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Spirit Airlines’ (SAVE - Free Report) second-quarter 2019 earnings per share (excluding 2 cents from non-recurring items) of $1.69 surpassed the Zacks Consensus Estimate by 5 cents. The bottom line also improved 52.3% on a year-over-year basis despite higher costs.
While adjusted operating expenses surged 14.8%, adjusted non-fuel unit costs increased 4.6% in the quarter under review. A severe storm during the Easter holiday weekend resulted in the cancellation of multiple flights, pushing up costs higher. The company incurred roughly $6 million expenses due to passenger re-accommodation and disrupted crew costs.
What is worse is that the cost scenario is bleak even for third-quarter 2019. This ultra-low-cost carrier expects third-quarter cost per available seat mile (CASM), excluding fuel (non-fuel unit costs), to increase in the 7-8% range on a year-over-year basis. Factors like the construction work at the Ft. Lauderdale airport, lower completion factor and expenses associated with flight disruptions contributed to this bearish view.
Consequently, the stock declined more than 12% in after-hours trading on Jul 24, despite outperforming in second-quarter 2019.
Spirit Airlines, Inc. Price, Consensus and EPS Surprise
Operating revenues of $1,013 million edged past the Zacks Consensus Estimate of $1012.2 million. The top line also improved 18.9% year over year on the back of an 18.4% rise in flight volume and favorable passenger yields, and load factor (% of seats filled by passengers). Passenger revenues, accounting for bulk (98.2%) of the top line, improved 18.9% year over year.
While total revenue passenger miles (RPMs) registered a 15% improvement in the reported quarter, available seat miles (ASMs) expanded 13.2% year over year. As a result, the load factor climbed 130 basis points to 85% as traffic growth outweighed capacity expansion. Average economic fuel cost per gallon in the reported quarter declined 6.9% year over year to $2.16.
Outlook
Spirit Airlines, carrying a Zacks Rank #3 (Hold), anticipates capacity growth of approximately 13% year over year for the third quarter of 2019. The company expects third-quarter revenue per available seat mile (TRASM) growth in the -1 to +1% band.
Economic fuel cost is projected to be $2.13 per gallon. Moreover, an effective tax rate of 24% is envisioned for the third quarter. In fourth-quarter 2019, non-fuel unit costs are expected to increase between 3.5% and 4.5%.
For 2019, the company expects non-fuel unit costs to increase between 4.5% and 5% (earlier view had called for an increase in the 2-3% range). Capacity is anticipated to climb 14.5% during the current year. Effective tax rate in the year is estimated to be 24%. Additionally, current-year total capital expenditures are projected to be $504 million.
Investors interested in the Zacks Airline industry are keenly awaiting second-quarter 2019 earnings reports from key players like SkyWest (SKYW - Free Report) , GOL Linhas and Copa Holdings (CPA - Free Report) . While SkyWest is scheduled to report second-quarter results on Jul 31, GOL Linhas and Copa Holdings will do so on Aug 1 and Aug 7, respectively.
This Could Be the Fastest Way to Grow Wealth in 2019
Research indicates one sector is poised to deliver a crop of the best-performing stocks you'll find anywhere in the market. Breaking news in this space frequently creates quick double- and triple-digit profit opportunities.
These companies are changing the world – and owning their stocks could transform your portfolio in 2019 and beyond. Recent trades from this sector have generated +98%, +119% and +164% gains in as little as 1 month.
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Spirit (SAVE) Q2 Earnings Top, Q3 CASM View Weak, Stock Down
Spirit Airlines’ (SAVE - Free Report) second-quarter 2019 earnings per share (excluding 2 cents from non-recurring items) of $1.69 surpassed the Zacks Consensus Estimate by 5 cents. The bottom line also improved 52.3% on a year-over-year basis despite higher costs.
While adjusted operating expenses surged 14.8%, adjusted non-fuel unit costs increased 4.6% in the quarter under review. A severe storm during the Easter holiday weekend resulted in the cancellation of multiple flights, pushing up costs higher. The company incurred roughly $6 million expenses due to passenger re-accommodation and disrupted crew costs.
What is worse is that the cost scenario is bleak even for third-quarter 2019. This ultra-low-cost carrier expects third-quarter cost per available seat mile (CASM), excluding fuel (non-fuel unit costs), to increase in the 7-8% range on a year-over-year basis. Factors like the construction work at the Ft. Lauderdale airport, lower completion factor and expenses associated with flight disruptions contributed to this bearish view.
Consequently, the stock declined more than 12% in after-hours trading on Jul 24, despite outperforming in second-quarter 2019.
Spirit Airlines, Inc. Price, Consensus and EPS Surprise
Spirit Airlines, Inc. price-consensus-eps-surprise-chart | Spirit Airlines, Inc. Quote
Other Q2 Details
Operating revenues of $1,013 million edged past the Zacks Consensus Estimate of $1012.2 million. The top line also improved 18.9% year over year on the back of an 18.4% rise in flight volume and favorable passenger yields, and load factor (% of seats filled by passengers). Passenger revenues, accounting for bulk (98.2%) of the top line, improved 18.9% year over year.
While total revenue passenger miles (RPMs) registered a 15% improvement in the reported quarter, available seat miles (ASMs) expanded 13.2% year over year. As a result, the load factor climbed 130 basis points to 85% as traffic growth outweighed capacity expansion. Average economic fuel cost per gallon in the reported quarter declined 6.9% year over year to $2.16.
Outlook
Spirit Airlines, carrying a Zacks Rank #3 (Hold), anticipates capacity growth of approximately 13% year over year for the third quarter of 2019. The company expects third-quarter revenue per available seat mile (TRASM) growth in the -1 to +1% band.
Economic fuel cost is projected to be $2.13 per gallon. Moreover, an effective tax rate of 24% is envisioned for the third quarter. In fourth-quarter 2019, non-fuel unit costs are expected to increase between 3.5% and 4.5%.
For 2019, the company expects non-fuel unit costs to increase between 4.5% and 5% (earlier view had called for an increase in the 2-3% range). Capacity is anticipated to climb 14.5% during the current year. Effective tax rate in the year is estimated to be 24%. Additionally, current-year total capital expenditures are projected to be $504 million.
You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Upcoming Releases
Investors interested in the Zacks Airline industry are keenly awaiting second-quarter 2019 earnings reports from key players like SkyWest (SKYW - Free Report) , GOL Linhas and Copa Holdings (CPA - Free Report) . While SkyWest is scheduled to report second-quarter results on Jul 31, GOL Linhas and Copa Holdings will do so on Aug 1 and Aug 7, respectively.
This Could Be the Fastest Way to Grow Wealth in 2019
Research indicates one sector is poised to deliver a crop of the best-performing stocks you'll find anywhere in the market. Breaking news in this space frequently creates quick double- and triple-digit profit opportunities.
These companies are changing the world – and owning their stocks could transform your portfolio in 2019 and beyond. Recent trades from this sector have generated +98%, +119% and +164% gains in as little as 1 month.
Click here to see these breakthrough stocks now >>