Wednesday, July 15, 2015

Spirit Airlines: Down But Not Out


Summary

  • Spirit Airlines provided disappointing margin guidance for the rest of 2015.
  • The discount airline continues to face growing pains from a capacity surge in excess of 30%.
  • The recent stumbles in the airline industry provide a solid buying opportunity, especially considering the cheap valuation of Spirit Airlines.
   After the close, Spirit Airlines (NASDAQ:SAVE) reported substantially reduced margins for Q2 and the full year. A key distinction though is a large amount of the reduced numbers are due to weather related issues during Q2. At the same time, the airline is definitely facing more airfare pressure during the prime summer travel months. A big part of the issue is self inflicted due to the greater than 30% capacity growth while most other airlines maintain capacity discipline.


Read the full article on Seeking Alpha.


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