This Day On The Street
Continue to site right-arrow
ADVERTISEMENT
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
TheStreet Open House

Growing Spirit Airlines Prefers Texas Economy Over Florida's

Stocks in this article: AAMRQ.PK LCC SAVE

CHARLOTTE, N.C. ( TheStreet) -- Three decades after the deregulation of the airline industry, consolidation seemingly has been completed and capacity growth largely has ceased.

Spirit Airlines (SAVE - Get Report) is the exception to the trend. The carrier, now the country's 11th largest in terms of revenue passenger miles, expects to grow about 22% this year and 15% to 20% over the next several years. Recently, the growth has been focused on Texas, where the economy is expanding faster than in Spirit's Florida home.

"We are a growth company," said CEO Ben Baldanza, in an interview. "The industry is shrinking through consolidation, but we have positioned ourselves with investors as a growth company. Investors who invest in Spirit buy good returns with a growth portfolio."

On Tuesday, shares rose 4.6%, leading the airline industry after the carrier beat estimates and reported a series of improved metrics, which would have improved even more if not for the impact of Hurricane Sandy. For the year, Spirit shares are up 12%.

"The growth has been excluding Florida," said Executive Vice President Barry Biffle. "We're about maximizing profits and return on invested capital. This environment (South Florida) doesn't call for more capacity. (For instance) New York to Florida is cheap and has been relatively cheap for 30 to 40 years."

Between March 2012 and March 2013, Spirit's capacity at Dallas/Fort Worth International Airport grew by 7%; it now accounts for 16% of total capacity. During the same period, the carrier's capacity at Fort Lauderdale International Airport declined 6% to 41% of its capacity.

Texas has "a really good economy (and) that generates better things from an airline perspective," Biffle said. Since October, Spirit has added 14 new routes including Houston to Chicago, Las Vegas and Orlando, and Dallas to Fort Myers, Fla. and New Orleans. In the coming four months, the carrier will add 11 routes including Houston to Los Angeles and Dallas to Minneapolis, Philadelphia, Oakland, Calif., Los Angeles, Cancun, Los Cabos and Latrobe, Pa.

Clearly, the carrier does not fear other carrier's hubs or even flying between a single carrier's hubs. "We today fly Dallas/Chicago," which connects two American (AAMRQ.PK) hubs, Biffle said. "We are not allergic to flying between two hubs." He said Spirit will look at Dallas/Charlotte, given that the merger between US Airways (LCC) and American may lead to pricing changes on the route.

1 of 2

Check Out Our Best Services for Investors

Action Alerts PLUS

Jim Cramer and Stephanie Link reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

Jim Cramer's protégé, David Peltier, uncovers low dollar stocks with extraordinary upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
Try it NOW
Try it NOW
Try it NOW

Check Out Our Best Services for Investors

Dividend Stock Advisor

Jim Cramer's protégé, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Options Profits

Our options trading pros provide over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • Actionable options commentary and news
  • Real-time trading community
Try it NOW
Try it NOW
Try it NOW
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!

Markets

DOW 17,416.85 +225.48 1.31%
S&P 500 2,021.25 +19.09 0.95%
NASDAQ 4,683.4070 +45.4130 0.98%

Partners Compare Online Brokers

Free Reports

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs