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Spirit Airlines' July Traffic Increases, Load Factor Slips

Spirit Airlines SAVE posted a significant rise in air traffic for the month of July. Traffic – measured in revenue passenger miles (RPMs) – came in at 2.35 billion, up 17.8% on a year-over-year basis. Consolidated capacity (or available seat miles/ASMs) also expanded 22.7% to 2.72 billion.

However, load factor or percentage of seats filled by passengers decreased to 86.3% from 89.8% recorded last July. Load factor fell as traffic growth was outpaced by capacity expansion for the month.

In fact, this Miramar, FL-based low-cost carrier registered a completion factor (system wide) of 97.2% for the month with 73.5% flights on schedule.

Notably, for the first seven months of 2017, Spirit Airlines registered a 12.4% increase in RPMs to 14.18 billion and a 15.5% rise in ASMs to 16.9 billion, both on a year-over-year basis. But load factor fell 240 basis points to 83.9% in the period.

Price Performance

Shares of Spirit Airlines have underperformed its industry in the last three months mainly due to the dispute with its pilots. The stock was down 31% compared with the industry’s decline of 2.4% during the same period.

 

In fact, the dispute with pilots was largely responsible for Spirit Airlines issuing a below-par forecast with respect to total revenue per available seat miles (TRASM: a key measure of unit revenue) for the third quarter. The metric is expected to decline in the band of 2% to 4% on a year-over-year basis, as well. Currently, the company carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

We note that passenger related issues have also hurt other U.S. carriers like American Airlines Group AAL, Delta Air Lines DAL and United Continental Holdings UAL so far this year.

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Delta Air Lines, Inc. (DAL) : Free Stock Analysis Report
 
United Continental Holdings, Inc. (UAL) : Free Stock Analysis Report
 
Spirit Airlines, Inc. (SAVE) : Free Stock Analysis Report
 
American Airlines Group, Inc. (AAL) : Free Stock Analysis Report
 
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