Shares of Spirit Airlines (SAVE - Free Report) surged on Tuesday after the company announced in a SEC filing that it raised its third-quarter revenue per available seat mile guidance.
The low-cost airliner now expects to experience a roughly 6.5% year-over-year decline in RASM in its third quarter, instead of Spirit’s previously projected guidance of a roughly 7% to 8.5% drop off.
Spirit upped its guidance for the highly important metric in its 8-K filing yesterday based in part on improved “ticket and non-ticket yields and better-than-expected load factor.”
Spirit offered up its previous RASM projection of up to an 8.5% decline in September amid concerns that the wave of hurricanes would hurt the airline more than it now expects.
The company’s adjusted cost per available seat mile without accounting for the cost of fuel is projected to be flat or fall only marginally, compared to its previous estimate of up to a 3% decline.
Still, Hurricanes Harvey, Irma, and Maria greatly impacted Spirit. The storms forced the airline to cancel over 1,650 flights, which cost Spirit about $40 million. In September alone, Spirit canceled approximately 1,400 flights. Yet September revenue passenger miles jumped by 5.9% based on an 8.9% gain in overall capacity. In its third quarter, the company announced that it raised total available seat miles by 18%.
This updated projection, coupled with a big increase in overall capacity, helped send shares of Spirit up over 8% on Tuesday morning. The company’s stock price has slipped back a bit since then and now hovers around 5% higher.
Even with today’s gains Spirit stock sits roughly 42% below its 52-week high of $60.40 per share. The company is set to report its third-quarter results Tuesday, Oct. 24.
Spirit’s updated quarterly guidance helped lift other airline stocks as well. The renewed faith that the massive tropical storms and hurricanes might not have impacted airlines as much as previously expected has seen JetBlue (JBLU - Free Report) stock gain 0.50%, while United (UAL - Free Report) popped just over 0.50% as well.
Shares of Hawaiian Holdings (HA - Free Report) gained over 2.70%, while Southwest Airlines (LUV - Free Report) saw much more marginal gains. Shares of the US Global Jets ETF (JETS - Free Report) climbed slightly.
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