Since taking the reins at Spirit Airlines Inc this year, Ted Christie has overseen a 38 percent share decline and a deteriorating financial outlook. But just wait for next year as the discounter steps up efforts to squeeze more revenue out of travellers.
“Nobody’s satisfied with the performance to date and I am certainly among that group,” Spirit’s chief executive officer said in an interview at an airline conference in Los Angeles.
“We haven’t deployed all the products that we wanted to deploy” in 2019, such as new
ways to sell on-board perks such as seat assignments and baggage charges.
The effort to increase non-ticket revenue is poised to gain momentum in 2020 as the carrier begins pushing sales of ancillary items such as access to larger seats, along with vacation products like hotel rooms and show tickets.
That sales category is already growing faster than fare revenue, and the initiatives for next year provide “cause for optimism,” the CEO said.
The shares fell 2.5 percent to $36.14 at the close in New York after the company cut its financial outlook, the second reduction since July. This year, Spirit has tumbled the most among US airlines with a market value of at least $1 billion.
Spirit said fares over the summer proved weaker than expected, echoing similar comments from JetBlue Airways Corp.
Both airlines, which cater primarily to leisure travelers, also cited the financial fallout from Hurricane Dorian.
Spirit cancelled 768 flights due to the hurricane, which contributed to a $25 million sales hit.
For the third quarter, Spirit said total revenue for each seat flown a mile will drop as much as 3.5 percent, compared with the previous forecast of a decline of no more than 2 percent.
While investors “are obviously frustrated in the performance of the stock, I share their frustration,” Christie said. “They like the model, they like the opportunities that are before us and they want to see us deliver.”
Christie spoke at the Airline Passenger Experience Association conference, where Spirit introduced new seats it’s introducing to its fleet over the next few years.
The first seats will come in November on a new Airbus SE jetliner, with about six planes expected by year’s end. Spirit will also retrofit some aircraft and eventually finish its entire fleet over the next several years, Christie said.