American ultra-low-cost carrier (ULCC) Spirit Airlines has detailed capacity plans for the rest of the year. Heading into the third quarter, which starts in just a couple of weeks, Spirit Airlines is planning double-digit growth compared to the same quarter in 2019 and only plans to grow that come the fourth quarter. This will lead the airline to a modest capacity increase for the year compared to 2019, emphasizing the continuing improvement of the air travel industry.
Spirit Airlines plans third and fourth quarter capacity increases
Spirit Airlines had planned significant growth for 2020 and 2021 before the crisis hit. That led the airline to hit pause on its growth plans. Now, the carrier is coming back to business. After a year in recovery mode, the airline is back on its growth trajectory and is betting big on leisure travelers.
Just looking at data from 2021, the airline recorded capacity down 18.9% in the first quarter compared to the same time in 2019. In the second quarter, Spirit expects its final flown capacity to be down around 5.2% from the same quarter in 2019. However, from the third quarter, things start to change.
In the third quarter, which stretches from July through September, Spirit expects its capacity to be up 10% from the same quarter of 2019. If that is not impressive enough, come the fourth quarter, the airline expects its capacity to be up 21% compared to the fourth quarter of 2019.
Altogether, the capacity increases will see Spirit fly about 2.0% more capacity in 2021 than in 2019. While a relatively modest increase, this represents the start of the airline’s return to its growth trajectory.
An improving airline environment
The environment has gotten significantly better for airlines. As a ULCC, Spirit has an advantage in the recovery, as it is already suited to fly leisure and visiting friends and relatives (VFR) traffic at low, unbundled fares and turn a profit. While it has yet to turn a quarterly profit since the start of the crisis, the airline is getting closer to that goal each day.
In fact, Spirit now expects, based on an improvement in operating yields, its Earnings Before Interest, Taxes, Depreciation, and Amortization (EBITDA) to be “modestly positive.” Yields have been helped by returning leisure travelers.
Spirit Airlines has seen an impressive recovery in leisure demand both in domestic and international markets. The continued improvement through the second quarter leads the airline to expect its load factor to hit 84% for the second quarter, with many flights going out well over that load factor. Even more, this is in line with the airline’s performance in the second quarter of 2019.
Spirit Airlines is willing to put up a fight
With most business travelers still waiting on the sidelines, Spirit Airlines is competing with plenty of other airlines for leisure traffic, and it is not willing to back down. The airline has continued its growth in 2021, including returning and adding new cities in Latin America and the Caribbean.
As Spirit targets double-digit growth, this will be driven by a mix of new routes and growing frequencies. As the airline has accelerated deliveries of new Airbus A320neo aircraft, with 16 total new aircraft planned to arrive this year, it will add more frequencies and grow its route network.
Much of Spirit’s growth is also targeting new routes. While plenty of already started in advance of the summer, including a daring transcontinental flight from LaGuardia, there are more new routes on the horizon. One of the biggest splashes expected in the fourth quarter will be the airline’s entrance at Miami International Airport (MIA), with 30 new routes planned. Plus, there will be growth in other markets like St. Louis and Louisville.
All in all, Spirit Airlines has a lot of runway left in the US, and it is accelerating for takeoff. The carrier has no dearth of options for new routes. The constraints on that growth will be limitations in the pace of Airbus deliveries, the hiring of enough crew to sustain the new routes, and access to both gate space and takeoff and landing rights wherever they want to fly.
Are you excited to see Spirit Airlines plan double-digit capacity increases later this year? Where do you want to see Spirit expand? Let us know in the comments!
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