Spirit Airlines shares drop further

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By TESTCustomwebLP TESTCustomwebLP October 20, 2015 20:00

Spirit Airlines shares drop further

Spirit Airlines stock fell 15% on Friday after an investor update suggested that pricing will remain weak for the foreseeable future. Shares ended the week down a full 50% from the all-time high reached in late 2014.

This performance doesn’t have any bearing on the Spirit’s business model and the airline expects to post double-digit profit growth this year, and is likely to do so again in 2016.

However, Spirit’s unit revenue fell 12.5% year over year in the first half of 2015 with Spirit’s updated third-quarter guidance issued on Thursday expecting that unit revenue declined about 17% to 18% last quarter and that low prices will cause unit revenue to fall even faster in Q4. However, the company still expects to produce a 21.5% to 23% operating margin this year, up significantly from 19.2% in 2014.

Morgan Stanley was forced to downgrade Spirit Airlines stock to “equal-weight” because of the pressure on unit revenue.

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By TESTCustomwebLP TESTCustomwebLP October 20, 2015 20:00