In May 2017, Spirit Airlines’ (SAVE) capacity grew 9.0% YoY (year-over-year), which was slower than its 12.9% YoY growth in April 2017. In fact, capacity growth at Spirit Airlines has been slowing down since the second half of 2016.
During the first half of 2016, Spirit Airlines grew its capacity at a significant rate of 25% YoY. Sensing the need for capacity discipline, this growth was reduced to 16% YoY in the second half of 2016.
Capacity growth was further reduced to 15% YoY in the first quarter of 2017. As of May 2017, Spirit Airlines capacity had increased by 13.2% YoY, which is slower than the 20% YoY growth it recorded in 2016 and the 30% capacity growth recorded in 2015.
Faster than peers
Despite this slowdown, Spirit Airlines continues to be the fastest-growing airline among peers. The next-highest YoY capacity growth was recorded by Alaska Air (ALK) at 5.1% in May. Southwest Airlines (LUV) recorded a capacity growth of 4.8% YoY, while JetBlue Airways (JBLU) has grown its capacity by 4.6% YoY in the same period.
On the lower end, United Continental (UAL) has grown its capacity by 3.1% YoY, and American Airlines’ (AAL) capacity growth was flat for the period. Delta Air Lines (DAL) is the only carrier to have recorded a capacity decline of 0.4% YoY as of May 2017.
For 2Q17, Spirit Airlines (SAVE) has given a capacity growth guidance of 16.7% YoY. As the first two months of the quarter have seen an average capacity growth of just 10.9% YoY, investors can reasonably expect higher growth next month. For fiscal 2017, Spirit Airlines expects its capacity to grow in the range of 17%–17.5%.
Notably, investors can gain exposure to Spirit Airlines by investing in the First Trust Industrials/Producer Durables AlphaDEX Fund (FXR), which invests 1.8% of its total portfolio in Spirit Airlines.