Low-cost carrier Spirit Airlines expects unit costs to decline in the fourth quarter, after what it calls a disappointing cost performance in its second quarter.
The carrier's cost per available seat mile (CASM) excluding fuel rose 11.8% to 6.05 cents in the three months ending 30 June. While this looks competitive with other airlines, says Spirit chief financial officer Ted Christie, the carrier is "disappointed with the cost performance," he adds.
Christie attributes the higher costs to maintenance expenses related to the airline's maturing fleet, accommodating passengers due to flight cancellations and aircraft damage during a hail storm at Dallas in April.
Other drivers behind the higher costs include one-time expenses related to a seat maintenance programme that Spirit is performing on its aircraft, which involves taking some aircraft out of service. Having fewer spare aircraft has led to some irregular operations and flight cancellations, says Spirit chief executive Ban Baldanza.
The opening of new cities in Spirit's network has also contributed to higher costs due to start-up expenses, say Spirit's executives, who expect these costs to abate in the fourth quarter.
"We see that as a one-time second and third quarter cost," says Baldanza.
Christie estimates that CASM excluding fuel will be up 5.2% to 6.1% year-on-year in the third quarter. However, CASM excluding fuel is expected to be down in the mid-single digit region in the fourth quarter, he says.