Spirit Airlines (SAVE) Rides on Air Travel Demand, Costs Ail
Spirit Airlines, Inc. (SAVE) continues to benefit from an uptick in demand for leisure air travel. Consolidated traffic (measured in revenue passenger miles) at Spirit Airlines rose 13.4% in the fourth quarter of 2023. To serve this increased demand, capacity (measured in available seat miles) expanded 14.8%. Anticipating the trend to continue, available seat miles are anticipated to increase 1.5% in first-quarter 2024 from the year-ago reported quarter. Available seat miles for 2024 are expected to be between flat and mid-single-digit growth from the 2023 actuals.
In response to gradually improving air-travel demand, Spirit Airlines is expanding its network and intends to expand its fleet to accommodate the rosy air-travel-demand scenario. It ended 2022 with 194 planes in its fleet, up 33.8% from 2019. In the fourth quarter of 2023, Spirit Airlines took delivery of four new aircraft (two A320neos and two A321neos) and retired one A319ceo aircraft. SAVE ended 2023 with 205 aircraft in its fleet.
On the flip side, SAVE is witnessing a rise in operating expenses due to increases in salaries, wages and benefits, landing fees and other rents, maintenance, materials and repairs. A rise in expenses does not bode well for the airline's bottom line. In 2023, total operating expenses grew 3.4% year over year.
Spirit Airlines' liquidity position raises concerns about the stock. At the fourth quarter of 2023-end, the carrier’s cash and cash equivalents were $865.21 million, lower than the long-term debt (and finance leases, less current maturities) of $3.05 billion. This implies that the company does not have enough cash to meet its debt obligations.
Zacks Rank and Stocks to Consider
Currently, Spirit Airlines carries a Zacks Rank #3 (Hold).
Some better-ranked stocks from the Zacks Transportation sector are GATX Corporation GATX, SkyWest, Inc. SKYW and Copa Holdings, S.A. CPA. Each stock presently carries a Zacks Rank of 2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
GATX has an encouraging track record with respect to earnings surprise, having surpassed the Zacks Consensus Estimate in three of the last four quarters (missing the mark in the remaining one). The average beat is 16.47%.
The Zacks Consensus Estimate for 2024 earnings has been revised 6.1% upward over the past 90 days. GATX has an expected earnings growth rate of 3.68% for 2024. Shares of GATX have gained 13.9% in the past year.
SkyWest's fleet-modernization efforts are commendable. The Zacks Consensus Estimate for SKYW’s 2024 earnings has improved 11.1% over the past 90 days. Shares of SKYW have surged 222.2% in the past year.
SKYW has an expected earnings growth rate of more than 100% for 2024. SKYW delivered a trailing four-quarter earnings surprise of 128.02%, on average.
CPA has an encouraging track record with respect to earnings surprise, having surpassed the Zacks Consensus Estimate in three of the last four quarters (missing the mark in the remaining one). The average beat is 18.02%.
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
Copa Holdings, S.A. (CPA) : Free Stock Analysis Report
Spirit Airlines, Inc. (SAVE) : Free Stock Analysis Report
SkyWest, Inc. (SKYW) : Free Stock Analysis Report
GATX Corporation (GATX) : Free Stock Analysis Report
