Thursday, September 24, 2020

SAVE stock: Spirit Airlines Shares Down 41.8% Since March: Here's Why

 Here is the article. 

Perf Week -13.32%

Perf Month -11.70%

Perf Quarter -4.96%

Perf Half Y 0.75%

Perf year -55.96%

Perf YTD -60.11%


Spirit Airlines, Inc.‘s SAVE shares have shed 41.8% of value since March compared with the industry’s 24.6% decline.

Reasons for Dismal Performance

Like other airlines, Spirit Airlines is reeling under the effects of the coronavirus pandemic. The demand scenario, which started deteriorating in late January, began to worsen in mid-March.

Due to declining passenger revenues (down 51.7% in first-half 2020), the carrier reported wider-than-expected loss in each of the two quarters of 2020. With traffic plunge outpacing the capacity reduction, load factor (percentage of seats filled by passengers) tanked 14.4 percentage points during the first half of 2020.

Due to an unprecedented drop in passenger demand, the company’s April and May capacity was lowered by approximately 75% and 95%, respectively. The same for June fell approximately 95%. For the third quarter, capacity is expected to drop approximately 32% year over year.

Notably, due to capacity cuts, unit costs are increasing substantially. Evidently, in second quarter 2020, cost per available seat mile (CASM) excluding operating special items and fuel, escalated more than 100%.


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