Passengers looking on as the inaugural flight of Spirit Airlines landed at the Norman Manley International Airport, last November. - RICARDO MAKYN/STAFF PHOTOGRAPHER
ATLANTA (Associated Press):
DISCOUNT CARRIER Spirit Airlines Inc., which started scheduled service to Jamaica last November, said a new ownership group has taken control of the closely held airline with an injection of financing aimed at fuelling the growth of its service into the Caribbean and Latin America.
Spirit, of Miramar, Florida, said Indigo Partners LLC, of Phoenix, is taking a controlling interest from Oaktree Capital Management LLC, previously the airline's largest investor, in order to help fund its expansion.
Oaktree took control of Spirit with an initial US$125 million investment in 2004, and then last year provided most of another US$100 million in financing, with the participation of an affiliate of Goldman Sachs Group Inc.
MAJOR IMPACT FOR JAMAICA
The 13-year-old airline formerly flew routes mostly from the Midwest and Northeast to Florida and now is trying to carve out a niche linking key markets in Florida and the northern United States (U.S.) to high-traffic destinations in Latin America and the Caribbean.
It has had a major impact on the Jamaican travel market, offering flights to Fort Lauderdale for only US$9. For limited periods, the airline has offered flights from Fort Lauderdale to 10 Caribbean destinations for US$9 each way, in addition to applicable fees and taxes.
But against the background of rising fuel costs and tough competition, the airline has suffered financially.
NEW CHAIRMAN
B. Ben Baldanza, Spirit's president and chief executive, said that Oaktree would continue its role as an investor in Spirit, but that the addition of Indigo brought additional airline experience to Spirit. William A. Franke, managing partner of Indigo Partners and a former chairman and chief executive of America West Airlines, has been named chairman of Spirit.
Spirit, which reported an US$8.3 million loss in the first quarter, according to U.S. Department of Transportation data, is retiring its fleet of older aircraft and by early September will have a new fleet of airbus planes.
Eventually, the investors have plans to cash in their investment with an initial public offering, company officials say, though such a move is still some time away. Baldanza said "a better time to IPO Spirit would be when we have shown our strategy is making money."
The airline began in 1980 as Charter One, a Detroit-based charter tour operator, and changed its name to Spirit Airlines in 1992.
