Spirit Airlines stock rebounded early Friday after the company released preliminary Q4 estimates as part of a business update. The announcement comes after a federal judge blocked JetBlue Airways $3.8 billion acquisition of Spirit earlier this week.
Spirit Airlines expects total Q4 revenue at the high end of its initial guidance, around $1.32 billion. That would represent a 1.3% decline from last year. FactSet analysts predict Q4 revenue at $1.3 billion. Spirit sees better-than-expected operating expenses due to lower fuel and airport costs and greater fuel efficiency. The company noted strong bookings for the peak Christmas and New Year's travel period, and reported a 99.7% completion rate for the holiday season.
Spirit expects its adjusted operating margin to improve to -12% to -13% from its prior range of -15% to -19%. Meanwhile, the airline forecasts capacity growth to climb 1% to 2% over the year.
As of Dec. 31, Spirit reported $1.3 billion in cash and equivalents, as well as $300 million in untapped credit. The company also continued shoring up its finances in Q4, netting $419 million through aircraft sale-leaseback transactions. Spirit is weighing its options to refinance its 2025 debt maturities, which include $1.1 billion of 8% corporate bonds.
The airline will host its Q4 earnings call early Feb. 8.
Spirit Airlines Statement On Blocked Buyout
The Spirit Airlines release on Friday included a joint statement with JetBlue, claiming the merger agreement remains "in full force and effect" as both airlines review Tuesday's court decision and evaluate next steps.
The airlines said they disagree with the court ruling and "continue to believe that a combination with JetBlue is the best opportunity to increase much-needed competition and choice." Spirit and JetBlue argued the merger would offer lower fares to more customers and markets, while boosting their ability to compete against the top U.S. carriers.
Meanwhile, JetBlue's commitment to divesting terminal space and terminating the Northeast Alliance should remove any anti-competition concerns from the DOJ, the firms contend.
Winter Weather Hampers Airlines
Winter weather began snarling U.S. air traffic early in the week, with more than 2,200 flights canceled and 6,800 flights delayed on Tuesday. By Friday morning, online service tracker FlightAware reported 680 canceled flights in the U.S. with another 1,108 flights delayed, as of 7:45 a.m. ET.
Early in the week, Southwest Airlines had seen the greatest impact. On Tuesday, it canceled more than 400 flights and delayed more than 900.
As of Friday morning, Alaska Airlines was at the top of the list with 195 cancellations. United showed 148 canceled flights. The 737 Max 9 groundings play a large part in the Alaska and United cancellations. United owns 79 of the aircraft. Alaska flies 65 Boeing Max 9s.
Spirit on Friday morning had reported 15 cancellations. Spirit does not use the 737 Max 9 aircraft.
Elsewhere, Alaska Airlines on Thursday said it would extend cancellation of its Boeing 737 Max 9 flights through Sunday. The Federal Aviation Administration is continuing to review data from the first 40 aircraft inspections. The FAA on Jan. 6 ordered all U.S. Boeing 737 Max 9 aircraft grounded, pending inspections, following a decompression incident that forced an emergency landing of an Alaskan Airlines jet in Portland, Ore., on Jan. 5.
Spirit Airlines Stock
Spirit Airlines stock leapt 17.2% Friday and rallied 30% premarket following the business update. Shares dove 47% on Tuesday after news of the court ruling. That marked the stock's worst daily drop in company history, MarketSmith shows.
JBLU stock eased 1.2% Friday morning after jumping 7.8% Thursday.
Alaska Airlines ticked slightly lower while United stock slipped 2.4%. Boeing stock climbed 1.6% Friday.
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