Spirit Airlines filed their S-1 statement in anticipation of an IPO, and complain all you want about them, they know how to run an airline. In short, if you like Allegiant’s finances, you’ll be pretty impressed with Spirit’s.
Read all of the complaints online about how Spirit is the worst run airline blah blah blah – it’s nonsense. In 2009 they made $83 million on $700 million in revenue. That’s not the BS “operating profit” that some airlines brag about, it’s actual profit. Remember in 2008 when the economy was collapsing and the major airlines were complaining about how horrible the market was? Spirit wasn’t complaining, because they made $33 million on $787 million in revenue.
They’ve succeeded by shrinking themselves to the right size (28 airplanes in 2009 vs 36 in 2007); increasing utilization (13 hours a day in 2009 vs 8.9 in 2005); and raising ancillary revenues to $31.28 per ticket for the first half of 2010. Oh, and they did that while at the same time lowering average fares from $104 in 2006 to $82 in the first half of 2010. In comparison, Allegiant had an average fare of $70, with $33 in ancillary revenues in 2009 on a similar average stage length (about 900 miles for both). Both airlines, frankly, have performed amazingly well.
It’s not brain surgery (I’m not at all discounting how difficult their job is) – it’s just about consistently executing on their plan to lower fares, reduce costs, and shift as much of their revenue as possible toward ancillary non-fare charges.
Their executives are not overcompensated, especially considering their impressive ongoing financial performance, with their CEO earning about $800k in salary and bonus last year. Compare that to the CEOs in the rest of the industry, and he’s basically living below the poverty line. OK, not quite.
Does Spirit occasionally have some customer service issues? Sure. But they have really done just about everything right from an operational perspective. People can laugh all they want, but these guys understand how to run an airline.