Spirit Airlines Shares Dip Despite Q3 Beat, High Fuel Prices Likely To Curb Q4 Margin

Spirit Airlines Inc SAVE reported Q3 FY23 revenue declined 6.3% Y/Y to $1,259 million, beating the consensus of $1,258 million. 

Adjusted EPS loss of $(1.37) beat the consensus of $(1.48).

Passenger revenues fell 6.7% Y/Y to $1,234 million, while other revenue rose 16.7% Y/Y to $24.6 million.  

Total revenue per ASM came in at 9.14 cents, down 17.4% Y/Y. Total revenue per passenger flight segment dipped 13.5% Y/Y to $116.43. 

Fare revenue per segment was down 27.8% Y/Y to $48.73, and non-ticket revenue per segment grew 1% Y/Y to $67.703. 

For Q3, the load factor contracted 1.9ppt Y/Y to 81.4% due to adverse weather and air traffic control-related delays, mainly along the eastern seaboard and in Florida.

“Softer demand for our product and discounted fares in our markets led to a disappointing outcome for the third quarter 2023," CEO Ted Christie said. "We continue to see discounted fares for travel booked through the pre-Thanksgiving period."  

Aircraft utilization in third-quarter (Q3) 2023 was 10.8 hours, up 1.9% Y/Y in Q3. 

In Q3, Spirit took delivery of three new A320neo aircraft and five new A321neo aircraft, retired four A319ceo aircraft, and had 202 aircraft by the end of the quarter.

Total capital expenditures for the nine months ended September 30, 2023, stood at $209.1 million, especially related to building a new headquarters campus in Florida and purchasing spare parts.

As of September, SAVE's unrestricted cash and cash equivalents, short-term investment securities, and liquidity available under its revolving credit facility stood at $1.2 billion. 

“In addition to a softer-than-expected demand environment, we continue to be challenged by higher fuel prices and NEO engine availability issues and are expecting our margins in the fourth quarter will be lower than we reported for the third quarter 2023"

"In addition to evaluating different strategies to drive higher revenue per departure, we have identified $100 million of structural cost reductions and are evaluating how best to capture those savings in 2024,” said Scott Haralson, CFO. 

Price Action: SAVE shares Are trading lower by 4.59% at $16.01 on the last check Thursday.