Spirit (SAVE) Q2 Earnings Beat, Decline Y/Y on High Costs

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Spirit Airlines, Inc .'s SAVE second-quarter earnings per share (excluding 95 cents from non-recurring items) came in at $1.11, ahead of the Zacks Consensus Estimate of $1.09. The bottom line however, dipped 2.6% year over year on high costs.

The earnings beat pleased investors. Consequently, shares of the company gained more than 3% since the earnings release.

The carrier recorded revenues of $851.8 million, in line with the Zacks Consensus Estimate. Meanwhile, the top line improved around 21% year over year owing to 18.9% expansion in flight volume.

Spirit Airlines, Inc. Price, Consensus and EPS Surprise

Spirit Airlines, Inc. Price, Consensus and EPS Surprise | Spirit Airlines, Inc. Quote

Total revenue per available seat miles (a key measure of unit revenues) declined 6.8%. This key metric was hurt by an increase in average stage length and a shift in the timing of Easter.

Total revenue passenger miles (RPMs) registered a rise of 28% in the reported quarter while available seat miles (ASMs) surged 30.5% year over year. Consequently, the load factor (percentage of seats filled by passengers) contracted 160 basis points to 83.7%.

Total operating expenses rose 30.7% to $743.25 million in the quarter under review, primarily due to 39.8% rise in average economic fuel cost per gallon ($2.32). Besides fuel costs, salaries, wages and other benefits soared 44.5%. Unit costs (excluding fuel and special items) decreased 11.3%.

Q3 Outlook

The company expects total revenue per available seat mile (TRASM) to increase in the range of 2-3% during the third quarter. The view includes a 170-basis point negativity from a 3.4% increase in average stage length as well as other adversities. Additionally, the airline anticipates a capacity expansion of 24.5% in the same period. Meanwhile, unit costs (excluding fuel and special items) are estimated to decline 3-4%. Economic fuel cost is projected to be $2.33 per gallon. Moreover, an effective tax rate of 24% is forecast in the time frame.

2018 Outlook

For the full year, this Zacks Rank #3 (Hold) company expects unit costs (excluding fuel and special items) to decrease in the 3.5-4% band year over year. Capacity in the year is forecast to climb approximately 22.7% while effective tax rate is projected to be 24%. Capital expenditures are estimated to be $1.02 billion in the period. You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here .

Upcoming Releases

Investors interested in the broader Transportation sector are keenly awaiting second-quarter earnings reports from key players, namely C.H. Robinson Worldwide, Inc. CHRW , Expeditors International of Washington, Inc. EXPD and Air Lease Corporation AL . While C.H. Robinson will report second-quarter earnings on Jul 31, Expeditors and Air Lease will release the same on Aug 7 and Aug 9, respectively.

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Spirit Airlines, Inc. (SAVE): Free Stock Analysis Report

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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 Nasdaq, Inc.

This article appears in: Investing , Business , Earnings , Stocks
Referenced Symbols: SAVE , AL , CHRW , EXPD

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