قالب وردپرس درنا توس
Home / Business / Spirit Airlines crashes, we earn 100% profit – Spirit Airlines, Inc. (NYSE: SAVE)

Spirit Airlines crashes, we earn 100% profit – Spirit Airlines, Inc. (NYSE: SAVE)



  airline, focus on freedoms, william sabin, oil, futures, money, budget, investment, children, youth, retirement

As I suggested in my last airline article, Spirit Airlines (SAVE) was over priced and ready for a fall. As such, I took a short position using a bear that was scattered last week and is up 100% on the trade, although I didn't expect an over 23% drop.

  Chart

Data by YCharts [19659006] What went well?

Spirit Airlines & # 39; CEO Ted Christie said: "In the second quarter of 2019, we improved the operating margin by 300 basis points and delivered very strong earnings growth." Revenue without tickets per passenger aircraft increased 1.8% to $ 55.54. The cost per passenger flight segment fell to $ 57.60 or 1%, while the total revenue per passenger segment was up 0.3% YY to $ 113.14.

Spirit Airlines # 2Q19 earnings per share as mentioned below came at $ 1.67, which was higher than consensus of $ 1.62. Net income improved over 52% from the previous year (YOY). In addition, the company's sales improved 18.9% YYY along with an increase of 18.4% in aircraft volume and favorable passenger yields, and cargo factor showing the percentage of seats filled by passengers.

Total passenger mile income (RPM) showed a 15% improvement in the reported quarter, available Seat miles (ASM) expanded 13.2% YY. Cargo factor climbed 130 basis points to 85%. The average economic fuel cost per gallon in the reported quarter fell 6.9% YOY to $ 2.16.

Source: Spirit Airlines

What made the stock crash

In my analysis, there was no good reason for the stock to go down as much as it did on Thursday. As such, I recommend taking advantage of the recovery adjustment back to a less panic price.

Some of the problems came in as operating expenses increased by 14.8% and non-fuel units increased 4.6% in the quarter. An Easter holiday storm was also known to push up the costs. The company incurred about $ 6 million in spending to accommodate passengers and crew. Higher salaries, wages and benefits, and airport rentals and landing fees also contributed to the sky-high expenses. Aircraft spending fuel costs increased by 7.6% YYY due to an increase of 15.4% in fuel gallon consumption.

Source: Spirit Airlines

Outlook Going Forward

For 3Q19 things are expected to get worse for airline with cost per available seat mileage (CASM), excluding fuel (non-fuel cost), to increase by 7-8% YE due to construction work at Ft. Lauderdale Airport and Expenses associated with Airplane Disruption. The company expects a growth of 3Q19 per available seat miles (TRASM) in the range -1 to + 1%.

Furthermore, 4Q19 non-fuel unit costs are expected to increase 3.5-4.5%, which SAVE expects for the entire year. This was above the original 2-3% increase.

Summary

While I was bearish on the stock and benefited from the recent downturn, I think the bad news wasn't as bad as the price showed. As such, I take a long position with minimal costs to earn even more money on stock volatility.

In addition to analyzes that you have just read, we provide valuable advice on investment strategies, including stocks, stock options and bonds. In addition, you will obtain key information for those who plan, approach or retire.

Invest and trade with an experienced investor and learn important savings and investment information as well as capital allocation strategies to help you get additional returns on your portfolio.

Only: Save more now, invest smarter, and hopefully have more in retirement.

Join today!

Publication: I / we have no positions in any of the aforementioned shares, but can initiate a long position in SAVE over the next 72 hours. I wrote this article myself, and it expresses my own opinions. I do not receive compensation for it (other than from Seeking Alpha). I have no business relationship with any company listed in this article.

Additional disclosure: This article is intended to provide educational information to readers and in no way constitutes investment advice. Investing in public securities is speculative and involves risk, including potential loss of principal. The reader of this article must decide whether the investments mentioned in this article are appropriate for their portfolio, risk tolerance and accept responsibility for their decisions. Neither information nor any meaning expressed in this article constitutes a solicitation, offer or recommendation for the purchase, sale or disposal of any investment or investment advice or service. An opinion in this article may change at any time without notice.


Source link