This Airline Has Struck Gold in the Sky

Most of us still moan and groan when we get to the airport. While flying is bad enough, nothing burns us more than being charged for what we had grown accustomed to getting for free: baggage check, food, and a pillow. While most airlines, including SkyWest (NASDAQ: SKYW  ) and JetBlue Airways Corporation (NASDAQ: JBLU  ) , have finally figured out how to actually make money these days, Spirit Airlines (NASDAQ: SAVE  ) is flying past most airlines when it comes to growth.

Shares of Spirit have nearly tripled this year. Lately, Spirit has been growing like a weed. The company last reported its third-quarter results on Oct. 30. Total revenue flew 33.4% higher to $456.6 million. Revenue per seat mile soared 8.9% to $0.1255. Revenue per flight segment rose 19.9% to $135.34.

CEO Ben Baldanza stated, "Spirit is known for doing things differently than other air carriers." That sounds like code for "charging for just about everything short of each breath of air you take." It's working. Adjusted net income skyrocketed 130.3% to $57.9 million or $0.79 per share.

Analysts see no sign of Spirit slowing down any time soon. For full year 2013, they expect sales up 25.6% to $1.66 billion with earnings per share up 62% to $2.32. For 2014, Spirit is expected to tack on another 16.4% gain in revenue, with another 21.6% gain in EPS. Don't be surprised if analysts continue to raise their estimates for 2014 and 2015, as they've been doing already.

These results look particularly impressive when compared to those of other airlines such as SkyWest and JetBlue Airways Corporation.

SkyWest last reported its third-quarter results on Nov. 6. While SkyWest is making an excellent profit, its sales dropped by 1.7%. Even if you account for certain one-time items and adjustments, sales were basically flat for SkyWest compared to huge gains across the board from Spirit Airlines. The bright spot for SkyWest was a net income gain of 26.3% to $26.4 million or $0.50 per share.

Analysts expect SkyWest to show a 6.2% overall drop in sales for 2013 to $3.31 billion with a 23.2% increase in EPS to $1.22. For 2014, the results are expected to be a tad better. Sales are expected to climb 3.4% to $3.43 billion with EPS rising 13.9% to $1.39. Not too shabby, but Skywest doesn't even hold a candle to Spirit Airlines' growth rate.

Meanwhile, JetBlue last reported its third-quarter results on Oct. 29. Revenue jumped 10.4% to $1.4 billion. Yield per passenger mile inched up 5.1% to $0.1383. Passenger revenue per available seat edged 5.4% to $0.1175. Net income leaped 57.8% to $71 million, or $0.21 per share. JetBlue reported record quarterly earnings and achieved its 14th consecutive quarter of profitability, but its growth numbers still fell short of Spirit Airlines. 

Analysts expect JetBlue to show sales growth of 8.7% to $5.41 billion, with EPS growth of 22.5% to $0.49 for the full year of 2013. For 2014, JetBlue is expected to show another 8.6% growth in sales to $5.88 billion along with EPS growth of 34.7% to $0.66 per share.

While JetBlue's EPS is expected to grow faster than Spirit Airlines' EPS in 2015, over the two-year period total EPS growth is expected to come in at 65% for JetBlue Airways, compared to 83% for Spirit Airlines. 

Foolish final thoughts
Look for an encore for Spirit Airlines, if it can perform in 2014 like it did in 2013. The name of the game in airlines is monetizing more than just tickets, and clearly, Spirit Airlines is increasingly finding ways to add more dollars to its top and bottom lines.

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Related Tickers

4/16/2014 4:00 PM
SAVE $56.42 Up +1.35 +2.45%
Spirit Airlines CAPS Rating: ***
JBLU $8.80 Up +0.49 +5.90%
JetBlue Airways CAPS Rating: ***
SKYW $12.58 Up +0.17 +1.37%
SkyWest, Inc. CAPS Rating: ***