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Spirit Airlines profit tops estimates in first quarter

Spirit Airlines
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Spirit Airlines

Spirit Airlines reported first-quarter profit above analysts' estimates on Tuesday, as cheap fuel and revenue from bag and other fees added to its bottom line.

The U.S. budget carrier earned $61.9 million in the first quarter. Excluding special items such as lease termination costs, profit rose by 2 percent to $72.3 million, or $1.01 per share, compared with the average analyst estimate of 96 cents, according to Thomson Reuters I/B/E/S.

"The pricing environment remains very competitive, but we aren't just sitting passively by," Chief Executive Bob Fornaro said in a news release. "We have upgraded our pricing systems, made modest revisions to our schedules, and adjusted our approach to inventory management."

A decline in fuel prices has allowed larger carriers, which have high costs associated with long-haul flying and premium-cabin travel, to profitably chop their fares in line with Spirit's and ratchet up competition in the United States.

Lower prices and extra flights from Spirit, which said capacity increased 27 percent in the quarter from a year ago, pushed the carrier's total operating revenue as measured against capacity, or unit revenue, down 13.8 percent. The measure declined 16 percent in the fourth quarter.

However, more passenger bookings and fees for ancillary services boosted revenue overall by 9.1 percent to $538.1 million, ahead of analysts' average estimate of $536.2 million, according to Thomson Reuters I/B/E/S.

Spirit "is definitely trending in the right direction as capacity growth decelerates and unit revenues improve," Sterne Agee CRT analyst Adam Hackel said.

Shares of the airline rose more than 3 percent in premarket trading immediately following the announcement. (Get the latest quote here.)

CNBC contributed to this report.