Spirit Airlines Inc.’s stock (SAVE) dropped 4% in premarket trade on Wednesday. The discount carrier revised its third-quarter guidance due to increased promotional activity for travel in the second half and a recent spike in fuel prices.
Increased Promotional Activity
According to a regulatory filing, Spirit Airlines has witnessed heightened promotional activity with steep discounting for travel booked for the second half of the third quarter through the pre-Thanksgiving travel period.
Revised Revenue and Fuel Cost
Spirit Airlines now expects third-quarter revenue to be in the range of $1.245 billion to $1.255 billion. This is a decrease from the previous guidance of $1.300 billion to $1.320 billion. Additionally, the company anticipates the fuel cost per gallon to be $3.06, which is up from the previous forecast of $2.80.
Adjusted Available Seat Miles
The airline also adjusted its expectations for available seat miles. It now projects a 13.4% increase, down from the previously estimated 13.7%.
Merger Update
The news of Spirit’s revised guidance coincides with JetBlue Airways Corp.’s attempts to make concessions in order to move forward with its proposed merger with Spirit.
Stock Performance
Year-to-date, Spirit Airlines’ stock has declined by 11%, while the U.S. Global JETS ETF has gained 8% and the S&P 500 has gained 16.2%.
