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Spirit (SAVE) Q3 Loss Narrower Than Expected, Shares Pop

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Spirit Airlines Inc. (SAVE - Free Report) incurred a loss of $2.32 per share (excluding $1.25 from non-recurring items) in third-quarter 2020, narrower than the Zacks Consensus Estimate of a loss of $2.63. In the year-ago quarter, the company reported earnings of $1.32. Results reflect continued softness in air-travel demand amid the coronavirus pandemic. Meanwhile, operating revenues of $401.9 million beat the Zacks Consensus Estimate of $384.7 million. Following the better-than-expected third-quarter performance, shares of the company gained 2.3% in after-market trading on Oct 28.

The top line, however, plunged 59.5% year over year with passenger revenues, contributing 97.7% to the top line, plummeting 59.7% year over year. Additionally, revenues from other sources dropped 50.7%.

Total operating revenue per available seat mile (TRASM: a measure of unit revenues) plunged 39.5% 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. While capacity contracted 33%, traffic declined 46.1%. With traffic declining more than the amount of capacity contraction, load factor fell 1670 basis points to 68.1% in the third quarter. Average yield slipped 24.7% in the same period.

Spirit Airlines, Inc. Price, Consensus and EPS Surprise

Spirit Airlines, Inc. Price, Consensus and EPS Surprise

Spirit Airlines, Inc. price-consensus-eps-surprise-chart | Spirit Airlines, Inc. Quote

Adjusted operating expenses dropped 24.3% to $649.70 million due to reduction in aircraft fuel expenses and decreased flight volume. Average fuel cost per gallon in the reported quarter fell 38.9% year over year to $1.27. However, adjusted cost per available seat miles (“CASM”) climbed 13% in the reported quarter. Adjusted CASM, excluding fuel, surged 36.9% in the reported quarter.

Spirit ended the quarter with unrestricted cash, cash equivalents, and short-term investment securities of $2.1 billion.

Outlook

Spirit, carrying a Zacks Rank #4 (Sell), anticipates its capacity to decline approximately 25% year over year in the fourth quarter. Additionally, the airline expects operating revenues to decrease approximately 43-45% year over year in the period. Adjusted operating expenses are estimated to be between $675 and $685 million in the current quarter. For the fourth quarter, the company predicts average daily cash burn to improve to about $2 million per day, from $2.3 million reported in the third quarter.

For 2020, total capital expenditures are fore cast to be approximately $545 million. Of the total amount, Spirit expects to incur around $45 million in the fourth quarter.

Sectorial Snapshot

Let’s take a look into some other Zacks Transportation sector companies’ third-quarter earnings.

Southwest Airlines Co. (LUV - Free Report) , carrying a Zacks Rank #3 (Hold), incurred a loss of $1.99 per share (excluding 3 cents from non-recurring items) in the third quarter of 2020, narrower than the Zacks Consensus Estimate of a loss of $2.44. Moreover, operating revenues of $1,793 million surpassed the Zacks Consensus Estimate of $1,678.2 million. You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here.

Trinity Industries Inc (TRN - Free Report) , carrying a Zacks Rank #3, reported third-quarter 2020 earnings (excluding 4 cents from non-recurring items) of 17 cents per share, massively surpassing the Zacks Consensus Estimate of 5 cents. Total revenues of $459.4 million also outperformed the Zacks Consensus Estimate of $443.8 million.

CSX Corporation (CSX - Free Report) , carrying a Zacks Rank of 3, reported third-quarter 2020 earnings of 96 cents per share, surpassing the Zacks Consensus Estimate of 93 cents. However, total revenues of $2,648 million lagged the Zacks Consensus Estimate of $2,704.6 million.

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