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Spirit Airlines, Inc.’s (SAVE - Free Report) fourth-quarter 2018 earnings per share (excluding 4 cents from non-recurring items) of $1.38 were in line with the Zacks Consensus Estimate. Meanwhile, the bottom line improved significantly year over year.
Following the earnings release, shares of the company declined more than 3% in after-hours trading on Feb 5 due to its soft first-quarter unit revenue outlook. The company expects total revenue per available seat mile (TRASM) to increase approximately 5% year over year during the first quarter of 2019. This is certainly a conservative outlook, given the airline’s fourth-quarter TRASM improvement of 11.4% on a year-over-year basis.
The carrier recorded revenues of $862.8 million, above the Zacks Consensus Estimate of $852.2 million. Also, the top line rose 29.4% year over year owing to 27% and 7.6% rise in non-ticket revenues and operating yields, respectively. Passenger revenues accounting for bulk (98.1%) of the top line jumped 30.1% year over year.
Spirit Airlines, Inc. Price, Consensus and EPS Surprise
Total revenue passenger miles (RPMs) registered an ascent of 20.4% in the reported quarter while available seat miles (ASMs) expanded 16.2% year over year. Consequently, the load factor (percentage of seats filled by passengers) climbed 290 basis points to 84.5% as traffic growth outweighed capacity expansion.
Total operating expenses escalated 26.4% to $726.73 million in the quarter under review, primarily due to 40.1% rise in salaries, wages and benefits. Average economic fuel cost per gallon rose 14.7% year over year to $2.26. Unit costs (excluding fuel and special items) increased 5.6%.
Q1 Outlook
The airline anticipates capacity growth of 16.5% year over year in the first quarter of 2019. Meanwhile, unit costs (excluding fuel and special items) are estimated to inch up 2-3% year over year in the period. Economic fuel cost is projected to be $2.06 per gallon compared with $2.15 reported in the year-ago quarter. Moreover, an effective tax rate of 22% is envisioned during the same time frame. This compares favorably with 24% effective tax rate reported in the first quarter of 2018.
2019 Outlook
For the full year, the company expects unit costs (excluding fuel and special items) to increase in the 1-2% range year over year. The previous guidance was a rise in the 0-1% band. This downside is due to higher aircraft rent and decrease in estimated average stage length. Capacity is anticipated to climb nearly 15% in the current year. Also, effective tax rate in the year is estimated to be 24%, commensurate with the reported figure in 2018. Additionally, capital expenditures are projected to be $210 million in 2019.
SkyWest flaunts an impressive earnings history, having outperformed the Zacks Consensus Estimate in each of the trailing four reported quarters, the average being 16.9%. Meanwhile, shares of Azul and Air France-KLM have rallied more than 63% and 21%, respectively, in the past six months.
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With battery prices plummeting and charging stations set to multiply, one company stands out as the #1 stock to buy according to Zacks research.
Image: Bigstock
Spirit (SAVE) Q4 Earnings Meet Estimates, Q1 TRASM View Weak
Spirit Airlines, Inc.’s (SAVE - Free Report) fourth-quarter 2018 earnings per share (excluding 4 cents from non-recurring items) of $1.38 were in line with the Zacks Consensus Estimate. Meanwhile, the bottom line improved significantly year over year.
Following the earnings release, shares of the company declined more than 3% in after-hours trading on Feb 5 due to its soft first-quarter unit revenue outlook. The company expects total revenue per available seat mile (TRASM) to increase approximately 5% year over year during the first quarter of 2019. This is certainly a conservative outlook, given the airline’s fourth-quarter TRASM improvement of 11.4% on a year-over-year basis.
The carrier recorded revenues of $862.8 million, above the Zacks Consensus Estimate of $852.2 million. Also, the top line rose 29.4% year over year owing to 27% and 7.6% rise in non-ticket revenues and operating yields, respectively. Passenger revenues accounting for bulk (98.1%) of the top line jumped 30.1% year over year.
Spirit Airlines, Inc. Price, Consensus and EPS Surprise
Spirit Airlines, Inc. Price, Consensus and EPS Surprise | Spirit Airlines, Inc. Quote
Total revenue passenger miles (RPMs) registered an ascent of 20.4% in the reported quarter while available seat miles (ASMs) expanded 16.2% year over year. Consequently, the load factor (percentage of seats filled by passengers) climbed 290 basis points to 84.5% as traffic growth outweighed capacity expansion.
Total operating expenses escalated 26.4% to $726.73 million in the quarter under review, primarily due to 40.1% rise in salaries, wages and benefits. Average economic fuel cost per gallon rose 14.7% year over year to $2.26. Unit costs (excluding fuel and special items) increased 5.6%.
Q1 Outlook
The airline anticipates capacity growth of 16.5% year over year in the first quarter of 2019. Meanwhile, unit costs (excluding fuel and special items) are estimated to inch up 2-3% year over year in the period. Economic fuel cost is projected to be $2.06 per gallon compared with $2.15 reported in the year-ago quarter. Moreover, an effective tax rate of 22% is envisioned during the same time frame. This compares favorably with 24% effective tax rate reported in the first quarter of 2018.
2019 Outlook
For the full year, the company expects unit costs (excluding fuel and special items) to increase in the 1-2% range year over year. The previous guidance was a rise in the 0-1% band. This downside is due to higher aircraft rent and decrease in estimated average stage length. Capacity is anticipated to climb nearly 15% in the current year. Also, effective tax rate in the year is estimated to be 24%, commensurate with the reported figure in 2018. Additionally, capital expenditures are projected to be $210 million in 2019.
Zacks Rank & Other Key Picks
Spirit carries a Zacks Rank #2 (Buy). Some other top-ranked stocks in the same space are SkyWest, Inc. (SKYW - Free Report) , Azul SA (AZUL - Free Report) and Air France-KLM SA (AFLYY - Free Report) , each sporting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
SkyWest flaunts an impressive earnings history, having outperformed the Zacks Consensus Estimate in each of the trailing four reported quarters, the average being 16.9%. Meanwhile, shares of Azul and Air France-KLM have rallied more than 63% and 21%, respectively, in the past six months.
Will You Make a Fortune on the Shift to Electric Cars?
Here's another stock idea to consider. Much like petroleum 150 years ago, lithium power may soon shake the world, creating millionaires and reshaping geo-politics. Soon electric vehicles (EVs) may be cheaper than gas guzzlers. Some are already reaching 265 miles on a single charge.
With battery prices plummeting and charging stations set to multiply, one company stands out as the #1 stock to buy according to Zacks research.
It's not the one you think.
See This Ticker Free >>