airlines raised USD187.2 million, 42% less than it originally sought, after the carrier cut the price and number of shares in its IPO (Bloomberg, 26-May-2011). The carrier sold 15.6 million shares at USD12 each. It originally planned to raise USD320 million and offer 20 million shares at USD14 to USD16. The shares will trade on the Nasdaq Stock Market under the symbol SAVE.
Spirit Airlines raises USD187.2 million, 42% less, in IPO
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Spirit Airlines: touting solid financial position, but investors stay laser-focused on unit revenue
During the past year investor attention has pivoted away from Spirit’s steady balance sheet and strong cost base to the company’s deteriorating unit revenue – a scenario most US airlines find themselves dealing with as a result of lower fuel costs driving up capacity and eroding pricing traction.
Growing cash balances and sustaining favourable leverage remain crucial elements of Spirit’s business strategy. Keeping a stable cash position allows the airline to fund its higher than average growth, which continues to deliver strong margins according to Spirit's argument.
Its industry-leading cost performance is key to Spirit’s ability to sustain solid margins even as the US revenue environment remains weak. Although it faces some cost inflation in 2016, the airline remains focused on sustaining one of the best cost performances in the US airline business.
LCC Volotea Part 2: in a competitive space positioned between regional airlines and LCCs
Part 1 of CAPA's analysis of Spanish LCC Volotea highlighted its rapid growth, but noted that its load factor left room for improvement. The Spanish LCC flies almost two thirds of its seats in domestic Italy and France, but operates in a total of 12 countries and 66 airports across Europe. It concentrates on small and medium-sized airports, with Italy and France dominating its list of leading routes.
This second part of CAPA's report on Volotea looks at its generally favourable competitive position on its leading routes (it is the biggest airline on 15 of its top 20 routes). This positive competitive standing has been carried onto the majority of the 32 routes that Volotea has launched in the past year, although its low frequencies and very strong summer bias limit its appeal to business passengers and give it a leisure focus.
Volotea's average trip length sits between those of regional airlines and Europe's principal LCCs. This is evidenced by the fact that two of its most frequent competitors are Hop (Air France's regional airline) and Ryanair (Europe's leading LCC). Volotea's fleet strategy is now to replace its 125-seat Boeing 717s with 150-seat A319s. This will result in it butting up against LCCs more often.