Author Topic: SAVE - Spirit Airlines, Inc.  (Read 26470 times)

Jurgis

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Re: SAVE - Spirit Airlines, Inc.
« Reply #80 on: October 06, 2019, 09:20:19 AM »
I think there is more Tonic than Mr Market doesnít like cyclicals.

I'm successfully battling the onset of dementia by applying my brain to figure out what Spekulatius' speech-to-text errors really meant.
Suggested mental exercise for everyone.
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Spekulatius

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Re: SAVE - Spirit Airlines, Inc.
« Reply #81 on: October 06, 2019, 11:05:50 AM »
I think there is more Tonic than Mr Market doesnít like cyclicals.

I'm successfully battling the onset of dementia by applying my brain to figure out what Spekulatius' speech-to-text errors really meant.
Suggested mental exercise for everyone.
AA+++  8)

The AI in Apples text recognition and grammar correction always seem to know what I really care about.
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frank87

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Re: SAVE - Spirit Airlines, Inc.
« Reply #82 on: October 06, 2019, 05:24:08 PM »

The business has destroyed value, because they increased their revenues by 50% , while their operating profit went from $500M to $350M, while interest expense went from $20M to $80M. Furthermore, negative FCF is pretty much guaranteed for a couple more years per plain delivery schedule.


Do you just look at item 6 on a 10-K and come up with these conclusions? Spirit had a large settlement with their pilots in 2018 which led to a large one-time charge. Plus fuel costs were unsustainably low a few years ago.

Basically yes. A few other thing - the operating profit margin went down before 2018.
Also, analogies with Europe are a bit misplaced - low cost carriers in Europe tend to take away business from other modes of transportation, while in the US they try to cut another airlines throat for the most part. I own a bit of Ryanair and think itís a  better Business than Spirit.
Recent pressures on shares may be due to tariffs on Airbus, which will hit SAVE disproportionally hard.


What do you think is the reason for Spirits lagging stock performance? I think there is more to it than Mr Market doesnít like cyclicals.

Who knows? And it's not just a cyclical...it's an airline as well. I was pointing out your faulty rationalization.

Spekulatius

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Re: SAVE - Spirit Airlines, Inc.
« Reply #83 on: October 07, 2019, 03:43:37 AM »

Who knows? And it's not just a cyclical...it's an airline as well. I was pointing out your faulty rationalization.

Who knows is not a good answer, if you own the stock. SAVE has underperformed most airline stocks, except JBLU (which has margin issues) during the last few years. The balance sheet has definitely taken a turn for the worse, due to negative FCF. the industry overall seems to be over-earning a bit due to capacity constraints from the 737Max grounding. This benefits SAVE, because their fly Airbus exclusively.

I havenít heard much about the latest trade war escalation where Airbus is now charged 10% tariffs, which are going to be paid by the customer. This hits SAVE hard, because they are expanding the fleet (high Capex) and exclusively fly Airbus 320 family planes. What if Trump goes crazy and escalates to a higher tariff? Then SAVEĎs operating model is in question, as they may have to switch to Boeing planes, which invalidates their operating model and increased their plane operating costs. Or they cancel deliveries (can they?) and actually start to generate cash, which Mr Market may like?
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kab60

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Re: SAVE - Spirit Airlines, Inc.
« Reply #84 on: October 23, 2019, 11:00:05 PM »
Earnings out, apparently they were good. More importantly, about to order 100-150 planes from Airbus towards 2027. Which, it seems, will be constructed in the US, so don't think tariffs are an issue.

bizaro86

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Re: SAVE - Spirit Airlines, Inc.
« Reply #85 on: October 24, 2019, 08:10:13 AM »
I think it's pretty likely SAVE could find someone else to take their delivery slots if they wanted, given the significant worldwide shortage of narrow body planes.

kab60

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Re: SAVE - Spirit Airlines, Inc.
« Reply #86 on: November 15, 2019, 07:46:55 AM »
Just wanted to point out what seems like a major discrepancy in expectations (and perhaps an opportunity for those playing short term earnings games). Per last CC, company expects to increase EPS high double digit in 2020 (1:1 with their capacity increase). Analysts basically expects earnings to be flat. Management had a lot of opportunities to downplay but stuck to their guidance. No Idea who is right, but odds look good that the Company atleast surprises somewhat positively since expectations are so low. The continuing Max issues might be a positive joker.

kab60

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Re: SAVE - Spirit Airlines, Inc.
« Reply #87 on: January 14, 2020, 10:06:39 AM »
Doesn't this company have a target at its back? It trades around 1,3xvalue of its planes - which are solely Airbus. Boeing issues should make them more sought after. Then they have their order backlog - having secured planes for the next decade. I know, Airlines, but returns are pretty good across the board. Talked to an Airline Chairman who said the Industry was much changed since the GFC due to consolidation and rightsizing of structures. Who knows, buying a bit above book, and perhaps being an m&a target, doesn't look like too bad of a bet. And then you still have that possible short term catalyst of a major earnings beat.