YCharts  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.
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.
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