Spirit Airlines on Tuesday announced plans to capture growing demand for premium travel as it pursues higher-margin revenue to ease cost pressures and boost profits.
The Florida-based ultra-low-cost airline offers European-style Business Class seating with guaranteed middle seats. Seat options include one carry-on bag, one checked bag, priority boarding, snacks and non-alcoholic beverages.
The airline continues to lose money despite surging travel demand, raising questions about its ability to manage debt coming due in 2025 and 2026.
The company’s shares have fallen 81% this year but rose 4.5% to $3 on Tuesday.
Spirit’s move comes months after rival Frontier Airlines launched a similar product, with both airlines desperate for new revenue streams to boost bottom lines.
But the product marks a shift away from the traditional business model of offering a streamlined experience for ultra-cheap fares and then charging high fees for ancillary services.
As air travelers become more willing to pay higher prices for a more comfortable and better experience, U.S. airlines are looking for ways to attract them.
Southwest Airlines announced last week that it would end its brand-defining seating policy and begin offering reserved and premium seating.
While demand for travel remains strong, an oversupply of aircraft seats in the domestic market is pushing down airfares and making it harder for airlines to cushion rising labor and other operating costs.
Airlines such as Delta Air Lines and United Airlines have relied on higher-margin premium travel to protect their bottom lines.
Delta Air Lines reported double-digit growth in premium-cabin revenue in the second quarter, while main-cabin sales were flat.
Spirit is Business Style Sheet released Seat reservations will begin on August 16th.
The airline said it will offer four new travel options, including plans that offer priority check-in, seats with extra legroom and online streaming access via in-flight Wi-Fi service.
Spirit Airlines will report earnings on Aug. 1 but did not provide guidance on revenue from the new product. The airline is expected to post an adjusted loss of $1.36 per share for the second quarter, according to LSEG data.
