Due to the continued rebounding of the U.S. economy and lower oil prices, airline activity is expected to see consistent year-over-year growth.
Earnings growth will allow Spirit Airlines to invest in expanding capacity, which will reap the benefits of improving airline industry trends.
I believe Spirit Airlines is an attractive long-term growth investment given the low valuation and growth prospects.
Spirit Airlines (NASDAQ:SAVE), along with the other major airlines, recently reported August 2017 traffic results. The data come in as follows:
Revenue Passenger Miles (RPMs) measures the traffic for an airline and is calculated by multiplying the number of revenue-paying passengers for the month by the total distance of flights for the month. Spirit Airlines’ RPMs increased 20.6% year over year to 2.3 billion. In comparison to other airlines, Southwest Airlines’ (NYSE:LUV) RPMs increased 5.3% to 11.3 billion and American Airlines’ (NASDAQ:AAL) RPMs increased 3.7% to 21.2 billion from August 2016. Other large airlines – JetBlue Airways (NASDAQ:JBLU), Delta Air Lines (NYSE:DAL), and United Airlines (NYSE:UAL) – showed gains of 5%, 6.9%, and 2.3%, respectively.
Average Seat Miles (ASMs) measures the airlines’ flight carrying capacity and is calculated by multiplying the number of seats available for passengers during the month by the total distance of flights for the month. Spirit Airlines’ ASMs increased 21.9% year over year to 2.7 billion. In comparison to other airlines, Southwest Airlines’ ASMs increased 4.9% to 13.3 billion and American Airlines’ RPMs increased 3.2% to 25.5 billion from August 2016. Other large airlines, JetBlue Airways, Delta Air Lines, and United Airlines, showed gains of 5.4%, 2.7%, and 2.4%, respectively.