Spirit Airlines can lift the spirits of people seeking sunshine.
The ultra low-cost carrier (ULCC) operates more than 280 daily
flights between major US cities and popular vacation spots in South
Florida, the Caribbean, and Latin America, serving nearly 50
destinations. It operates an all Airbus fleet of nearly 55
single-aisle aircraft, including A319s, A320s, and A321s. Spirit
capitalizes on an ancillary service model, charging separately for
baggage, advance seat selection, and other travel-related upgrades.
In addition to scheduled service, the company partners with
third-party vendors to offer a slate of vacation packages via its
Spirit's largest maintenance facility is stationed in a leased
facility at FLL under a lease that expires in January 2015. It also
conducts additional maintenance operations in leased facilities in
Detroit; Chicago; Atlantic City, New Jersey; Dallas; and Las Vegas.
Revenue generated from the US accounts for nearly 90% of Spirit's
Sales and Marketing
Spirit Airlines sells through its website, an outsourced call
center, and third-party travel agents. Its spirit.com site accounts
for about two-thirds of sales.
With the Great Recession that decimated the airline industry far
behind it, Spirit is enjoying uncharted growth over the years.
Revenues jumped 25% from $1.32 billion in 2012 to $1.65 in 2013, a
historic milestone for the company. The spike in revenue in 2013
was driven by a 26% increase in passenger revenue. Non-ticket
revenue also climbed by 25% due to a 24% increase in traffic and an
increase in baggage revenue per passenger flight segment.
Profits also surged 63% from $108 million in 2012 to peak at a
record-shattering $177 million in 2013 due to the higher revenue
and decreased increase expenses. While its cash flow from
operations has fluctuated a bit over the last few years, it
increased by $82 million in 2013 due to larger operating profits
and a slightly higher air traffic liability driven by higher
capacity and future bookings.
To maintain its impressive growth trajectory, Spirit is expanding
its city destination network while also concentrating its resources
on the growing Caribbean and Latin American markets. Like most
carriers within its industry, Spirit's top issue is controlling
costs in order sustain a profit from its low fares.
To this end, the company has moved to an aggressive unbundling
strategy to stimulate passenger demand and revenues. Unbundling
allows passengers to pay separately for products and services that
they want to use. Charging for such extras as onboard beverages and
snacks enables Spirit to offset its low ticket prices as well as
maintain its competitive market presence.
▲ Show Less▼ Show Full Description