Miramar, FL-based low-cost carrier Spirit Airlines (NASDAQ:SAVE) posted a significant rise in air traffic for the month of August. Traffic – measured in revenue passenger miles (RPMs) – came in at 1.94 billion, up 18.3% from 1.64 billion recorded in Aug 2015.
On a year-over-year basis, consolidated capacity (or available seat miles/ASMs) improved 17.1% to 2.22 billion. Load factor or percentage of seats filled by passengers increased to 87.1% from 86.2% recorded last August. Load factor increased as traffic growth outpaced capacity expansion for the month. The discount carrier registered a completion factor (system wide) of 98.5% for the month with 72.7% flights on schedule.
For the first eight months of 2016, Spirit Airlines registered a 23.1% increase in RPMs to 14.55 billion and a 22.6% rise in ASMs to 16.85 billion, both on a year-over-year basis. Load factor, on the other hand, improved 40 basis points to 86.4% in the period.
Apart from posting impressive traffic numbers, the carrier has been receiving other positive updates as well. The U.S. Department of Transportation’s decision to grant the final approval to eight carriers, including Spirit Airlines, to initiate commercial flights to Havana is a huge positive. The verdict has confirmed the tentative approval awarded on Jul 7, 2016.
Havana is slated to be Spirit Airlines’ 59th destination. Following the approval, the carrier announced its plans to initiate flights (twice a day) to Havana's José Martí International Airport from the Fort Lauderdale-Hollywood International Airport. The service will be starting from Dec 1, 2016, subject to approval from the Cuban government. We believe that, once operational, Spirit Airlines top line will be benefitted immensely by the new route additions as Havana is a favorite tourist spot. The low-cost carrier has also received encouraging updates on the labor front over the past few months.
The spate of positive developments can well be attributed to the change in the leadership of Spirit Airlines at the beginning of 2016. In January, Robert Fornaro was appointed as president and Chief Executive Officer of the company. Fornaro replaced Ben Baldanza.
Zacks Rank & Key Picks
Spirit Airlines carries a Zacks Rank #3 (Hold). Some better-ranked stocks in the airline space include SkyWest Inc. (SKYW), ANA Holdings Inc. (ALNPY) and Copa Holdings SA (CPA). Both SkyWest and ANA Holdings carry a Zacks Rank #2 (Buy), while Copa Holdings sports a Zacks Rank #1 (Strong Buy).You can see the complete list of today’s Zacks #1 Rank stocks here.
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