Spirit Airlines Gets a New CEO
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Spirit Airlines on Tuesday named board member Robert Fornaro as chief executive officer, sending its shares up nearly 7 percent.
Investors welcomed the appointment of the former AirTran Holdings Inc CEO as a new start for Spirit, a U.S. carrier that has grown rapidly in the past five years by marketing ultra-low fares with heavy restrictions.
However, recent moves by larger rivals Delta Air Lines Inc and American Airlines Group Inc to match those low prices have hurt unit revenue and pushed Spirit's stock down 46 percent last year.
Fornaro joined Spirit's board in May 2014. He said in the news release that the company would continue to provide "the lowest total price to the places we fly."
Spirit has said its flight capacity, which grew around 30 percent in 2015, has stimulated new demand from customers interested in low fares rather than luring passengers from bigger airlines.
But carriers such as American, the world's largest, have taken note. While they have higher costs than Spirit because they target business travelers and must maintain multiple types of planes, lower fuel prices in the past year have let them profitably chop their fares.
For many U.S. airlines, this has resulted in price battlegrounds from Chicago to Dallas and lower unit revenue, which measures ticket sales against flight capacity.
(Reporting by Jeffrey Dastin in New York; Editing by Lisa Von Ahn)