Out Fox The $treet

Update - March 6 No surprise the government is looking to block the acquisition by JetBlue. The question is whether the DoJ actually has the right to block the merger. Besides, Spirit shareholders are likely better off without a deal. Regardless, the stock has fallen to the yearly and covid lows as the market apparently doesn't understand Spirit is better off without JetBlue.  Regulators are reportedly looking to block the prospective merger between JetBlue Airways ( NASDAQ: JBLU ) and Spirit Airlines ( NYSE: SAVE ), sending shares of the latter sliding. Both the Department of Transportation and Department of Justice are looking to  halt the deal on the grounds that the merger would be anti-competitive, according to Bloomberg. Per prior media reports, executives from the carriers met with the DOJ in late February  in a "last-rites" meeting  to assuage regulatory concerns on the planned merger. That meeting followed  reports earlier in February  that the dep...

  Spirit Airlines has at least 44% upside on closing the JetBlue deal. The airline deal still has a lot of questions on whether regulators will approve the merger. The stock is cheap whether the deal closes at $33.50 per share in cash or the airline and shareholders get a large breakup fee and Spirit remains a standalone airline. This idea was discussed in more depth with members of my private investing community, Out Fox The Street.  Learn More »   While long term investors should've wanted the  Frontier Group Holdings'  ( ULCC ) buyout of  Spirit Airlines  ( NYSE: SAVE ), those investors must now analyze the  JetBlue Airways  ( JBLU ) deal. The agreed  upon purchase price provides substantial upside to the stock while holding Spirit Airlines offers downside protection on a deal failure. My  investment thesis  remains ultra Bullish on the stock, though disappointed shareholders didn't approve the merger with Frontier. Read the...

  Spirit Airlines cut Q3'21 guidance after a period of strong rebounds from the covid lows in 2020. The airline had to cut nearly 3,000 flights in early August due to internal issues. The stock is cheap back closer to $20 with a path to $4+ EPS in the next few years due to capacity growth. This idea was discussed in more depth with members of my private investing community, Out Fox The Street.  Learn More » The Delta variant has slightly dented travel demand, but the airline stocks have fallen up to 40% from the recent highs.  Spirit Airlines  ( SAVE ) hasn't helped their case with systems troubles causing the cancellation of thousands of flights. My  investment thesis  remains very Bullish on this stock following this dip as air travel demand remains on track for a full recovery. Read the full article on Seeking Alpha.  Disclosure: No positions mentioned. Please review the disclaimer page for more details.  Update - August 29 TSA traffic has def...

  Spirit Airlines forecast strong financial targets for Q2/Q3. The airline is poised to grow the fleet by a 15% CAGR going forward. The stock is cheap at $37 as EPS targets start pointing toward $4-plus. This idea was discussed in more depth with members of my private investing community, Out Fox The Street.  Learn More » Despite U.S. airline traffic only recently topping 50% of 2019 levels, Spirit Airlines ( SAVE ) already is back to operating close to normal. As yields rise, the airline will start generating solid profits in the next few quarters. My  investment thesis  remains very bullish on Spirit Airlines as the stock is poised to return to previous highs. Read the full article on Seeking Alpha.  Disclosure: Long SAVE. Please review the disclaimer page for more details. 

Spirit Airlines is down close to 50% from recent highs. The airline will obtain a massive cushion from lower fuel costs with jet fuel down to $1.42 per gallon. Global air travel rarely slows down based on virus outbreaks. The stock is a bargain at below 5x normalized EPS estimates. As the global coronavirus outbreak reduces travel, the domestic airline stocks are being hit hard.  Spirit Airlines  ( SAVE ) is now an incredible bargain after taking a $20-plus tumble in the last couple of weeks. The market has far too much fear over an airline with a rock-solid position. Read the full article on Seeking Alpha.  Update March 9, 2020 Jet fuel was down to $1.31 as of March 6 and will continue to fall. The lower prices are a huge benefit to the airlines like Spirit. The stock has held the lows from last Friday.  Disclosure: No position. Please review the disclaimer page for more details. 

11/28 Update Spirit Airlines (SAVE) has surged 20% over the last couple of days after the airline boosted Q4 RASM to ~11% growth. The airline had originally forecast 6% growth after a period of declining metrics. The airline has amazingly hit new highs following my April article when Spirit Airlines was down in the dumps. Analysts are boosting 2019 EPS estimates above $5 per share. The stock likely rallies towards $70 on this bullish news. Investors should turn more cautious at these levels. The airline has a tendancy to dramatically boost capacity as yields start to improve. Absent any capacity boost, my view could stay bullish on these gains.

Spirit Airlines shareholders are glad to see 2015 end. The airline is set for better traffic metrics in 2016 due to reduced capacity growth. The stock is highly attractive at extreme lows compared to the long-term growth rate. My investment thesis on Spirit Airlines (NASDAQ: SAVE ) for a while now is that the airline caused self-inflicted wounds by growing capacity too fast. The stock is currently trading near multi-year lows, down roughly 50% from all-time highs. Read the full article at Seeking Alpha. Disclosure: No position mentioned. Please review the disclaimer page for more details. 

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. Disclosure: No positions mentioned. Please read the disclaimer page for more details.

After reading the November traffic results from the major legacy airlines, one would've assumed that the month was a throwaway for all airlines. The timing of the Thanksgiving holiday pushed passenger return traffic into December. All of the major airlines reported declining load factors, with Delta Air Lines ( NYSE: DAL     ) and US Airways, now part of American Airlines Group ( NASDAQ: AAL     ) , blaming the late Thanksgiving and proclaiming that December will be strong. But, along came Spirit Airlines ( NASDAQ: SAVE     ) with some surprisingly positive numbers. The company did note a small decline in load factor, but the other traffic totals suggest that November was a normal month to the airline. Read the full article here . Disclosure: Long AAL. Please review the disclaimer page for more details. 

Small-Cap Insight Historically, the airlines have been horrible operators and Hawaiian Holdings ( HA ) probably topped the list. In reality, the issue in paradise might have been a prime example of the industry issue times two. For a long time, it was cool to own an airline and probably double so to fly to the beautiful Hawaiian Islands. Even today in the midst of a dramatic turnaround, the airline lists receding industry capacity in Hawaii as a major benefit. The opposite was probably true of fellow West Coast competitor Alaska Air Group ( ALK ) that historically has the better operations. Did the lack of desire to fly to the cold confines of Alaska provide a natural competition eliminator that provided a significant advantage over any management skill? Read the full article at Seeking Alpha. Disclosure: No positions mentioned. Please review the disclaimer page for more details. 

A recent IPO might provide the a great opportunity to invest in Mexico's air travel boom.  Volaris Aviation ( NYSE: VLRS     ) , a leading ultra-low-cost-carrier (ULCC) in Mexico, provides access to leading manufacturing hubs, and it could make a great play on the general overall growth in Mexico's economy and air travel. Like most of Latin America, the majority of Mexicans travel around the country on buses. While the country's highly inefficient highway network makes bus travel time-consuming, the nation's many lower-income travelers prefer buses' cheaper fares, helping the system stay in business. But now, Volaris Aviation promises the ability to match bus fares in some areas, providing consumers with a much better travel alternative. Read the full article here . Disclosure: No positions mentioned. Please review the disclaimer page for more details. 

After years of attempting to turn around Frontier Airlines, Republic Airways ( NASDAQ: RJET     ) ( NASDAQ: RJET     ) ( NASDAQ: RJET     ) made a move that should have surprised no one in the industry. The operator of fixed-fee flights for partner airlines agreed to sell  Frontier to a group run by William Franke, the former chairman of Spirit Airlines ( NASDAQ: SAVE     ) ( NASDAQ: SAVE     ) ( NASDAQ: SAVE     ) . Exiting the troubled subsidiary allows Republic to focus on the profitable fixed-fee segment, but the airline failed to obtain anything significant for its four years of work attempting to make Frontier viable. Read the full article here . Disclosure: No position mentioned. Please read the disclaimer page for more details.

Following a few intriguing moves in the past month,  Spirit Airlines '  ( NASDAQ: SAVE     )  cheap-ticket, high-fee model could be in for serious competition in a few years. Spirit chairman William Franke, who pioneered the airline's highly profitable approach to flying, resigned his post after his Indigo Partners group sold a substantial stake in the airline. But Franke and Indigo turned right around and bought Frontier Airlines, a subsidiary of  Republic Airways ( NASDAQ: RJET     ) The deal won't close until December, and given the time it takes to turn around an airline, Spirit and Allegiant Travel ( NASDAQ: ALGT     ) shouldn't sweat Frontier's competition for now. However, with a strong operator at its helm, other ultra-low-cost carriers could face a tougher rival in the future. Read the full article here . Disclosure: No positions mentioned. Please review the disclaimer page for more details. 

For those interested in the pending merger between US Airways (LCC) and American Airlines (AAMRQ) , Minyanville has an interesting interview with analyst Wayne Plucker at consultant firm Frost & Sullivan. The best part of the interview is the he discusses a bigger impact to job losses and not costs to consumers. In fact, he makes the claims that ticket prices aren't high enough. Though some of those costs are being made up for with ancillary charges, the DOJ has it wrong about higher costs to consumers. Heck, in some cases consumers need to pay higher prices and that's just the hard cold facts that airlines undercharged in the past. If the new American Airlines were to dramatically raise rates for any routes and existing rates are so attractive, other airlines will swoop in to take market share. After this consolidation, the industry is still left with Delta Air Lines (DAL) and United Airlines (UAL) as equal competitors and Southwest Airlines (LUV) , JetBlue (JBLU) , ...

As with most sectors, airline stocks generally trade in the same general direction whether up in bull markets or down in bear markets. Typically the better company in the sector outperforms, but for an investor picking the right group is the major battle. In the case of the airlines, the whole sector is gaining as historically strong profits and reduced competition from consolidation promises to continue the profits streak. In more » Disclosure: No positions mentioned. Please review the disclaimer page for more details. 

When reviewing the quarterly results for Republic Airways (NASDAQ: RJET ) , a couple of numbers really stuck out as shocking and actually in a good way. The company reported the amazing combination of lower revenue yet higher operating margin. What is going on in the airline industry that is allowing this focus on profits? Republic Airways is a jumbled group of airlines including Chautauqua Airlines, Frontier Airlines, Republic Airlines, and Shuttle more » Disclosure: No positions mentioned. Please review the disclaimer page for more details. 

When reviewing the airline sector, the moves made by Republic Airways (NASDAQ: RJET ) appear to be all the right ones. In an industry long focused on market share and size, the airlines as a group have undertaken a new dedication to focusing on profits regardless of market share or supposed industry importance. Republic Airways is a jumbled group of airlines including Chautauqua Airlines, Frontier Airlines, Republic Airlines, and Shuttle America more » Disclosure: No positions mentioned. Please review the disclaimer page for more details. 

Anybody following this blog should know by now that the consolidation in the airline industry makes it investable for the first time possibly ever. The major airlines, including Delta Air Lines (NYSE: DAL ) , United Airlines, a subsidiary of United Continental Holdings  (NYSE: UAL ) , and the ongoing combination of US Airways (NYSE: LCC ) and American Airways have helped dramatically reduce the competition in the sector. The biggest threat to strong profits more » Disclosure: No positions mentioned. Please review the disclaimer page for more details. 

All of the benefits of consolidation undertaken by the major airlines to create three behemoths could unravel if new competitive threats enter the market. After decades of losses, new airlines entering the industry don’t appear as likely a threat as some of the established, more regional players aggressively expanding to fill the voids created by the mergers. Enter Spirit Airlines (NASDAQ: SAVE ) as possibly the biggest threat to the more » Disclosure: No positions mentioned. Please review the disclaimer page for more details.