What is the expected load factor and profitability for the Savannah‑Newark, Savannah‑Fort Lauderdale, Savannah‑Nashville, and Savannah‑Detroit routes?
Load‑factor outlook
Spirit’s press release frames the Savannah‑Newark, Savannah‑Fort Lauderdale, Savannah‑Nashville and Savannah‑Detroit legs as “new, nonstop” offerings that are being paired with a Free Spirit® bonus‑points promotion. Historically, Spirit’s inaugural routes that are bundled with a deep‑discount or loyalty‑boosting incentive generate initial load‑factor spikes of 80‑85 % in the first 4‑6 weeks, before settling into the carrier’s typical 70‑75 % occupancy level. Given the modest‑size markets (Savannah’s 2024‑25 passenger‑traffic forecast is ~1.1 M enplanements) and the “Southern‑hospitality” branding that targets both leisure (Florida, Tennessee) and business (Newark, Detroit) travelers, we can reasonably expect:
| Route | Expected first‑month load factor | Post‑promo steady‑state load factor |
|---|---|---|
| Savannah ↔ Newark | ~83 % | 72 % |
| Savannah ↔ Fort Laud | ~85 % | 73 % |
| Savannah ↔ Nashville | ~82 % | 71 % |
| Savannah ↔ Detroit | ~81 % | 70 % |
Profitability expectations
Spirit’s unit‑cost model (fuel, crew, maintenance) is largely fixed per seat‑mile, while the average fare‑yield on new‑market, short‑haul routes typically sits at $0.12–$0.14 per RPK for the carrier’s “ultra‑low‑cost” product. With the projected load‑factor levels above, the Revenue‑per‑Available‑Seat‑Mile (RASM) for each leg should be in the $0.11–$0.13 range, comfortably above the $0.09–$0.10 cost‑per‑available‑seat‑mile (CASM) that Spirit reports for its domestic network. Consequently, the net route margin is expected to be +$0.02–$0.03 per RPK, translating to a 10‑12 % route‑level operating profit once ancillary revenue (bags, seat‑selection, on‑board sales) is added.
Trading implications
- Short‑term catalyst: The launch and accompanying bonus‑points promotion are priced in the market (sentiment 65), creating a near‑term upside for Spirit’s stock (FLYY). A 2–3 % price bump on the next 1‑2 weeks is plausible as investors price in the higher load‑factor and ancillary‑revenue tailwinds.
- Medium‑term view: If the routes sustain the 70‑75 % load‑factor band and deliver the projected 10‑12 % route margin, Spirit’s EBITDA guidance for FY 2025 could be upgraded by ~3 %–4 % (≈$150 M). This would support a mid‑term bullish stance with a target price 5–6 % above the current level.
- Risks: Capacity‑expansion by legacy carriers (e.g., United on Newark‑Savannah) or a fuel‑price shock could compress CASM and erode the modest margin cushion. Keep a stop‑loss around ‑4 % of the entry price to guard against a rapid re‑pricing if load‑factor falls below 65 % in the post‑promo window.
Bottom line: The Savannah‑Newark, Savannah‑Fort Lauderdale, Savannah‑Nashville and Savannah‑Detroit routes are poised to launch with high initial load‑factors (≈83‑85 %) and steady‑state occupancy near 70‑75 %, delivering ~10‑12 % route‑level profitability. The news provides a short‑term upside catalyst and a medium‑term earnings tailwind for Spirit, making a light‑to‑moderate long‑position on FLYY attractive, with tight risk controls.