Cost Neutral, not even breaking a sweat.
 

How is it Cost Neutral if they have to increase fares to absorb the cost? Or am I missing something? Im not being a D-ck Im just slightly confused. Long night watching my Beloved Pats lose, lol



"For 2018, Spirit Airlines would need mid-high single-digit unit revenue growth to keep its pre-tax margin flat in the face of rising fuel costs. That will be difficult to achieve, but it's not impossible. A relatively small (less than $10 one-way) increase in Spirit's average fare would do the trick. Airlines across the industry should be motivated to avoid fare wars this year, given the steep fuel cost increases they face."

Read that quote again. I’ve put the important text in bold.

And here is another:
“Furthermore, Spirit's effective tax rate will drop from 37% to 24% this year, due to tax reform. That should enable Spirit Airlines to grow its earnings per share in 2018, despite absorbing big increases in its fuel and labor costs.”

Dude, read the point right before your highlight. High single Digit REVENUE would be needed to offset. Its not neutral if you need to RAISE revenue which was the previous posters point. Its a see saw, we drop a fat weight on one side then they have to balance it out to get back to neutral, or atleast attempt to, raising REVENUE, hence its not cost neutral.

Any company is gonna try to offset any increase in costs, whatever it maybe.. They just gonna absorb any and all costs and just watch profits dwindle? Of course they wanna find ways to mitigate any dramatic increase in costs..The have a fiduciary responsibility to the owners (shareholders) to do so.

This is in reference the rising fuel costs and has nothing to do with the contract.

However, "Spirit Airlines previously estimated that nonfuel unit costs would decrease 3%-5% year over year in 2018, excluding the impact of any pilot deal, in line with the 4% decrease it expects to report for the final quarter of 2017.

In other words, Spirit Airlines should be able to offset the vast majority of this increase in pilot compensation through other savings during 2018. The net result is likely to be low single-digit nonfuel unit cost growth. This is a small price to pay for achieving better labor relations."

It doesn't say what 'other savings' is but I would guess it has to do with Section 1 and 25.

Their assumption of $700 million is off by about $256 million.... ($956 million was the number I was told)

I haven't done the math, I can't because I'm not in the accounting dept. But if you told me for a fact that this contract was cost neutral, I would absolutely believe it. There are so many concessions here it's mind boggling. Here are just a few off the top of my head:

PBS = Less pilots per Aircraft = Smaller payroll

Less vacation dropping with PBS = Ditto

Section 25 changes = Ditto

Transition conflict gone = Less open time = Ditto

No reserve drops = Ditto

18 hour short hotel = free hotel transportation instead of paid shuttle service (This is way more money than you might think.) (I'm of the opinion that the majority of our overnights will shrink to fit this)

Usually the worst part of my trips are waiting for the hotel shuttle on a short layover. No kidding

At least we are still confortable downtown to enjoy the new no pay 23:30 layover

Absolutely. No argument here.

The plus side is that when your outbound flight is delayed, you can simply take a later van. Transportation services are usually not as flexible.