Spirit Airlines and Airbus signed a MoU for 75 single-aisle aircraft at the Dubai Airshow on 15-Nov-2011, comprising 45 A320neo aircraft and 30 A320s. The engine selection will be announced later. The new aircraft will be deployed on Spirit’s targeted growth markets in the US, Caribbean and Latin America. [more - original PR]
Spirit Airlines signs commitment for 75 A320 family jets
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Spirit Airlines expresses cautious optimism about pricing improvement in the sagging US market
Similarly to the largest US global network airlines, the ULCC Spirit is welcoming signs of a modest improvement in the US pricing environment. The company’s decline in total unit revenues year-on-year in 3Q2016 slowed to single digits – compared with some of the steepest decreases recorded among US airlines for the past year. If the overall trends in the US market stick Spirit’s sequential unit revenue improvements should continue, reflected in projected further improvement in 4Q2016. However, unlike some US airlines, Spirit is not offering a specific timeframe for a return to positive unit revenue.
Spirit also posted sequential improvement from non-ticket revenue declines in 3Q2016. The airline has been battling soft pricing in baggage fees tied to lower ticket prices. It has been in the process of incorporating ways to shore up non-ticket revenue, including adopting more dynamic pricing of its ancillary products.
Throughout 2016 Spirit has retained a number of smaller-gauge Airbus A319s as it adopts a pivot in its network strategy – to smaller markets. Looking forward, the company is not ruling out talks with other manufacturers about its long-term fleet needs, reasoning that with Airbus’ strength among low cost airlines other airframers are ultimately going to act aggressively to secure new business.
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.