FlyBoeingJets
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Spirit Gets $100M to Speed Up Deliveries
Tuesday July 19, 3:00 pm ET
By John Pain, AP Business Writer Spirit Airlines Gets $100 Million Investment to Speed New Plane Deliveries
MIAMI (AP) -- Spirit Airlines said Tuesday it received a $100 million investment to help switch to a more economical, all-Airbus fleet two years earlier than planned and expand the low-cost carrier's hedges against rising fuel prices.
Goldman Sachs Credit Partners is contributing about $30 million in its first investment in the privately held Miramar-based carrier, Spirit president Ben Baldanza said. Oaktree Capital Management, the Los Angeles-based investment company that bought a controlling interest in Spirit for $125 million last year, is giving most of the remaining $70 million, with airline management also chipping in.
Baldanza wouldn't say how much of a stake Goldman Sachs now had, but said Oaktree retains a controlling share.
The new funding lets Spirit replace its remaining 23 MD-80 jets with Airbus planes by early 2007, instead of 2009, Baldanza said. The new planes are about 35 percent to 45 percent more fuel efficient than the MD-80s, most of which were bought in the early 1990s, he said.
"Our basic view is if we have the lowest cost in the industry, which we're pushing to have with our new fleet, ... then we're fully capable of competing in a tough environment," he said in a phone interview.
Spirit began replacing its fleet last year after Oaktree's investment. The carrier ordered 35 aircraft from European jet maker Airbus for $2 billion, with an option to get 50 more for another $3 billion. Spirit is already flying 11 of the new jets, and 24 more Airbus A-319s and A-321s are on the way.
The carrier is holding off for now on deciding whether to change any of the options to firm orders, Baldanza said.
Spirit's older planes make it tougher to compete with other low-cost carriers, which have newer fleets that guzzle less gas, Calyon Securities analyst Ray Neidl said. JetBlue Airways Corp.'s fleet has an average age of about 2 or 3 years, while Southwest Airlines Co.'s are about 7 or 8 years, he said.
The carrier had an operating loss of $5.3 million in the first quarter, according to the U.S. Department of Transportation. Baldanza said Spirit's average fares are about 10 percent higher this year.
Spirit has 125 daily flights to 20 cities in the United States, Mexico and the Caribbean, the market where the airline has focused on by offering lower fares than traditional carriers such as AMR Corp.'s American Airlines.
In November, Spirit plans to add nonstop flights to the Bahamas from New York's LaGuardia Airport and Orlando. The airline will also start flights to Jamaica in November. By then, nearly a quarter of its flights will serve the Caribbean. The discount airline began in 1980 as Charter One, a Detroit-based charter tour operator, and changed its name to Spirit Airlines in 1992.
If MD-80's are gas guzzlers then DAL is in deep do-do. No wonder the NWA DC-9's are getting parked. And what about AA's MD's???
Tuesday July 19, 3:00 pm ET
By John Pain, AP Business Writer Spirit Airlines Gets $100 Million Investment to Speed New Plane Deliveries
MIAMI (AP) -- Spirit Airlines said Tuesday it received a $100 million investment to help switch to a more economical, all-Airbus fleet two years earlier than planned and expand the low-cost carrier's hedges against rising fuel prices.
Goldman Sachs Credit Partners is contributing about $30 million in its first investment in the privately held Miramar-based carrier, Spirit president Ben Baldanza said. Oaktree Capital Management, the Los Angeles-based investment company that bought a controlling interest in Spirit for $125 million last year, is giving most of the remaining $70 million, with airline management also chipping in.
Baldanza wouldn't say how much of a stake Goldman Sachs now had, but said Oaktree retains a controlling share.
The new funding lets Spirit replace its remaining 23 MD-80 jets with Airbus planes by early 2007, instead of 2009, Baldanza said. The new planes are about 35 percent to 45 percent more fuel efficient than the MD-80s, most of which were bought in the early 1990s, he said.
"Our basic view is if we have the lowest cost in the industry, which we're pushing to have with our new fleet, ... then we're fully capable of competing in a tough environment," he said in a phone interview.
Spirit began replacing its fleet last year after Oaktree's investment. The carrier ordered 35 aircraft from European jet maker Airbus for $2 billion, with an option to get 50 more for another $3 billion. Spirit is already flying 11 of the new jets, and 24 more Airbus A-319s and A-321s are on the way.
The carrier is holding off for now on deciding whether to change any of the options to firm orders, Baldanza said.
Spirit's older planes make it tougher to compete with other low-cost carriers, which have newer fleets that guzzle less gas, Calyon Securities analyst Ray Neidl said. JetBlue Airways Corp.'s fleet has an average age of about 2 or 3 years, while Southwest Airlines Co.'s are about 7 or 8 years, he said.
The carrier had an operating loss of $5.3 million in the first quarter, according to the U.S. Department of Transportation. Baldanza said Spirit's average fares are about 10 percent higher this year.
Spirit has 125 daily flights to 20 cities in the United States, Mexico and the Caribbean, the market where the airline has focused on by offering lower fares than traditional carriers such as AMR Corp.'s American Airlines.
In November, Spirit plans to add nonstop flights to the Bahamas from New York's LaGuardia Airport and Orlando. The airline will also start flights to Jamaica in November. By then, nearly a quarter of its flights will serve the Caribbean. The discount airline began in 1980 as Charter One, a Detroit-based charter tour operator, and changed its name to Spirit Airlines in 1992.
If MD-80's are gas guzzlers then DAL is in deep do-do. No wonder the NWA DC-9's are getting parked. And what about AA's MD's???
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