Will the Free Spirit® bonus points promotion attract enough demand to offset promotional costs?

Analysis

The Free Spirit® bonus‑points push is tied to Spirit’s newest nonstop route out of Savannah (SAV). The promotion lowers the effective price for leisure and price‑sensitive business travelers on four high‑traffic corridors (SAV‑EWR, SAV‑FLL, SAV‑BNA, SAV‑DTW). Historically, Spirit’s loyalty‑point giveaways generate a short‑run lift in load factor—often 6‑10 percentage points—while the incremental cost is limited to the marginal cost of the seats (fuel, crew, airport fees). On a route where the base fare is already sub‑$100, the “free points” value to consumers (roughly 1 cent per point) translates into a $5‑$10 discount, which is enough to pull marginal demand without eroding the overall yield.

Fundamentally, Spirit’s Q2‑2025 earnings guidance already assumes a modest 3‑4 % increase in passenger revenue from the Savannah launch. The bonus‑points campaign, if it drives the projected load‑factor boost, would likely cover its $2‑$3 million promotional outlay within the first 8‑12 weeks, especially given the low operating cost base of a single‑aisle carrier. Technically, FLYY has broken above its 50‑day EMA (≈$6.45) and is holding near the top of its recent range ($6.20‑$6.70), with volume expanding on the news day. The relative strength index (RSI) sits around 58, suggesting room for upside without being overbought.

Trading Implications

• Short‑term bias: Bullish. The promotion and route debut provide a catalyst that could push the stock 3‑5 % higher over the next 4‑6 weeks as load‑factor data rolls in and analysts upgrade the revenue outlook.
• Entry point: Consider a buy on pull‑backs to the 50‑day EMA (~$6.45) or on a break above the high of $6.70, targeting the next resistance near $7.00.
• Risk management: Place a stop‑loss around $6.20 (below the recent low and the 20‑day EMA) to limit exposure if the promotion fails to generate the expected demand or if broader market risk resurfaces.

Overall, the Free Spirit® bonus‑points promotion is likely to attract enough incremental demand to offset its cost, supporting a near‑term upside bias on FLYY.