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What's in Store for Spirit Airlines (SAVE) in Q2 Earnings?

Spirit Airlines, Inc. SAVE is expected to report second-quarter 2020 results on Jul 22.

The Zacks Consensus Estimate for second-quarter the bottom line narrowed from a loss of $2.82 per share to a loss of $2.77 per share in the past 60 days.

Let’s discuss the factors that are expected to have influenced the airline’s second-quarter performance.

Spirit’s passenger revenues are expected to have been severely affected by unprecedented drop in passenger demand leading to capacity cuts of approximately 75% and 95% during April and May, respectively. The measure was undertaken due to rise in government travel restrictions amid coronavirus concerns. Notably, the Zacks Consensus Estimate for passenger revenues indicates a 93.4% drop from the previous quarter’s reported figure.

The carrier was already witnessing some weakness on the total unit revenue (total operating revenue per available seat mile, TRASM: a key measure of unit revenues) front due to low operating yields. The virus outbreak has further aggravated the situation. TRASM is expected to have plunged due to fall in load factor during its second quarter. The Zacks Consensus Estimate for second-quarter TRASM and load factor suggests a sequential decline of 9.1% and 65.8%, respectively.

Spirit Airlines, Inc. Price and EPS Surprise

Spirit Airlines, Inc. Price and EPS Surprise

Spirit Airlines, Inc. price-eps-surprise | Spirit Airlines, Inc. Quote

With coronavirus affecting demand significantly, low fuel prices are expected to have partly offset the adversities and contributed to the bottom line in its to-be-reported quarter. The consensus mark for average economic fuel cost per gallon indicates a 39.7% decline from its March-end reported figure.

What Does the Zacks Model Say?

The Zacks model predicts a bottom line outperformance for Spirit Airlines this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of a positive surprise as elaborated below. You can see the complete list of today’s Zacks #1 Rank stocks here.

Earnings ESP: Spirit has an Earnings ESP of +7.67%, as the Most Accurate Estimate is pegged at a loss of $2.56 per share and the Zacks Consensus Estimate is pegged at a loss of $2.77. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Zacks Rank: Spirit carries a Zacks Rank #3, currently.

Highlights of Q1

Spirit Airlines incurred loss of 86 cents per share (excluding 45 cents from non-recurring items) in first-quarter 2020, wider than the Zacks Consensus Estimate of a loss of 60 cents. In the year-ago quarter, the company reported earnings of 84 cents. First-quarter results reflect the impact of the coronavirus crisis on domestic and international air travel in March. Operating revenues of $771.1 million missed the Zacks Consensus Estimate of $848.8 million and also declined 9.9% year over year.

Other Stocks to Consider

Investors interested in the broader Transportation sector may also check out other stocks worth considering like United Airlines Holdings, Inc. UAL, Southwest Airlines Co. LUV and Air Lease Corporation AL as these also possess the perfect combination to beat on estimates.

United Airlines has an Earnings ESP of +20.59% and a Zacks Rank #3, currently. The company will release second-quarter 2020 results on Jul 21.

Southwest Airlines presently has an Earnings ESP of +18.02% and is a #3 Ranked player. The company will release second-quarter 2020 results on Jul 23.

Air Lease has an Earnings ESP of +23.32% and is Zacks #3 Ranked at present. The company will release second-quarter 2020 results on Aug 6.

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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.

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