Boosted by higher fare and ancillary revenue, Fort Lauderdale-based Spirit Airlines posted a fourth-quarter (4Q) net profit of $92 million and saw revenue increase for the period, despite higher fuel and personnel costs.

The ultra-LCC’s 4Q net profit was down 62.8% compared to its 4Q 2017 $247 million net profit, which included a one-time, non-cash tax credit as a result of US tax reform legislation. Similarly, full-year net income declined 62.5% year-over-year (YOY) to $156 million, compared to its $415.5 million net profit for full-year 2017.

But the airline sees the 4Q performance as evidence of “our momentum as we head into 2019,” president and CEO Ted Christie said during an earnings call.

In 2018, Spirit added 21 routes to its network, five of them seasonal, and expanded its international footprint into Latin America and the Caribbean. The airline also took delivery of five Airbus A320ceos and two A320neos during the quarter, ending the year with a fleet 128 aircraft.

“Throughout 2019, we will continue to see growth opportunities in large domestic leisure destinations and near-field international destinations,” Christie said. “In addition, as the opportunities present themselves to grow in large gate-constrained metros, we will do so as this is where many customers who have otherwise been priced out of the market with high fares live and where many leisure customers want to go.”

Spirit’s 4Q operating revenue was up 29.5% YOY to $863 million, compared to $666.2 million in 4Q 2017, and full-year revenue rose 25.7% to $3.3 billion, compared to $2.6 billion in 2017. Fare revenue per passenger flight segment was up 9.3% to $60.45 in the quarter, and non-ticket revenue climbed 5.2% to $56.70.

The ancillary revenue increase was “primarily due to our dynamic pricing initiatives and the continued improvement of our bundled services offering,” SVP and CCO Matthew Klein said. “In addition to our initiatives that are still maturing, we have several new revenue enhancements that we plan to deploy this year. Our new website with improved merchandising capabilities is currently in the final testing stages, and we are excited about its potential to drive additional ancillary revenue and increased conversions. We are working on a revamped vacation package program and expect to see the benefits of this new program begin to take hold later this spring.”

Unit revenue, or TRASM, was up 11.4% for the quarter and 1.9% for the year.

“Based on our current booking trends and customer buying behavior for ancillary items, for the first quarter 2019 we estimate TRASM will increase approximately 5% year-over-year,” Klein said.

Fourth-quarter operating expenses rose 26.4% YOY to $727 million, compared to $575 million in 4Q 2017, with full-year expenses up 31.6% to $2.9 billion (from $2.3 billion in 2017), driven by a 52.6% hike in fuel costs and 36.3% increase in labor costs in 2018. Last year the carrier ratified a five-year agreement with its pilots, represented by the Air Line Pilots Association. Higher pilot rates were also largely responsible for a 4Q 5.6% increase in CASM, excluding fuel, the airline said.

Passenger traffic in the quarter was up 20.4 % YOY to 7.6 billion RPMs, with a capacity gain of 16.2% to 8.9 billion ASMs, producing a load factor of 84.5%, up 2.9 points. For the full year, RPMs rose 24.5% to 30.6 billion and ASMs were up 23.4% to 36.5 billion, with a load factor of 83.9, up 0.8 points.

The airline anticipates capacity gains of about 16.5% in the first quarter of 2019 and around 15% for the year, slightly more than previous guidance.

CASM-ex is expected to be up 1%-2% in 2019, higher than earlier guidance of flat to up 1%.

Spirit is scheduled to receive two A320ceos and 14 A320neos this year.

Jack Wittman,