Spirit Airlines CEO: More Opportunity Ahead And Not At The Expense Of Increased Fees

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Spirit Airlines Incorporated SAVE came out with much better than expected fourth-quarter earnings on Tuesday, which sent the company’s shares soaring. The company posted a fourth-quarter EPS of $0.80, an increase of 43.2 percent year-over-year.

Spirit Airways President & CEO Ben Baldanza, discussed fourth-quarter profits on
CNBC
’s show “Mad Money” with
Jim Cramer
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Lots of Markets Added, Opportunities Still Ahead

When discussing how there can still be lots of opportunities ahead when so many markets were recently added, Baldanza explained the two-fold opportunity.
“Well there’s more opportunity for two reasons. One: other airlines' fares continue to rise, which creates more of an umbrella for more of a discounter for guys like us. And two: our costs keep getting lower; and as our cost keep getting lower, more opportunities become available for us to fly profitably,” Baldanza said.

Pricing Compression

In speaking on oil and gas prices and their influence on the airline industry, Baldanza continued, “The reality is oil is any airline's biggest input cost and that input cost has dropped a lot.
“What that does is it makes it more economic for all airlines to charge some lower fares, especially to fill marginal capacity. That’s what we meant by the pricing compression comment [in our conference call].”

Related Link: The Spirit Airlines Model Is 'Growing Stronger,' Barclays Says

'You Can Use Every Plane You Can Get Your Hands On, Couldn’t You?'

When Cramer questioned Baldanza about the demand for more airplanes, Baldanza answered logically. “Well, although the reality is it’s such a long-term assets. We can’t think of too dramatically changing the fleet just based on short-term economics. So, when we buy plans, we got to think about the next 20 years, not just about the next two quarters.”
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Posted In: CNBCTravelMediaGeneralBen BaldanzaCNBCJim CramerMad Money
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