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(Updates with closing share price in last paragraph.)
Nov. 15 (Bloomberg) -- Spirit Airlines Inc.’s agreement to buy 75 single-aisle jets from Airbus SAS, with list prices totaling $6.7 billion, would triple the carrier’s existing fleet within the next decade.
The non-binding memorandum of understanding includes 45 upgraded A320neos with new, more fuel-efficient engines and 30 of the existing model. The aircraft will be used on the Florida- based budget carrier’s growth markets in the U.S., Caribbean and Latin America, Chief Executive Officer Ben Baldanza said at the Dubai Air Show.
Spirit focuses on leisure travelers who fly to beach destinations, and offers low base fares with higher add-on fees, such as $35 to bring a piece of luggage aboard a plane. The carrier had 35 leased Airbus jets in its fleet as of September, most of them A319s, and has an additional 33 on order.
“Spirit is a very-low-fare airline, and in tough economic times a larger percentage of people look for value, so we do pretty well,” Baldanza said. “We feel good about Spirit’s growth and having a cost advantage over our competition.”
Through the first nine months of this year, Spirit’s revenue rose 41 percent to $797 million while its operating income more than doubled to $106.4 million. Spirit and other carriers are struggling to cover rising fuel costs through fare increases. Spirit’s fuel bill jumped 65 percent in the first nine months of this year, to $293.2 million.
Spirit, part-owned by Indigo Partners LLC and Oaktree Capital Management, plans to firm up the order before the year’s end, with the jets delivered from 2017 to 2021, Baldanza said. The growth plans won’t be deflected by a slowing economy, he said.
Spirit jumped 41 percent before today following the Miramar, Florida-based carrier’s initial public offering May 25. The stock fell 1 percent to $16.74 at 4 p.m. in New York.
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