Our Terms of Service and Privacy Policy have changed.

By continuing to use this site, you are agreeing to the new Privacy Policy and Terms of Service.

Spirit Airlines files to go public

By Aaron Smith, staff writer


NEW YORK (CNNMoney.com) -- Spirit Airlines Inc. is going public.

The airline, based in Ft. Lauderdale, Fla., has filed with the Securities and Exchange Commission for an initial public offering.

The S-1 filing does not specify the number of shares it plans to sell or assign them a value, but it did say that it plans to use the proceeds to pay off some $264 million in debt.

"The IPO will strengthen their position and, if completed, will demonstrate to the market and the industry that they are a serious airline," said Ray Neidl, airline analyst with the Maxim Group. "To their credit, they weathered the past 2 years -- which were extremely challenging due first to runaway fuel prices, and then to the challenging economy."

The company has several underwriters, including Citi (C, Fortune 500), JPMorgan Stanley (JPM, Fortune 500), Barclays Capital (BCS) and Dahlman Rose & Co. The airline, led by Chief Executive Officer Ben Baldanza, said that its revenue for 2009 totaled $700 million.

Spirit describes itself as "an ultra low-cost, low-fare airline" that provides flights between South Florida and the Caribbean and Latin America. The airline said that its average base fare was $83 during the first six months of 2010, "and we regularly offer promotional base fares of $9 or less."

The airline said it has reduced base fares by 40% since 2007, "with the goal of stimulating additional passenger demand," while adding additional fees for baggage and seat selection services.

This practice has become common in the airline industry over the last couple years, as airlines struggled with the recession and volatile fuel prices. Most airlines began charging additional fees for services that once came for free, such as checked luggage, non-alcoholic drinks and food.

And Spirit made it crystal clear in its filing that these new fees are not going away, but it also said that it intends to continuing lowering air fares.

Harlan Pratt, a finance professor who covers the airline industry at Northeastern University's College of Business Administration in Boston, referred to Spirit as "the American Ryanair " -- a reference to the low-cost Irish airline that relies heavily on fees. He said this distinction could give Spirit a competitive edge.

"We're going to see an upward escalation in airfares, and that gives Spirit the opportunity to become the carrier that's known for cheap air fares," he said. To top of page

Index Last Change % Change
Dow 17,891.16 117.52 0.66%
Nasdaq 4,817.59 42.23 0.88%
S&P 500 2,081.43 16.13 0.78%
Treasuries 1.86 0.05 2.53%
Data as of 6:00pm ET
Company Price Change % Change
Bank of America Corp... 14.77 0.21 1.44%
Ford Motor Co 13.62 0.06 0.44%
Apple Inc 93.64 -0.10 -0.11%
Freeport-McMoRan Inc... 13.55 -0.45 -3.21%
Frontier Communicati... 5.44 -0.12 -2.16%
Data as of 4:15pm ET
Sponsors

Sections

Shares of Amazon have been on fire lately. Investors are bullish after the company's latest earnings. Even Warren Buffett is a big fan of Amazon CEO Jeff Bezos -- even though Berkshire Hathaway does not own Amazon stock. More

It's getting worse for Puerto Rico. The island defaulted on $422 million in bonds related to its Government Development Bank on Monday. Congress is currently debating an aid package for the island. More

Tech leaders Apple, Alphabet and Microsoft all disappointed Wall Street with their latest earnings reports. And that's dragged the Nasdaq back near correction territory. Is this the beginning of another huge pullback or an overreaction? More

Visa says new software will allow consumers to check out with chip cards as fast as swiping a card with magnetic strip. More