Story URL: http://news.medill.northwestern.edu/chicago/news.aspx?id=228136
Story Retrieval Date: 10/2/2014 5:26:32 AM CST

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Spirit Airlines

Courtesy of Timothy Wildey

Earnings at ultra-low-cost Spirit Air surged in the latest quarter


Spirit Airlines' earnings are sky high

by Epiphany Acevedo
Feb 19, 2014


Spirit Airlines’ famously low-cost flights helped the no-frills carrier turn in a fourth quarter earnings hike that topped Wall Street expectations.

In the latest quarter,  Spirit’s net earnings more than doubled to $43.2 million, or 59 cents per diluted share, from $19.6 million, or 27 cents per diluted share, in the year ago period. Revenues rose 28 percent to $420 million from $328.3 million a year ago.

Excluding one-time items, Spirit’s adjusted earnings per share was 56 cents – well above the 50 cents analysts surveyed by Yahoo Inc. had been expecting.

Investors responded positively: In New York Stock Exchange trading Wednesday, Spirit shares jumped $2.93, or 6.2 percent, to close at $50.59.

“For the full year 2013, we delivered record profitability and return as demand for our low-cost, ultra-low fare model remained very high,” said CEO Ben Baldanza in a press release.

During the earnings conference call, Baldanza also attributed the company’s results to lower-than expected operational costs   Additionally, the company benefited from  fewer weather-related cancellations in the fourth quarter 2013 compared with the year ago period.

According to a recent presentation Spirit made at an investor conference, part of the Miramar, Fla.-based air carrier’s low-cost strategy is an “a la carte revenue structure,” which officials sayallows customers to only pay for what matters to them.  Consumers who opt for Spirit’s ultra low-cost fares do so knowing that they will be charged extra for conveniences such as seat assignments, onboard snacks and beverages, and carry-on and checked baggage.

Spirit has also boosted revenues by increasing base fares and ancillary, or non-ticket, fees over the past few quarters, according to Cowen Research analyst Helane Becker.

“We continue to expect ancillary fees to grow but at a more moderate rate as the company has indicated it will be more customer friendly going forward,” said Becker in a note Wednesday. 

For the full year 2013, net income rose 63.1 percent to $176.9 million, or $2.44 per diluted share, up from $108.5 million, or $1.50 per diluted share, in the previous year.