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Spirit Affected by Hurricane Dorian Slashes Q3 TRASM View

Spirit Airlines, Inc. SAVE recently revised its third-quarter 2019 view for total unit revenues and adjusted non-fuel unit costs.

With 768 fight cancellations due to Hurricane Dorian, the carrier now anticipates total revenue per available seat mile (TRASM) to decline 2.5-3.5% year over year. The airline was already grappling with low yields in the off-peak period and had previously anticipated TRASM to slide in the 1-2% range. Apart from weak TRASM, Spirit expects an approximate $25-million revenue impact due to the aforementioned headwind.

On the costs front, this Miramar, FL-based low-cost airline was battling increased expenses from factors like construction work at the Ft. Lauderdale airport, lower completion factor and expenses associated with flight disruptions. The large number of flight cancellations have only added to its woes. The carrier now anticipates adjusted cost per available seat mile excluding fuel (CASM, ex-fuel) to augment 9-10% year over year in the current quarter, reflecting a 200-basis points increase from the prior estimate. The adversity is due to reduced capacity and higher costs from the impacts of Hurricane Dorian. Total available seat miles (ASMs) are forecast to rise approximately 11.5% year over year in the ongoing quarter.

Spirit Airlines, Inc. Price

 

Spirit Airlines, Inc. Price

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Earlier in the month, JetBlue Airways Corporation JBLU furnished a bleak view for third-quarter unit revenues on account of negative effects of Hurricane Dorian among other factors. The carrier now expects revenue per available seat mile (RASM) to either slip up to 2% or remain flat year over year. Previously, the metric was estimated to increase in the 0.5-3.5% range. (Read more: JetBlue Shares Decline More Than 4% on Q3 RASM View Cut)

In the wake of Hurricane Dorian, Fort Lauderdale — a hub to Spirit and JetBlue — has faced numerous flight cancellations. With these two low-cost airlines now bearing the brunt of the natural calamity, it remains to be seen whether Southwest Airlines LUV (another low-cost carrier with a hub at Fort Lauderdale) feels the heat as well.

Zacks Rank & Key Pick

Spirit carries a Zacks Rank #3 (Hold). A better-ranked stock in the same space is Copa Holdings, S.A. CPA, sporting a Zacks Rank #1 (Strong Buy).  You can see the complete list of today’s Zacks #1 Rank stocks here.

Shares of Copa have rallied more than 28% so far this year.

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