Spirit Airlines (SAVE - Free Report) incurred loss of 86 cents per share (excluding 45 cents from non-recurring items) in first-quarter 2020, wider than the Zacks Consensus Estimate of a loss of 60 cents. In the year-ago quarter, the company reported earnings of 84 cents. First-quarter results reflect the impact of the coronavirus crisis on domestic and international air travel in March. Following the earnings release, shares of Spirit declined 12.1% in after-hours trading on May 6.
Operating revenues of $771.1 million missed the Zacks Consensus Estimate of $848.8 million and also declined 9.9% year over year. Passenger revenues, which contributed 97.7% to the top line, fell 10.1% year over year. Additionally, revenues from other sources dropped 1.1%.
Other Details on Q1
Total operating revenue per available seat mile (TRASM: a measure of unit revenues) plunged 18.8% in the reported quarter. The downside was caused by fall in load factor (% of seats filled by passengers) and yields due to the COVID-19 crisis. Notably, capacity expanded (11%) while traffic contracted (2.3%) in the quarter, leading to a 990-basis point decline in load factor (72.8% in the first quarter). Moreover, average yield declined 7.85 in the January-March period.
Adjusted operating expenses increased 8.2% to $829.07 million, mainly on increased flight volume and higher depreciation and amortization. Average fuel cost per gallon in the reported quarter fell 13.4% year over year to $1.81. Moreover, adjusted cost per available seat miles (CASM) dropped 2.4% in the reported quarter.
However, CASM, excluding operating special items and fuel (non-fuel unit costs), increased 3.3% year over year.Increased expenses on salaries, wages and benefits led to higher non-fuel unit costs.
Spirit ended the quarter with unrestricted cash, cash equivalents, and short-term investments of $894.4 million and an undrawn $110 million revolver.
Dealing With the Coronavirus Crisis
Due to an unprecedented drop in passenger demand in the wake of the coronavirus outbreak and to comply with government-imposed travel restrictions, the Zacks Rank #3 (Hold) company reduced its April capacity by approximately 75%. The same has been reduced by approximately 95% for May and June. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
With stringent cost-cutting measures, the airline has been able to reduce capital spending by approximately $50 millionfor 2020. Additionally, the carrier is in talks with Airbus to defer some of its aircraft deliveries for 2020 and 2021, which would help the airline lower aircraft-related capital expenses by approximately $185 million.
Besides savings from lower capacity, Spirit reduced non-fuel operating costs by $20-$30 million for 2020.
Performance of Other Airline Stocks
Delta Air Lines (DAL - Free Report) incurred a loss of 51 cents (excluding 33 cents from non-recurring items) in the March quarter, narrower than the Zacks Consensus Estimate of a loss of 72 cents. In the year-ago quarter, the company reported earnings (on an adjusted basis) of 96 cents per share. Total revenues of $8,592 million lagged the Zacks Consensus Estimate of $9,637.5 million and also declined 18% year over year.
Southwest Airlines (LUV - Free Report) incurred loss of 15 cents per share (excluding 3 cents from non-recurring items) in the first quarter of 2020, narrower than the Zacks Consensus Estimate of 48 cents. In the year-ago quarter, the company reported earnings of 70 cents per share. The results reflect the coronavirus-induced drop in passenger demand. Meanwhile, operating revenues of $4,234 million lagged the Zacks Consensus Estimate of $4,397 million and also declined 17.8% year over year.
American Airlines (AAL - Free Report) incurred a loss (excluding $2.61 from non-recurring items) of $2.65 per share, wider than the Zacks Consensus Estimate of a loss of $2.16. The company reported earnings per share of 52 cents in the year-ago quarter. Results in first-quarter 2020 were hurt by the coronavirus-led drop in air-travel demand. Operating revenues of $8,515 million declined 19.6% year over year and also fell short of the Zacks Consensus Estimate of $9,146.7 million.
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Spirit Airlines (SAVE - Free Report) incurred loss of 86 cents per share (excluding 45 cents from non-recurring items) in first-quarter 2020, wider than the Zacks Consensus Estimate of a loss of 60 cents. In the year-ago quarter, the company reported earnings of 84 cents. First-quarter results reflect the impact of the coronavirus crisis on domestic and international air travel in March. Following the earnings release, shares of Spirit declined 12.1% in after-hours trading on May 6.
Operating revenues of $771.1 million missed the Zacks Consensus Estimate of $848.8 million and also declined 9.9% year over year. Passenger revenues, which contributed 97.7% to the top line, fell 10.1% year over year. Additionally, revenues from other sources dropped 1.1%.
Other Details on Q1
Total operating revenue per available seat mile (TRASM: a measure of unit revenues) plunged 18.8% in the reported quarter. The downside was caused by fall in load factor (% of seats filled by passengers) and yields due to the COVID-19 crisis. Notably, capacity expanded (11%) while traffic contracted (2.3%) in the quarter, leading to a 990-basis point decline in load factor (72.8% in the first quarter). Moreover, average yield declined 7.85 in the January-March period.
Adjusted operating expenses increased 8.2% to $829.07 million, mainly on increased flight volume and higher depreciation and amortization. Average fuel cost per gallon in the reported quarter fell 13.4% year over year to $1.81. Moreover, adjusted cost per available seat miles (CASM) dropped 2.4% in the reported quarter.
However, CASM, excluding operating special items and fuel (non-fuel unit costs), increased 3.3% year over year.Increased expenses on salaries, wages and benefits led to higher non-fuel unit costs.
Spirit ended the quarter with unrestricted cash, cash equivalents, and short-term investments of $894.4 million and an undrawn $110 million revolver.
Dealing With the Coronavirus Crisis
Due to an unprecedented drop in passenger demand in the wake of the coronavirus outbreak and to comply with government-imposed travel restrictions, the Zacks Rank #3 (Hold) company reduced its April capacity by approximately 75%. The same has been reduced by approximately 95% for May and June. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
With stringent cost-cutting measures, the airline has been able to reduce capital spending by approximately $50 millionfor 2020. Additionally, the carrier is in talks with Airbus to defer some of its aircraft deliveries for 2020 and 2021, which would help the airline lower aircraft-related capital expenses by approximately $185 million.
Besides savings from lower capacity, Spirit reduced non-fuel operating costs by $20-$30 million for 2020.
Performance of Other Airline Stocks
Delta Air Lines (DAL - Free Report) incurred a loss of 51 cents (excluding 33 cents from non-recurring items) in the March quarter, narrower than the Zacks Consensus Estimate of a loss of 72 cents. In the year-ago quarter, the company reported earnings (on an adjusted basis) of 96 cents per share. Total revenues of $8,592 million lagged the Zacks Consensus Estimate of $9,637.5 million and also declined 18% year over year.
Southwest Airlines (LUV - Free Report) incurred loss of 15 cents per share (excluding 3 cents from non-recurring items) in the first quarter of 2020, narrower than the Zacks Consensus Estimate of 48 cents. In the year-ago quarter, the company reported earnings of 70 cents per share. The results reflect the coronavirus-induced drop in passenger demand. Meanwhile, operating revenues of $4,234 million lagged the Zacks Consensus Estimate of $4,397 million and also declined 17.8% year over year.
American Airlines (AAL - Free Report) incurred a loss (excluding $2.61 from non-recurring items) of $2.65 per share, wider than the Zacks Consensus Estimate of a loss of $2.16. The company reported earnings per share of 52 cents in the year-ago quarter. Results in first-quarter 2020 were hurt by the coronavirus-led drop in air-travel demand. Operating revenues of $8,515 million declined 19.6% year over year and also fell short of the Zacks Consensus Estimate of $9,146.7 million.
5 Stocks Set to Double
Each was hand-picked by a Zacks expert as the #1 favorite stock to gain +100% or more in 2020. Each comes from a different sector and has unique qualities and catalysts that could fuel exceptional growth.
Most of the stocks in this report are flying under Wall Street radar, which provides a great opportunity to get in on the ground floor.
Today, See These 5 Potential Home Runs >>
Zacks Names "Single Best Pick to Double"
From thousands of stocks, 5 Zacks experts each have chosen their favorite to skyrocket +100% or more in months to come. From those 5, Director of Research Sheraz Mian hand-picks one to have the most explosive upside of all.
It’s a little-known chemical company that’s up 65% over last year, yet still dirt cheap. With unrelenting demand, soaring 2022 earnings estimates, and $1.5 billion for repurchasing shares, retail investors could jump in at any time.
This company could rival or surpass other recent Zacks’ Stocks Set to Double like Boston Beer Company which shot up +143.0% in little more than 9 months and NVIDIA which boomed +175.9% in one year.
Free: See Our Top Stock and 4 Runners Up >>
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