Why Is Spirit Airlines Stock Diving Today?

Zinger Key Points
  • SAVE expects aircraft delivery deferrals to improve liquidity by $230M while facing continued engine challenges impacting its outlook.
  • Spirit Airlines saw revenue decline due to engine-related issues, reduced load factor, and lower fare revenue per flight segment.

Spirit Airlines Inc SAVE reported a first-quarter fiscal 2024 revenue decline of 6.2% Y/Y to $1.265 billion, marginally missing the consensus of $1.269 billion.

Adjusted EPS loss was $(1.46), down from $(0.82), missing the consensus of $(1.45).

“While we reported a loss in the first quarter 2024, we are making progress towards our financial goals…. There are numerous steps to rollout the plan in a successful, orderly fashion, but we are on track and we are excited to unveil the milestones to you over the coming months,” said Ted Christie, Spirit’s President and Chief Executive Officer. “The competitive environment remains challenging due to elevated capacity in many of the markets we serve.”

Passenger revenues fell 6.6% Y/Y to $1.239 billion, while other revenue rose 17.6% Y/Y to $26.23 million.

Total revenue per ASM was 9.38 cents, down 8.2%Y/Y. Total revenue per passenger flight segment dipped 8.1% Y/Y to $117.03. 

Fare revenue per segment was down 16.3% Y/Y to $48.08, and non-ticket revenue per segment was down 1.4% Y/Y to $68.95. 

The load factor contracted 0.1ppt Y/Y for the first quarter to 80.7%. Aircraft utilization was 10.4 hours, down 7.1% from last year, reflecting aircraft unavailable for operational service due to PW1100G-JM geared turbo fan engine availability issues.

In the quarter, it took delivery of seven new aircraft, with three A320neo and four A321neo aircraft, retired five A319ceo aircraft, and had 207 aircraft in its fleet at the end of the quarter.

Adjusted operating expenses totaled $1.44 billion, with adjusted operating expenses excluding fuel at $1.034 billion and average economic fuel price per gallon at $2.90.

Pratt & Whitney will issue AOG credits to Spirit totaling $30.6 million for the second quarter, with $1.6 million recorded as maintenance credits. Estimated 2024 credits will range from $150 million to $200 million for 25 AOG aircraft. Spirit will discuss arrangements with Pratt & Whitney for AOG aircraft after December 31, 2024.

Additionally, Spirit announced on April 8, 2024, that it will defer aircraft deliveries from the second quarter of 2025 through the end of 2026 to 2030-2031, except for two direct-lease aircraft. The deferrals are expected to boost Spirit’s 2024 liquidity by $230 million.

The company ended the quarter with $1.2 billion in cash, short-term securities, and available liquidity under its credit facility.

Sale-leaseback transactions yielded $99 million, a JetBlue termination payment brought in $69 million, and capital expenditures totaled $33.9 million.

Q2 Outlook: Spirit Airlines expects total revenues of $1.32 billion-$1.34 billion versus $1.463 billion consensus.

The company sees Adjusted Operating loss adjusted for AOG credits to be $(110) million to $(86) million, Fuel cost per gallon of $2.80, and Available seat miles % change vs. 2023 of ~2%.

Price Action: SAVE shares are trading lower by 8.49% at $3.395 at the last check Monday.

Photo via Wikimedia Commons

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