Airline Stock Roundup: DAL & UAL's Earnings Beat, SAVE's Q4 View Bullish & More
Zacks Investment Research | Jan 21, 2020 09:31PM ET
In the past week, Delta Air Lines (NYSE:DAL) kick started the fourth-quarter 2019 earnings season for the airline stocks. The carrier reported better-than-expected earnings per share and revenues in the final quarter of 2019. Moreover, both earnings and revenues increased year over year. Results were aided by upbeat air-travel demand from holiday travelers.
Like Delta, United Airlines Holdings (NASDAQ:UAL) beat on earnings and revenues in the December-end quarter. Both metrics increased year over year. Moreover, United Airlines’ full-year 2019 earnings per share (on an adjusted basis) came in at $12.05 per share, thereby implying that the Chicago-based carrier achieved its earnings per share target (between $11 and $13) a year ahead of schedule.
On the non-earnings front, Spirit Airlines (NYSE:SAVE) was the primary news maker courtesy of its improved fourth-quarter guidance with respect to unit revenues and cost. The projections found great favor with investors as the news propelled the stock to its highest level in almost six months’ time. Southwest Airlines (NYSE:LUV) also grabbed headlines by virtue of its decision to extend the grounding period of the Boeing (NYSE:BA) 737 Max jets in the company’s fleet till early June, this year.
(Read the Last Airline Stock Roundup here ).
Recap of the Past Week’s Most Important Stories
1. Delta’s fourth-quarter 2019 earnings per share (excluding 1 cent from non-recurring items) of $1.70 per share surpassed the Zacks Consensus Estimate by 30 cents. The bottom line also improved 30.8% on a year-over- year basis, mainly owing to low fuel costs. Delta’s results were also aided by the sale of its stake in GOL Linhas (NYSE:GOL) . Operating revenues in the quarter came in at $11,439 million, edging past the Zacks Consensus Estimate. Moreover, the top line increased 6.5% on a year-over-year basis. For the first quarter of 2020, the carrier expects revenues to be up 5-7%. The estimated fuel price, including taxes and refinery impact, is expected in the range of $2-$2.20 per gallon for the current quarter. Pre-tax margin is expected to be flat on a year-over-year basis. The company expects total revenues per available seat miles (TRASM: adjusted) to be either flat or increase up to 2% in the quarter. Non fuel unit cost (CASM -Ex) is estimated to increase in the 2-3% range during this period. (Read more: Spirit Airlines Stock Nears 6-Month High: Here's Why ).
4. Southwest Airlines has extended the grounding period of its Boeing 737 MAX jets through Jun 6, 2020, from the previous expectation of Apr 13. Following the extension of the grounding period, Southwest Airlines, which has 34 such jets in its fleet, will remove approximately 330 weekday flights from its peak-day schedule (which exceeds 4,000 flights).
5. In a bid to expand its network, Alaska Airlines intends to operate non-stop flights connecting Seattle and Monterey. Flights on the route are scheduled to be operational from Jun 18. The carrier’s decision to operate on the route is a prudent one as it will be the only non-stop flight connecting the cities. Alaska's sister carrier, Horizon Air, will be responsible for operation of this all-jet service between Seattle and Monterey. An Embraer 175 aircraft will operate on the route.
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Performance
The following table shows the price movement of the major airline players over the past week and during the past six months.
The table above shows that almost all airline stocks traded in the red over the past week, resulting in the NYSE ARCA Airline index's 1.8% decline to $109.38. Over the course of past six months, the NYSE ARCA Airline index has gained 3.5%.
What’s Next in the Airline Space?
Investors will keenly await the fourth-quarter 2019 earnings reports of American Airlines (NASDAQ:AAL) , Southwest Airlines and JetBlue Airways (NASDAQ:JBLU) on Jan 23.
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