Spirit Airlines Beats Q2 Earnings, Revenues on Higher Demand - Analyst Blog

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U.S. low cost carrier Spirit Airlines Co. ( SAVE ) reported second-quarter 2014 earnings of 91 cents per share, beating the Zacks Consensus Estimate by a penny. Earnings, however, surged 44.4% from 63 cents in the prior-year quarter.

Quarterly revenues moved up 22.6% year over year to $499.3 million edging past the Zacks Consensus Estimate of $494 million. On a year-over-year basis, Passenger revenues increased 25.5% while Non-Ticket revenues increased 18.4%. Improvement in flight volume, higher load factor and operating yields impacted results positively.

Operating Statistics

Revenue passenger miles moved up 19.6% year over year to 3.5 billion in the second quarter. Capacity or available seat miles increased 17.2% year over year to 4 billion, while load factor (percentage of seats filled with passengers) leaped 180 basis points year over year to 87.5%. Revenue per available seat mile (RASM) increased 4.6% year over year to 12.5 cents. The shift of Easter from March to April this year yielded the positive result.

Operating Expenses & Operating Income

For the second quarter, adjusted operating income increased to $106.3 million from $72.6 million in the year-ago quarter. Total operating expenses increased 15.7% year over year to $394.2 million. Average fuel price (economic) was $3.13 per gallon, up 3.3% from the year-ago quarter. Consolidated unit cost or cost per available seat mile (CASM), excluding fuel and special items, decreased 0.8%.

Liquidity

At the end of the second quarter, Spirit Airlines had $567.2 million in unrestricted cash and cash equivalents and zero debt in its balance sheet. Spirit Airlines generated operating cash flow of $144.1 million while capital expenditures amounted to $7.4 million in the quarter. The carrier also paid $94.0 million in pre-delivery deposits for future deliveries of aircraft. The company took delivery of one new Airbus A-320 aircraft, taking its total fleet count to 57 aircraft at quarter-end.

In the last twelve months, return on invested capital (before taxes and excluding special items) was 32.0%.

Other Airline Releases

Delta Air Lines Inc. ( DAL ) reported second-quarter 2014 adjusted earnings of $1.04 per share, beating the Zacks Consensus Estimate of $1.03, while Southwest Airline Co.'s ( LUV ) earnings of 70 cents also steered ahead of our estimate of 61 cents. Likewise, United Continental Holdings Inc. ( UAL ) posted a profit of $2.34 per share, much higher than the Zacks Consensus Estimate of $2.22.

Our Take

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. Further, the carrier's initiatives to improve its operational efficiency are delivering positive results. We thus remain bullish on Spirit Airlines which currently holds a Zacks Rank #1, implying a Strong Buy rating.


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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.



This article appears in: Investing , Business , Earnings , Stocks

Referenced Stocks: CASM , LUV , DAL , UAL , SAVE

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