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Spirit Airlines faces 2017 capacity flux as unit revenue remains under pressure

Various issues are coalescing to drive Spirit Airlines’ capacity growth lower in 2017, including idle aircraft and operational challenges stemming from a pilot slowdown and hurricanes that struck a significant portion of its network in late 3Q2017.

Those issues are resulting in Spirit making adjustments to its growth targets in 2017 and 2018. For now, its capacity expansion will slow significantly in 2019, to approximately 10%, which would be the lowest level for Spirit over a five year period. Its 2019 projections are based on its current order book, and any future orders seem tied to the outcome of contract negotiations with its pilots, which have lasted approximately two years.

Spirit is experiencing some relief from pricing pressure it was under during the US summer season, and believes adjustments it has made in revenue management are bearing fruit. However, its unit revenues will remain depressed in 4Q2017.

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