Spirit (SAVE, $60.32) shares slip following mixed fourth-quarter earnings

Shares of the ultra-discount carrier, Spirit Airlines, fell nearly 5% in Tuesday’s after hours after the company reported mixed fourth quarter earnings and declared slowing first quarter revenue growth, along with a slight increase in flight capacity for the full year.

Beating forecasts for the first quarter by approx. 6%, the carrier reported a massive 11.4% gain in its total operating revenue per available seat mile ("TRASM") in Q4.

Q4 proved to a productive period for the carrier as earnings reached $1.38 per share versus an estimated $1.39. While revenue reached $862.8 million versus an expected $852 million, an increase of 29.5% compared to the fourth quarter 2017.

However, GAAP adjusted net income (excluding special items) for the fourth quarter 2018 stood at $91.9 million verses an estimate of $94.7 million. But on a per-passenger flight segment basis, total revenue for the fourth quarter 2018 increased 7.3% on a y-o-y basis to $117.15, while fare revenue per passenger flight segment increased 9.3% to $60.45 and non-ticket revenue per passenger flight segment increased 5.2% to $56.702.

On the cost front, for the fourth quarter, Spirit reported a 26.4% y-o-y increase to $726.7 million in its GAAP adjusted operating expenses and a 31.1% y-o-y increase in its aircraft fuel expense. The company further added that it expected non-fuel unit costs to rise 1%-2%, beating forecasts by 1%.

The entire airline industry is currently under pressure owing to the recent U.S. government shutdown's impact on travel and aircraft approvals, weaker economies in China and Europe, and swings in fuel prices, which dominate a big portion of airlines' costs. But Spirit remains optimistic that its flight capacity will increase by 15% in 2019.