U.S. low cost carrier
Spirit Airlines Co.
) reported strong fourth quarter and full-year 2013 results, owing
to solid demand for its low-cost ultra-low fare model.
The company reported record fourth quarter earnings of 56 cents per
share that surpassed the Zacks Consensus Estimate of 50 cents. The
results were way above the prior-year quarter earnings of 27 cents.
Quarterly revenues moved up 27.9% year over year to $420.0 million
and were ahead of the Zacks Consensus Estimate of $415.0 million.
On an annualized basis, Passenger revenues increased 30.6% while
Non-Ticket revenues increased 24.3%. Continuous demand and growth
in capacity aided the strong performance.
For full-year 2013, Spirit posted earnings of $2.43 per share
(surpassing our projection of $2.37 and increasing 70.0% year over
year) on revenues of $1,654.4 million (up 25.5% from the prior year
and marginally ahead of our projection of $1,653.0 million).
Revenue passenger miles moved up 25.7% year over year to 3.17
billion in the fourth quarter. Capacity or available seat miles
increased 24.3% year over year to 3.67 billion, while load factor
(percentage of seats filled with passengers) leaped 100 basis
points year over year to 86.2%. Revenue per available seat mile
(RASM) increased 3.0% year over year to 11.43 cents.
Operating Expenses & Operating Income
For the fourth quarter, operating income increased to $68.1 million
from $31.9 million in the year-ago quarter. Total operating
expenses increased 18.8% year over year to $351.9 million in the
fourth quarter. Average fuel price (economic) was $3.21 per gallon,
down 2.7% from $3.30 in the year-ago quarter. Consolidated unit
cost or cost per available seat mile (CASM), excluding fuel and
special items, increased 2.5%.
At the end of 2013, Spirit had $530.6 million in unrestricted cash
and cash equivalents and no debt in its balance sheet. In 2013,
Spirit generated operating cash flow of $195.4 million and capital
expenditures were $19.8 million. In the fourth quarter, the company
took delivery of 4 new Airbus A-320 aircrafts having a total of 54
aircraft in its fleet.
In 2013, return on invested capital (before taxes and excluding
special items) was 31.8%.
Other Airline Stocks
Delta Air Lines Inc.
) reported fourth-quarter 2013 adjusted earnings of 65 cents while
United Continental Holdings Inc.
) adjusted earnings came in at 78 cents. Both stocks managed to
beat their Zacks Consensus Estimate.
We believe that the company will benefit from service launch in
several markets along with its focus on delivering low fares to its
valued customers. Additionally, the company has ordered new
aircraft from Airbus, which will enhance customer comfort.
Spirit Airlines currently holds a Zacks Rank #2, implying a Buy
rating. Better ranked stocks like
American Airlines Group Inc.
) is worth considering within the sector.
(We are reissuing this article to correct a mistake. The
original article, issued earlier today, February 19, 2014,
] by mistake, and should no longer be relied upon.)
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