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Spirit Airlines June Load Factor Falls, Q2 TRASM View Raised

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Spirit Airlines (SAVE - Free Report) saw a 17% rise in traffic (measured in Revenue Passenger Miles or RPMs) to approximately 2.2 billion in Jun 2017 on a year-over-year basis. Available Seat Miles (ASMs) increased 19.2% to 2.53 billion. Load factor (the percentage of seats filled by passengers) decreased 160 basis points (bps) to 86.8% as capacity expansion outpaced traffic growth.

Additionally, the airline recorded a 67.8% on-time performance and 96.1% completion factor for the same month.

The company also witnessed a 11.4% year-over-year rise in RPMs to 11.83 billion on a year-to-date basis. ASMs rose 14.3% to 14.17 billion. Load factor decreased 210 bps to 83.5%. The passenger flight segments in the first half of 2017 rose to 11.8 billion, up 11.1%.

Apart from releasing its June traffic numbers, this low-cost carrier also revised its guidance for the second quarter of 2017. This was done primarily owing to the dispute with pilots encountered in May, which resulted in many flight cancellations. Detailed results should be out on Jul 27. Moreover, capacity is projected to increase 13.6% on a year-over-year basis (old guidance had hinted at an increase of 14.5%).

Following the flight cancellations, this Zacks Rank #3 (Hold) company had to re-accommodate quite a few of the affected passengers either on its flights or those operated by other carriers. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Consequently, Spirit Airlines retained some of the revenues pertaining to the cancelled ASMs. This, in turn, boosted TRASM resulting in the upward revision. The metric is now expected to increase approximately 5.5% in the second quarter (previous guidance had called for an increase in the range of 4% to 5%).

Cost per available seat miles, excluding fuel (CASM), is now expected to increase year over year in the band of 9.5% to 10.5% (old guidance had called for an increase in the range of 9% to 10%). Also, fuel cost per gallon (economic) is now pegged at $1.64 per gallon compared with $1.66, expected earlier.

Price Performance

Shares of Spirit Airlines have underperformed the Zacks categorized Transportation-Airline industry in the last three months, mainly due to the dispute with its pilots. The stock has declined 7.5% against the industry’s gain of 13.8% during the same period.

Of late, we note that passenger related issues have hurt the other US carriers too. These companies include the likes of American Airlines Group (AAL - Free Report) , Delta Air Lines (DAL - Free Report) and United Continental Holdings (UAL - Free Report) .

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