Although it has a hub in Fort Lauderdale, from which it serves domestic and Caribbean markets, Spirit has taken a scatter-shot approach to growth, recently adding leisure destinations like Orlando and Atlantic City and competitors' hubs such as Dallas and Minneapolis. "They seem somewhat enigmatic," says aviation consultant Stan Hula. "From a traditional strategy point of view, their objectives are difficult to discern." But Deutsche Bank analyst Mike Linenberg wrote, in a recent report that "Spirit's strategy behind network planning is simple: Fly where the company will make the highest returns." In May 2011 Spirit began service in Dallas, where it now has 15 destinations. In a recent interview with The Dallas Morning News, Barry Biffle, Spirit chief marketing officer, explained: "We're growing 15 to 20%, so I'm going to grow somewhere. Dallas/Fort Worth has some of the highest fares and we believe we have a cost advantage versus other carriers in the market." American Airlines ( AAMRQ.PK) has more than 700 daily flights at the airport, but Biffle told the newspaper that Spirit "is not after any given incumbent airline." In fact, Spirit has just one or two daily departures in most Dallas markets. The carrier has said it does not chase business travelers, who want schedule frequencies and seats with at least a bit of legroom and who are sought by mainline carriers. In Spirit's favor is the lowest costs in the airline industry -- cost per available seat mile excluding fuel is around 6.05 cents-- and increasing numbers of passengers as capacity grows. "Spirit's load factors and organic growth (prove) that the business model is effective despite a steady stream of less-than-glowing media reports and complaints from over-entitled customers," wrote Wolfe Trahan analyst Hunter Keay, in a report issued Friday.
In fact, Spirit capacity in June was 20% higher than a year earlier. Only Hawaiian ( HA - Get Report) grew faster, at 23%: Overall industry growth was flat. Spirit's share price is also growing, up 44% so far this year, the second biggest gain among major carriers after merger-hungry, unhedged US Airways ( LCC), which is up 177%. Spirit shares closed Friday at $22.75, up 57 cents. Analysts expect the trend to continue. Keay has an outperform on the shares and a $27 price target. Linenberg has a $28 price target and Avondale Partners analyst Fred Lowrance has a $35 target. Shares reached an all-time high of $24.75 in April, then slipped to $19.04 on July 1. On that date, Morgan Stanley analyst William Greene issued a report saying Spirit "has been a notable laggard as the legacy airlines have rallied in recent months -- we consider this weakness an opportunity." Last week, a still-positive Greene wrote that Spirit, with its low cost/low fare model and exposure to the growing Latin American market, still "offers compelling upside." -- Written by Ted Reed in Charlotte, N.C. >To contact the writer of this article, click here: Ted Reed >To follow the writer on Twitter, go to http://twitter.com/tedreednc. >To contact the writer of this article, click here: Ted Reed