Spirit Airlines shares jump premarket after preliminary revenue beats estimates

Investing.com -- Shares in Spirit Airlines (NYSE:SAVE) soared in premarket U.S. trading on Friday after the U.S. budget carrier reported preliminary quarterly operating revenue that was above average analyst projections.

In a securities filing, Spirit estimated that it will post fourth-quarter operating revenue of $1.32 billion. Adjusted operating margin is also anticipated to come in at -12% to -13%, an improvement from its prior guidance of -15% to -19%. Bloomberg consensus forecasts see the figures at $1.3B and -15%, respectively.

Florida-based Spirit said that bookings over the peak holiday travel period were "strong," while expenses are seen coming in "better than expected" thanks to lower airport costs and greater fuel efficiency. The full fourth-quarter results are set to be released on Feb. 8.

The group added that it took "several steps" over the course of its previous three-month period to bolster its liquidity, including an extension of a revolving credit facility and sale-leaseback transactions related to 20 aircraft that resulted in net cash proceeds of approximately $419 million.

Spirit argued that the moves will "allow it time to make the necessary strategic shifts to enable the [c]ompany to compete effectively in the current demand backdrop and to return the business to profitability." Spirit was hit hard by travel restrictions during the COVID-19 pandemic, and its low-budget price model has hampered its recovery by crimping its ability to raise fares at the same rate as its peers following the crisis.

For its current quarter, Spirit predicts capacity growth will be up 1% to 2% compared to the corresponding period in 2023.

The filing comes as Spirit is reportedly attempting to convince JetBlue Airways (NASDAQ:JBLU) to appeal a decision by a federal judge earlier this week to block a merger between the two. Citing people familiar with the matter, Reuters reported that JetBlue is trying to assess the chances that an appeal would be successful, and is mindful of Spirit's struggles since they agreed to tie-up in 2022.

Spirit shares plunged following U.S. District Judge William Young's ruling on Tuesday that the JetBlue deal would hurt passengers by leading to higher fares.