Sun Sentinel Palm Beach Edition
Spirit posts smaller 3Q profit of $81.4 million
Spirit Airlines posted a smaller profit in the third quarter from a year ago due, in part, to higher fuel costs and a competitive pricing environment in key markets, the Miramar-based, low-cost carrier reported Tuesday.
Spirit’s net income fell 16.2 percent to $81.4 million, or $1.17 per share, compared with $97.1 million, or $1.35 per share, in the third quarter of 2015.
The carrier’s operating revenue, however, rose 8.1 percent to $621.3 million, up from $574.8 million, a year ago. The increase in revenue was driven partly by increases in flight volumes, Spirit said.
Spirit’s quarterly earnings per share and revenue beat analysts’ estimates of $1.16 and $615 million, according to Zacks Consensus Estimates.
“During the quarter, we benefited from our own revenue initiatives as well as a modest improvement in the industry pricing environment,” said Bob Fornaro, Spirit’s president and CEO, in an earnings call with analysts on Tuesday. “We had solid cost performance and, operationally, we made good strides toward improving our performance.”
Over the three-month period ending Sept. 30, the budget carrier still faced some pricing pressure from competitors — although not as intense as earlier this year — which led to a 12.9 percent dip in average ticket revenue per passenger, to $58.34. Meanwhile, average nonticket revenue declined 4.2 percent to $51.17 as fewer travelers opted to pay extra for checked luggage or large carry-on bags or preassigned seats.
Matt Klein, senior vice president and chief commercial officer, told analysts that Spirit has been working on “new and innovative” products in an effort to grow revenue.
Spirit passengers at New York’s LaGuardia Airport can now purchase an optional service that gives them access to an expedited security lane, Klein said. This new optional service will be added to more airports over the next few months.
“It’s a great product that enhances our customers’ experience and provides us with a new nonticket revenue stream,” Klein said.
Additionally, by year’s end, Spirit will begin offering TSA PreCheck, a federal program that allows preapproved U.S. citizens and lawful permanent residents to leave on shoes, light jackets and belts, and not have to remove laptops or small containers of liquids and gels from carry-on bags. TSA PreCheck has certain eligibility requirements and costs $85 for five years.
During the third quarter, more Spirit flights had on-time departures.
“For the months of July, August and September, we set new company records for on-time performance, including the company’s alltime high in September of 85.2 percent,” Fornaro said.
This year through August, Spirit was the second-busiest carrier at Fort Lauderdale-Hollywood International Airport with 19.3 percent of passenger traffic, according to the latest airport data.
The carrier took delivery of two new Airbus A321ceo aircraft during the quarter, and ended with 89 planes in its fleet.
It also had more than a dozen new service announcements in the period, including flights from Fort Lauderdale to Newark (Oct. 30), Akron-Canton, Ohio (Nov. 10), and Havana, Cuba (Dec. 1, pending Cuban approval).
Spirit shares rose nearly 3.9 percent to $48.66 in trading Tuesday on the Nasdaq.