Spirit Airlines’ Return to Unit Revenue Growth Looks Short-Lived | The Motley Fool

The long-awaited return to unit revenue growth won’t last

The revenue story for the quarter mostly played out as expected, as Spirit continued to make progress with revenue-boosting initiatives including dynamic pricing of seats, and benefited from trends in fare pricing. Fornaro noted that this was the first time in two-and-a-half years that either passenger revenue or non-ticket revenue increased year over year. Moreover, Spirit’s quarterly TRASM growth of 5.7% actually beat its last guidance update, which called for 5.5% growth. And passenger yields (the average fare paid per mile, per passenger) rose 7.1%.

Despite those encouraging results, however, Spirit issued an out-of-the-blue gloomy outlook, saying that in late June, it began noticing a more competitive environment in a few markets and is now experiencing “deeper discount levels than we have experienced yet this year” in many more. Just as it was beginning to experience some success in boosting prices, Spirit is now being forced to hold fares down during the peak summer travel period to stay competitive.

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Spirit Airlines’ Return to Unit Revenue Growth Looks Short-Lived.