Spirit posts profits in the first half of 2009
Brendan Sobie, Washington DC (09Jul09, 14:21 GMT, 266 words)
Spirit Airlines claims to have turned a better than expected profit in the first half of the year, but warns the outlook for the second half is murky.
The low-cost carrier's CEO, Ben Baldanza, says revenues for the first half of 2009 came in below budget but costs were below budget by an even wider margin. As a result, he says privately-owned Spirit had a higher than planned operating margin.
But Baldanza adds he is not sure if the carrier will be able to stay profitable in the second half. He says the outlook for the second half is "grey" and points out for Spirit there are more off peak months in the second half of the year than the first half.
He says May was relatively weak for the entire US airline industry and this often indicates a weak fall. "Demand is a little weaker than thought in part because fuel prices are starting to creep up," Baldanza says.
But fuel prices in the first half were significantly lower than last year, which helped Spirit achieve a higher than budgeted reduction in costs.
Baldanza says Spirit has been profitable since 2007, or one year after Baldanza took over as CEO and embarked on a major restructuring which focused on reducing costs and dramatically expanding the carrier's Caribbean and Latin American network. Based on DOT data, Florida-based Spirit last year turned a $7 million operating profit on revenues of $661 million.
Baldanza says Spirit's balance sheet is also in relatively good shape. "We'll finish this year with more cash than we started the year," he predicts.
Source: Air Transport Intelligence news