Spirit Airlines Reverses on Revenue Outlook

This is the third double-digit swing in three days

BREAKING NEWS

The wild ride of Spirit Airlines stock continued this morning after preliminary revenue results sent the stock rocketing upwards. Let’s make sense of all these moves:

WHAT HAPPENED

Spirit fell over 50% earlier in the week when a U.S. Judge agreed to block their merger with JetBlue. Then, Spirit added to that decline yesterday when new reports about their potential move toward bankruptcy leaked.

However, then the company released preliminary earnings projections that completely reversed that decline. Spirit now projects revenue of $1.3 billion—the top of their previous estimate. They also cut their losses to an estimated negative 13% margin. That’s a huge improvement over the near-20% shortfall the market was preparing for. 

RIGHT MOVES AT THE RIGHT TIME

With budgets compressing, Spirit saw a huge uptick in bookings to end the year as more folks utilized their budget service. Meanwhile, fuel costs got crushed—which took a huge load of margin pressure off the airline. While Spirit definitely isn’t out of the woods yet—those mild improvements give the company a fighting chance of surviving on their own. 

WHY IT MATTERS

Spirit honestly has a small chance of turning into a key airline for the moment as reduced consumer spending will push more travelers to use their service. While Spirit would have thrived as a part of JetBlue, maybe blocking this merger wasn’t so bad after all. Spirit has a long way to go before they make it to being profitable—but at least the stock isn’t on life support anymore. Spirit stock jumped over 15% in early trading—but the company is still down over 50% on the week. Where’s the wild ride headed next?