Spirit Air Goes After AA Market

[WingNaPrayer]

Spirit Airlines (Fort Lauderdale/Hollywood) despite the high cost of fuel and an economy that is softening, will increase the number of flights at its Fort Lauderdale/Hollywood hub by 40% for this coming summer.

Spirit intends to offer 70 flights a day from FLL by mid-summer, up from the current 34 a day and the 50 per day it peaked last summer. Spirit has become the largest carrier at FLL with over 15% of the market so far.

However the fast-growing FLL airport is faced with very tight gate, terminal and runway capacity issues already during it's peak hours. Spirit plans to add the new flights during off-peak hours to help avoid delays.

By the end of 2008, Spirit plans to serve 44 cities from FLL (28 are to international destinations in the AA market). The ultra low-cast carrier will launch its next new route to Panama City, Panama on January 31.

 

[MAH4546]

Spirit Airlines (Fort Lauderdale/Hollywood) despite the high cost of fuel and an economy that is softening, will increase the number of flights at its Fort Lauderdale/Hollywood hub by 40% for this coming summer.

Spirit intends to offer 70 flights a day from FLL by mid-summer, up from the current 34 a day and the 50 per day it peaked last summer. Spirit has become the largest carrier at FLL with over 15% of the market so far.

However the fast-growing FLL airport is faced with very tight gate, terminal and runway capacity issues already during it's peak hours. Spirit plans to add the new flights during off-peak hours to help avoid delays.

By the end of 2008, Spirit plans to serve 44 cities from FLL (28 are to international destinations in the AA market). The ultra low-cast carrier will launch its next new route to Panama City, Panama on January 31.

AA does not fly to all the Latin/Caribbean markets that Spirit flies to (i.e. Ponce, Aguadilla, Grand Turk, Cartagena).

And, so far, Spirit has been performing pretty poorly on most Latin routes, especially to Central America. Caribbean routes and Peru have done well.

 

[eolesen]

Spirit is hardly competition. They fight over the table scraps at the bottom of the yield barrel. Let 'em have 'em. That's more room for the last minute bookers and better yielding tickets. It's also a few more middle seats open, which means a heck of a lot to me when I fly in Y.

 

[MAH4546]

Spirit is hardly competition. They fight over the table scraps at the bottom of the yield barrel. Let 'em have 'em. That's more room for the last minute bookers and better yielding tickets. It's also a few more middle seats open, which means a heck of a lot to me when I fly in Y.

Very true, and it's largely thanks to their pricing structure, their expensive baggage fees, charging for checked-in luggage, sodas, etc. It really isn't for everyone. Their fares are also not significantly lower than AA outside of the promo fares.

Spirit's ULCC is not for everybody, and allows AA and NK to co-exist quite nicely.

Spirit, for example, doesn't cater to business travelers. They don't even try with non-daily frequencies and schedules such as redeyes to San Pedro Sula.

 

[jimntx]

Besides, with almost $7 billion in the bank, we can play the game of "our tickets are lower than yours" for a lot longer than Spirit can. (See also, Legend Airlines, Dallas Love Field)

 

[WingNaPrayer]

None of it matters and I don't think Spirit is worried about AA after the way American pissed away it's presence at FLL. They had a good thing started at FLL and they literally pissed it away.

I've never seen an airline that runs scared where it counts like AA does.

 

[donttouchthebeauty]

Besides, with almost $7 billion in the bank, we can play the game of "our tickets are lower than yours" for a lot longer than Spirit can. (See also, Legend Airlines, Dallas Love Field)

Thats a nice scenario, only AMR doesnt have near 7 billion... Nice try though.. In case you havent noticed, take a good look at SWA, no one used to worry about them either, now they have much more enplanements than even AMR... So, be careful, they definitely have a nicer fleet...

 

[Skymess]

None of it matters and I don't think Spirit is worried about AA after the way American pissed away it's presence at FLL. They had a good thing started at FLL and they literally pissed it away.

I've never seen an airline that runs scared where it counts like AA does.

MIA is 30 minutes away and it's hard to find more AA domination than that airport. FLL is a flea bag airport like sEwark.

As for competition; there's competition and there's "competition". Spirit is as much competition as Tower Air was from JFK to CDG or JFK to Brazil vs. AA. They will get the "can't afford the bus come fly on us" crowds but no long term loyalty. The minute their mgmt gets to the point where the low fares aren't going to cut it and try to raise fares they'll pull out of some markets and we'll still be there.

 

[WingNaPrayer]

and we'll still be there.

Flying on McDonalds fares and vouchers definitely. AA certainly does get the voucher crowd in South Florida, now that's a market they have cornered!

 

[eolesen]

Besides, with almost $7 billion in the bank, we can play the game of "our tickets are lower than yours" for a lot longer than Spirit can. (See also, Legend Airlines, Dallas Love Field)

It's not that high anymore, Jim. It was below $5B as of mid December, and could be closer to $4.5B unrestricted when the financials are announced Wednesday.

 

[FWAAA]

It's not that high anymore, Jim. It was below $5B as of mid December, and could be closer to $4.5B unrestricted when the financials are announced Wednesday.

That's correct - about a week ago, I posted the contents of the recent Eagle Eye, in which management said it expected the unrestricted cash to be around $4.35 billion:

Liquidity: We expect to end the fourth quarter with a cash and short-term investment balance of approximately $4.8 billion, including approximately $450 million in restricted cash and short-term investments. As previously announced, AMR will pay down approximately $900 million in debt in the fourth quarter, which consists of both scheduled payments and pre-payments.

http://www.shareholder.com/aa/EdgarDetail....1&SID=07-00

Not too shabby, considering the debt repayments of almost $1 billion in the fourth quarter alone. I expect total debt and net debt to be significantly lower, year over year.

As long as AMR stays cash flow positive, AA can withstand high fuel prices and ineffective competition (like Spirit) for quite a while. In the first 3 quarters of 2007, AMR generated almost $2 billion of cash from operations, so cash flow isn't a problem. At least not for now.

 

[Skymess]

Flying on McDonalds fares and vouchers definitely. AA certainly does get the voucher crowd in South Florida, now that's a market they have cornered!

What's a McDonalds fare/voucher? Why don't you find one and post it?

 

[FWAAA]

What's a McDonalds fare/voucher? Why don't you find one and post it?

Buy a Happy Meal, get a voucher.

 

[WingNaPrayer]

You know, fares equivalent to the cost of a Big Mac and vouchers for when oversales force AA to give back 5 to 10 times what the passenger paid for a ticket in the first place.

Caraccas is a big one! Plenty of business travelers who just stack up the vouchers over several months travel and next thing you know, the whole family is taking a free vacation on AA. And I don't think anyone has to wonder where AA goes to get it back, do they?

 

[Skymess]

You know, fares equivalent to the cost of a Big Mac and vouchers for when oversales force AA to give back 5 to 10 times what the passenger paid for a ticket in the first place.

Caraccas is a big one! Plenty of business travelers who just stack up the vouchers over several months travel and next thing you know, the whole family is taking a free vacation on AA. And I don't think anyone has to wonder where AA goes to get it back, do they?

Where are you getting your info? And BTW, if you are going to spell caracas wrong you may as well spell it with two s's instead of two c's. Makes more sense that way.