Yahoo Finance 3 Airline Stocks to Watch Post A4A's Rosy Summer Travel Forecast
With air travel demand strongly bouncing back from the pandemic lows, stocks belonging to the Zacks Transportation - Airline industry are being well-served. Air travel has continued to be particularly strong on the leisure front. Encouragingly, international demand is also bouncing back.
Airline stocks are likely to continue flying high with the summer travel season fast approaching when air travel demand is likely to swell. The record projection by the Airlines for America (‘A4A’) — the trade organization for leading U.S. airlines — for the upcoming summer season (Jun 1-Aug 31) further highlights the bullish scenario with respect to passenger revenues. Following the record-setting projection, keeping an eye on airline stocks like SkyWest SKYW, Delta Air Lines DAL and Alaska Air Group ALK appears prudent.
A4A’s Projection
A4A projected that companies in the airline space will make hay in the upcoming summer season. The trade group predicted that the summer of 2024 will be the busiest season of all time for American air travel carriers. This is because 6.3% more passengers are expected to fly to various destinations over the period than the 2023 reported levels.
Per the forecast, approximately 271 million passengers will be transported through U.S. airlines this summer, which is an all-time high. To cater to the increased demand, U.S. passenger carriers will offer more than 26,000 scheduled flights per day over the period. This reflects an increase of almost 1,400 from the summer of 2023. U.S. carriers have invested significantly to upgrade travel services, which bodes well for passengers. Despite inflation-related worries resurfacing, more Americans are taking vacations, which is another positive.
3 Airline Stocks to Keep Tab on
Given the encouraging backdrop, we believe investors should keep an eye on airline stocks. The three selected stocks have outperformed the industry in terms of price over the past three months.
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SkyWest sports a Zacks Rank #1 (Strong Buy) at present. The upbeat air-travel demand bodes well for this St. George, UT-based regional carrier. SkyWest's fleet modernization efforts are commendable. The Zacks Consensus Estimate for SKYW’s 2024 earnings has improved 6.6% over the past 60 days. You can see the complete list of today’s Zacks #1 Rank stocks here.
SKYW has an expected earnings growth rate of more than 100% for 2024. The company delivered a trailing four-quarter earnings surprise of 128.09%, on average.
Improvement in air travel demand bodes well for Alaska Air's top line. Driven by upbeat air-travel demand, ALK, based in Seattle, WA, issued a bullish earnings per share guidance for second-quarter 2024, after posting a loss in the first quarter. ALK expects second-quarter earnings per share between $2.20 and $2.40. To meet the upbeat demand, ALK is boosting capacity.
The company expects available seat miles (a measure of capacity) to increase 5-7% in the second quarter of 2024 from the second-quarter 2023 actual. ALK anticipates 2024 earnings per share between $3.25 and $5.25 (versus the earlier guidance of $3-$5). The Zacks Consensus Estimate for ALK’s 2024 earnings has improved 3.1% over the past 60 days. ALK currently carries a Zacks Rank #3 (Hold).
Delta, based in Atlanta, is being well-served by the uptick in air travel demand. Riding on the buoyant scenario, DAL reported better-than-expected earnings per share and revenues for first-quarter 2024. Due to the buoyant air-travel demand, management projects second-quarter 2024 total revenues (adjusted) to increase of 5-7% from the second-quarter 2023 actuals.
DAL surpassed the Zacks Consensus Estimate for earnings in each of the last four quarters, the average beat being 12.7%. DAL currently carries a Zacks Rank #3.
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Delta Air Lines, Inc. (DAL) : Free Stock Analysis Report
Alaska Air Group, Inc. (ALK) : Free Stock Analysis Report
SkyWest, Inc. (SKYW) : Free Stock Analysis Report
