Spirit Airlines (SAVE) Hikes Q4 TRASM Projection, Stock Up

Shares of Spirit Airlines (NYSE:SAVE) have outperformed its industry so far this year. The stock has gained 13.6% against the industry’s 15.5% decline.

YTD Price Performance

Bullish Views Boost Stock Further

Shares of this Miramar, FL-based discount carrier continued the uptrend and gained more than 10% in after-market trading on Nov 26. The uptick was driven by bullish current-quarter projections unveiled by the company at an investor update.

Spirit Airlines now expects total revenue per available seat miles (TRASM: a key measure of unit revenues) to increase approximately 11% year over year (the earlier view had called for this metric to increase approximately 6%).

Apart from higher expectations regarding load factor (% of seats filled by passengers), favorable pricing of non-ticket items like seats and bags led to the upbeat fourth-quarter projection. Spirit Airlines’ recent initiatives pertaining to network re-alignment have contributed to the improved expectations regarding load factor.

The bullish unit revenue projection for the October-December period can also be attributed to the anticipation of higher traffic during the same timeframe. With the Thanksgiving holiday period underway and the winter travel period to follow soon, it is natural that U.S. airlines will be very busy during the three-month period as demand for air travel is very strong.

Unit revenues apart, this Zacks Rank #1 (Strong Buy) company’s projections with respect to cost items are also impressive. The carrier expects non-fuel unit costs (adjusted) to increase in the 5-5.5% band (earlier the company had predicted the metric to rise 5-6% year over year). Economic fuel cost is now projected to be $2.27 per gallon compared with $2.46 estimated earlier.

Other Stocks to Consider

Investors interested in the Zacks Transportation sector may consider Frontline Ltd. (NYSE:FRO) , CSX Corporation (NASDAQ:CSX) and Arcbest Corporation (NASDAQ:ARCB) , each sporting a Zacks Rank of 1.You can see the complete list of today’s Zacks #1 Rank stocks here.

Shares of Frontline, CSX and Arcbest have gained 38.8%, 28% and 9.9%, respectively, year to date.

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