Spirit Airlines (SAVE) Posts Narrower-Than-Expected Q3 Loss
High fuel costs hurt Spirit Airlines' (SAVE) Q3 performance.
Spirit Airlines’ SAVE third-quarter 2021 loss (excluding 83 cents from non-recurring items) of 69 cents per share was narrower than the Zacks Consensus Estimate of a loss of 95 cents and the year-ago loss of $2.32. In third-quarter 2019 (pre-coronavirus era), the carrier had reported earnings of $1.32 per share.
Operating revenues of $922.6 million increased in excess of 100% year over year. This massive year-over-year jump reflects improving air-travel demand as COVID-19 cases fall and the threat of the Delta variant recedes in the United States. Revenues increased 7.4%, sequentially. However, quarterly revenues declined 7% from the third-quarter 2019 actuals. Revenues were also lower than the Zacks Consensus Estimate of $935.4 million.
Spirit Airlines, Inc. Price, Consensus and EPS Surprise
In third-quarter 2021, passenger revenues, which accounted for bulk of the top line (98.3%), increased to $907.2 million from a mere $392.7 million a year ago when the impact of coronavirus on air-travel demand was much severe. Other revenues surged 67.8% year over year to $15.3 million. Passenger revenues were down 6.8% from the third-quarter 2019 actuals.
All comparisons (in %) are presented below on a year-over-year basis.
Reflecting the uptick in air-travel demand, consolidated traffic (measured in revenue passenger miles) at Spirit skyrocketed 75.8% in the reported quarter. To cater to this increased demand, capacity (measured in available seat miles) expanded to 54.4%. Load factor (percentage of seats filled by passengers) increased 9.5 points to 77.6% in the third quarter of 2021. Total operating revenue per available seat miles soared 48.7% to 8.34 cents in the reported quarter. Average yield surged 30.5% to 10.75 cents.
Adjusted operating expenses (excluding fuel) escalated 31% to $727.9 million. Average fuel cost per gallon in the reported quarter rose to $2.14 from $1.27 as oil price shoots up. Fuel gallons consumed skyrocketed 63.2% to $121.1 million, reflecting the usage of more planes to cater to upbeat air-travel demand. Adjusted cost per available seat miles (CASM) excluding fuel decreased 15.1% in the reported quarter, reflecting the expanded capacity.
Spirit, currently carrying a Zacks Rank #4 (Sell), ended the quarter with unrestricted cash, cash equivalents and short-term investments, and liquidity available under the carrier’s revolving credit facility of $1.9 billion. Capital expenditures in the first nine months of 2021 were approximately $249 million. The expenditure was primarily related to pre-delivery deposits associated with future aircraft deliveries, and the purchase of four aircraft and two engines off lease.
The carrier expects fourth-quarter 2021 capacity to ascend 11.2% from the levels achieved in fourth-quarter 2019. Fuel cost per gallon and the effective tax rate in the December quarter are anticipated to be $2.54 and 22%, respectively. Fuel gallon consumption is expected to be $122.7 million. Adjusted EBITDA margin for the same period is projected between breakeven and - 5. Adjusted operating expenses are expected in the $1,050-$1,060 million band. For the full year, total capital expenditures are expected to be $290 million. Spirit expects to end 2021, 2022 and 2023 with 173, 197 and 230 jets in its fleet, respectively.
How Other Airlines Fared
Let’s take a look at some of the other recently-released earnings reports of companies from within the Zacks Airline industry.
American Airlines’ AAL third-quarter 2021 loss (excluding $1.24 from non-recurring items) of 99 cents per share compared favorably with the Zacks Consensus Estimate of a loss of $1.04. Quarterly loss per share was also narrower than the year-ago loss of $5.54. Operating revenues of $8,969 million skyrocketed 182.67% year over year and also surpassed the Zacks Consensus Estimate of $8,926.6 million. This massive year-over-year jump reflects improving air-travel demand.
Southwest Airlines LUV incurred a loss (excluding 96 cents from non-recurring items) of 23 cents per share in the third quarter of 2021, narrower than the Zacks Consensus Estimate of a loss of 27 cents. Operating revenues of $4,679 million outperformed the Zacks Consensus Estimate of $4,581.5 million.
United Airlines UAL incurred a loss (excluding $2.46 from non-recurring items) of $1.02 per share in the third quarter of 2021, narrower than the Zacks Consensus Estimate of a loss of $1.65. Operating revenues of $7,750 million surpassed the Zacks Consensus Estimate of $7639.7 million.
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