A Spirit Airlines jet lands at McCarran International Airport in Las Vegas, Nevada on May 25, 2020.
Ethan Miller | Getty Images
As losses to the aviation industry mount, low-cost airline executives are becoming more optimistic despite the recent growth in aviation Coronavirus Cases promoting their leisure-oriented networks and tariffs that appeal to the most price-sensitive consumers.
Spirit’s shares rose 8% on Thursday afternoon after the company beat sales estimates, posting a smaller-than-expected loss and less than expected cash burn for the quarter.
Spirit’s third quarter revenue of $ 401.9 million was down nearly 60% year over year. The Miramar, Florida-based airline expects fourth quarter revenue to be between 43% and 45% year-over-year, when revenue was nearly $ 970 million.
“Obviously, if we see increased travel restrictions or other disruptions, it could change that outlook,” said Matt Klein, Spirit’s chief commercial officer, in an earnings call on Thursday. “We don’t see anything in our bookings to suggest this will happen, but we recognize that the recovery can still be a bit bumpy and there will be some noise as demand recovers to pre-COVID levels. “
Shares of Allegiant Travel Company, the parent company of Allegiant Air, gained more than 10% in afternoon trading after giving a sunny outlook on a milestone that has eluded most of the industry.
“We’re flirting with cash flow breaking even,” said Gregory Anderson, CFO of Allegiant, on a Wednesday afternoon earnings call, citing bookings in September and October of more than $ 3 million per day. “While the environment continues to be fluid and bookings are sure to dwindle, our data suggests that these average booking levels are sustainable going forward.” Allegiants Cash Burn averaged $ 1.3 million per day for the third quarter.
Allegiant’s “point-to-point focus on domestic leisure should allow them to recover faster than others in the market,” wrote Helane Becker, an analyst for Cowen & Co. airline, raising her price target for Allegiant from $ 130 per share to $ 140. The shares rose to $ 138.50 on Thursday.
While the economy has regained ground from a record decline at the beginning of the Coronavirus Pandemic, airlines are still fluctuating. American airlines combined lost more than $ 11 billion in the third quarter, usually during the peak summer travel season.
Discount airlines are not as dependent on international and business travel as large network operators. These two segments were hardest hit by the pandemic and are expected to recover last. In response, US airlines large and small have added services in areas where Supply vacationers hoping to generate much-needed income.