Low-cost carrier Spirit Airlines is experiencing a weak unit revenue outlook and has been downgraded to a "Market Perform" status by Hot Research financial analyst Raymond James, Barron's reports.
"Based on updated fourth-quarter 2014 guidance, it is clear that Spirit (ticker: SAVE) is seeing term unit revenue (TRASM) weakness," James writes in his analysis of the company.
"We believe this is primarily due to large capacity additions and low introductory fares in Dallas (about 8% of Spirit's total seat capacity) as Southwest Airlines (LUV) takes advantage of the repeal of the Wright Amendment."
The airline, known for its affordable ticket pricing and modest accommodations, is however said to be well-poised for the future-an increasing number of consumers are siding with low-cost tickets offering limited destinations and limited on-flight luxuries, several financial reports suggest.
While it has been downgraded from its original "Outperform" status, it certainly has prospects amidst a rocky, competitive airline industry.
"Spirit has been seeing a compression in the fare structure for close-in bookings primarily during off-peak period," James goes on to write in his report.
"It is likely that Spirit's growth acceleration from 15% in third quarter to 19% in fourth quarter is exacerbating the impact of lower off-peak pricing."
Spirit Airlines has been deemed by many the "underappreciated growth story" within its sector of industry, with some believing its business model has demonstrated operational resilience since its over three-decade existence.
The company's main slogan is "Less Money, More Go."
