The Spirit Airlines Inc (NYSE: SAVE) stock price fell 4.51% during premarket trading after lowering its third-quarter guidance to reflect increased promotional activity for travel in the second half and a recent spike in fuel prices.
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The budget airline now expects its third-quarter revenue to range from $1.245 billion to $1.255 billion, marking a decline from its previous guidance of $1.300 billion to $1.320 billion. The airline now expected fuel costs per gallon to be $3.06, an increase from the previous guidance of $2.80.
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Furthermore, the airline expects its available seat miles to increase by 13.4%, marking a decline from the previous guidance of 13.7%.
The lower guidance comes as JetBlue Airways Corp. (JBLU) is making concessions to get its merger with Spirit Airlines back on the regulatory track. The Spirit Airlines stock price has fallen 11% this year, while the U.S. Global JETS ETF (JETS) has grown 8% and the S&P 500 has risen 16.2%.
Some of the concessions made by JetBlue Airways include agreeing to sell Spirit Airlines assets in Newark and Boston to Allegiant. JetBlue acquired Spirit Airlines for $3.8 billion on July 28, 2022, after winning a long battle with Frontier Airlines, another low-cost airline.
JetBlue has agreed to transfer two gates in Newark, two in Boston, and 43 takeoff and landing authorisations in Newark to Allegiant. Looking at Spirit Airlines' stock price, we can see that today’s pullback comes after a significant rally on Monday, which is expected.
However, the lower guidance played a crucial role in the pullback, and investors hope the company will not give up all its recent gains due to the lower revenues and earnings guidance. Meanwhile, we could see the stock pull back to the $15.54 support level and bounce higher like it did on Monday.
Spirit said: “During the last few weeks, the company has seen heightened promotional activity with steep discounting for travel booked for the second half of the third quarter through the pre-Thanksgiving travel period.”
Spirit Airlines (SAVE) stock price.
The Spirit Airlines (SAVE) stock price fell 4.51% premarket to trade at $16.50, from Tuesday’s closing price of $17.28.
YOUR CAPITAL IS AT RISK. 76% OF RETAIL CFD ACCOUNTS LOSE MONEY.