Spirit forecasts 2014 operating margin

Washington DC
Source:
This story is sourced from Pro
See more Pro news »

Low-cost carrier Spirit Airlines is projecting a 16-18% operating margin in 2014.

The Miramar, Florida-based airline expects its operating margin to come in at 13-14.5% in the first quarter of this year, it says in updated guidance today.

The airline will grow full-year capacity at 16.7%. Available seat miles (ASMs) will grow 20.6% in the first quarter, 17% in the second, 13.3% in the third and finally 16.5% in the fourth.

Adjusted operating cost per ASM (CASM) is expected to be in the 9.81-9.86 cents range for the full year, and 10-10.06 cents for the first quarter. When excluding fuel, this is forecasted to come in at between 5.97 and 6.03 cents for 2014, and 6.10-6.16 cents for the first quarter.

In an earnings call today, the airline's chief financial officer Ted Christie says the carrier could incur additional expenses as it places an International Aero Engines V2500 engine back in service, but adds that the costs will not be "material".

The powerplant was involved in an October 2013 engine failure. Spirit had estimated that it would incur $8 million of expenses related to the repair of the engine and Airbus A319 that was involved in the incident. The airline says today it expects to receive insurance proceeds covering all the expenses in excess of a $750,000 deductible, which it had expensed in the fourth quarter of 2013.