Spirit Airlines, the ultra-low-cost carrier, is gearing up for a make-or-break moment as it prepares to release its latest earnings report. After a turbulent start to the year, with its stock plummeting 57% following a blocked merger proposal with JetBlue Airways, the airline is eager to show investors a path towards profitability.
While the possibility of an appeals court overturning the merger ruling by July 24 remains uncertain, Spirit Airlines has another opportunity to turn their fortunes around. With analysts predicting five consecutive quarters of adjusted losses, including the fourth quarter, the company must present improved numbers and a clear plan for recovery.
When the market opens, Spirit Airlines will unveil its latest earnings performance. Projections for the final quarter of 2023 indicate an anticipated adjusted per-share loss of $1.42 on sales totaling $1.32 billion. Additionally, the airline’s outlook for the first quarter of 2024 is expected to reveal a loss of $1.57 per share, with sales amounting to $1.24 billion.
Analysts and investors are particularly interested in gaining insights into Spirit’s balance sheet at year-end and management’s perspective on liquidity and standalone prospects. The airline’s ability to demonstrate a solid financial position and offer a positive outlook for the future will be key in regaining investor confidence.
With credit-ratings firm Fitch downgrading Spirit’s debt rating to B- from B last month, an urgent need for improved profitability is evident if the airline wishes to prevent further downgrades.
As Spirit Airlines prepares to unveil its earnings report, all eyes are on how they will deliver strong financial results and outline a promising trajectory for the company’s recovery.
Spirit Airlines Investors Anticipate Improvement Amidst Challenging Landscape
Despite the numerous obstacles faced by low-cost carriers, such as a decline in domestic demand and supply constraints, a glimmer of hope shines for Spirit Airlines.
On Tuesday, the positive earnings report from Frontier Group provided a boost to the entire airline sector, offering potential signs of encouragement for Spirit’s shareholders.
Frontier Group managed to break even, outperforming expectations of a 23 cents per-share loss. President Jimmy Dempsey expressed his optimism regarding revenue trends in 2024, stating that they have already surpassed expectations and are poised to further improve throughout the year.
This impressive performance by Frontier also resonated with Spirit, as their stock jumped 13%. In fact, other major U.S. airlines, such as United Airlines and American Airlines, also experienced an increase in their stock prices, rising 3% and 4.5% respectively.
Moreover, Spirit Airlines previously upgraded its outlook last month, offering evidence for a solid quarter ahead.
With strong bookings during the peak period encompassing Christmas and New Year’s Day holidays, the airline expects fourth-quarter revenue to reach the upper end of its previous forecasted range, ranging from $1.28 billion to $1.32 billion.
Furthermore, operating margin guidance has been revised to -12% to -13%, evidencing a shift towards profitability, compared to the previous range of -15% to -19%.
In addition to this positive outlook, Spirit Airlines also anticipates better-than-expected costs due to lower fuel costs, reduced airport expenses, and enhanced operational reliability.
