Spirit Airlines foresees continued unit revenue pressure, but still delivers strong topline results
Spirit Airlines plans to introduce 24 new routes in 2Q2015 after adding Cleveland to its network earlier in the year. The biggest push during 2Q is from Houston Intercontinental, where the airline is adding eight new nonstop destinations that include seven to Latin America.
The rapid route expansion results in Spirit having a significant portion of its network under development, which along with some lingering pricing compression in other market is pressuring Spirit's unit revenues. It projects a unit revenue decline of 14% to 15% for 2Q2015, which wider than the nearly 10% drop it recorded in 1Q.
Spirit has refined its FY2015 operating margin guidance to a still healthy 24% to 27% as it still faces some lingering pressure in Dallas, one of its larger markets. But it is still the reigning lowest cost producer in the US, which gives is some leverage to navigate the current competitive environment.
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