U.S. Markets closed

Spirit's (SAVE) Q1 Earnings Meet, CASM View Weak, Stock Down

Zacks Equity Research

Spirit Airlines’ SAVE first-quarter 2019 earnings per share (excluding 2 cents from non-recurring items) of 84 cents came in line with the Zacks Consensus Estimate. Meanwhile, the bottom line improved significantly on a year-over-year basis mainly owing to low fuel costs.

However, this ultra-low-cost carrier issued a disappointing view with respect to cost per available seat mile (CASM), excluding fuel (non-fuel unit costs), for the second quarter. Consequently, the stock declined more than 5% in after-hours trading on Apr 24.

In the quarter under review, non-fuel unit costs increased 2.4% year over year and is projected to rise 4.6% in the April-June period. Notably, the construction work scheduled at the Ft. Lauderdale airport during 2019’s summer and a severe storm on Apr 19 were the primary reasons behind the bearish projection.

The storm, which forced the carrier to cancel 318 flights over the Easter weekend, is also expected to negatively impact second-quarter total revenue per available seat mile (TRASM) to the tune of approximately 50 basis points. TRASM, which increased 4.1% in the reported quarter, is projected to rise approximately 5% in the second quarter despite the impact of the storm.

Spirit Airlines, Inc. Price, Consensus and EPS Surprise

Spirit Airlines, Inc. Price, Consensus and EPS Surprise | Spirit Airlines, Inc. Quote


Meanwhile, operating revenues of $855.8 million in the first quarter marginally missed the Zacks Consensus Estimate of $856.1 million. However, the top line improved 21.5% year over year on the back of a 16% rise in flight volume and favorable passenger yields, and load factor (% of seats filled by passengers). Passenger revenues, accounting for bulk (97.9%) of the top line, jumped 21.6% year over year.

While total revenue passenger miles (RPMs) registered a 19.4% improvement in the reported quarter, available seat miles (ASMs) expanded 16.9% year over year. As a result, the load factor climbed 170 basis points to 82.7% as traffic growth outweighed capacity expansion.

Total operating expenses increased 3.4% million, primarily due to a 31.5% rise in salaries, wages and benefits. However, the rise in operating expenses was much less than the 26.4% increase registered in the fourth quarter of 2018. Average economic fuel cost per gallon in the reported quarter declined 2.8% year over year to $2.09.


Spirit Airlines, carrying a Zacks Rank #3 (Hold), anticipates capacity growth of approximately 13% year over year in the second quarter of 2019. Economic fuel cost is projected to be $2.25 per gallon. Moreover, an effective tax rate of 24% is envisioned during the same time frame. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

For 2019, the company expects non-fuel unit costs to increase in the 2-3% range year over year. Capacity is anticipated to climb nearly 15% in the current year. Effective tax rate in the year is estimated to be 24%. Additionally, capital expenditures are projected to be $498 million.

Upcoming Releases

Investors interested in the Zacks Airline industry are keenly awaiting first-quarter 2019 earnings reports from key players like American Airlines AAL, GOL Linhas GOL and Azul AZUL on Apr 26, Apr 30 and May 9, respectively.

Radical New Technology Creates $12.3 Trillion Opportunity

Imagine buying Microsoft stock in the early days of personal computers… or Motorola after it released the world’s first cell phone. These technologies changed our lives and created massive profits for investors.

Today, we’re on the brink of the next quantum leap in technology. 7 innovative companies are leading this “4th Industrial Revolution” - and early investors stand to earn the biggest profits.

See the 7 breakthrough stocks now >>

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
Spirit Airlines, Inc. (SAVE) : Free Stock Analysis Report
American Airlines Group Inc. (AAL) : Free Stock Analysis Report
Gol Linhas Aereas Inteligentes S.A. (GOL) : Free Stock Analysis Report
AZUL SA (AZUL) : Free Stock Analysis Report
To read this article on Zacks.com click here.