Spirit Airlines SAVE plans to flag off non-stop flights between Los Angeles International Airport (LAX) and Oakland International Airport (OAK), starting Nov 12, 2015. Under this latest plan, the company will operate one morning and one evening non-stop flight on a daily basis.
With the launch of this service, travelers from Los Angeles will able to save time by skipping the four-hour road journey to San Francisco. Moreover, passengers will benefit from Spirit Airlines’ affordable ticket rates, thereby increasing air traffic and load factor (percentage of seats filled with passengers) for the carrier. Furthermore, the new offering will open up more travel options during a busy holiday season.
Interestingly, Spirit Airlines charges 40% lower ticket rates as compared to other carriers. Even after considering value-added services, the ticket prices have been kept at a significant 35% discounted rate. This largely attracts budget-conscious passengers who can avail flight services to their favorite destinations at such reasonable costs.
Moreover, the company’s Ultra-Low Bare Fares (TM) program and the Frill Control (TM) service allow passengers to pay for only those services that they require.
In the first quarter of 2015, Spirit Airlines came up with strong financial numbers. Operating revenues surged a significant 12.6% year over year while adjusted net income grew 85%. Lower fuel costs and 22.1% growth in Revenue Passenger Miles (RPM) or air traffic have supported the upside. The company also exited the reported quarter with 70 flights, up 25% year over year.
Hence, we believe that launch of such new services coupled with increased number of carriers under its belt will continue to drive profits for the company going forward.
Spirit Airlines currently carries a Zacks Rank #4 (Sell).
Stocks to Consider
Better-ranked stocks in the same industry include Ryanair Holdings plc RYAAY, SkyWest Inc. SKYW and JetBlue Airways Corporation JBLU. Both Ryanair and SkyWest sport a Zacks Rank #1 (Strong Buy) while JetBlue carries a Zacks Rank #2 (Buy).
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