Airline Stock Roundup: DAL's Q4 PRASM View Upbeat, JBLU & ALK in Focus

Last week, Delta Air Lines DAL issued a bullish view on passenger revenue per available seat miles (PRASM: a key measure of unit revenues) for the current quarter. The company expects to perform well on this front in 2018 too, with PRASM growth estimated in each quarter.

JetBlue Airways Corp. JBLU, a low-cost carrier based in Long Island City, New York, also grabbed headlines when its board of directors approved a new share repurchase program. Another low-cost carrier, Spirit Airlines SAVE was also in the news by virtue of its decision to appoint a new chief executive officer (CEO).

Meanwhile, Alaska Air Group ALK raised its guidance for the current quarter and full-year 2017 non-fuel unit costs. The increase was primarily due to costs associated with the pay-related deal inked with its pilots. Additionally, Latin-American carrier Copa Holdings CPA revealed encouraging traffic data for the month of November.

On the price front, the NYSE ARCA Airline Index gained 1.8% to $116.71 over the past five trading days.

Transportation - Airline Industry 5YR % Return

 

Transportation - Airline Industry 5YR % Return

(Read the last Airline Stock Roundup for Dec 13, 2017).

Recap of the Past Week’s Most Important Stories

1. Delta presented a rosy picture at its Investor Day, particularly with respect to passenger unit revenues. The Atlanta, GA-based carrier, however, said that due to high fuel costs it expects operating margin for the current quarter to be approximately 11%, the lowest point of its previously guided range of 11% to 13%. Fuel price per gallon, inclusive of taxes and refinery impact, is now projected between $1.92 and $1.97 (the previous view had projected the metric in the band of $1.82 and $1.87) (Read more: Delta Up on Bullish Q4 Unit Revenue View at Investor Day).

Delta carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

2. The new share buyback program authorized by JetBlue’s board of directors allows it to buy back its common stock up to $750 million. The duration of the program, which commences from Jan 1, 2018, is of two years. The new authorization comes after JetBlue completed its previous $500 million share repurchase program in September 2017 (Read more: JetBlue Boosts Shareholder Returns, OK's $750M Share Buyback).

3. At Alaska Air Group, traffic — measured in revenue passenger miles (RPMs) — increased 9.2% to 4.39 billion. On a year-over-year basis, consolidated capacity (or available seat miles/ASMs) rose 9.3% to 5.22 billion. The carrier now expects capacity in the range of 15.87 billion to15.92 billion in the fourth quarter of 2017. The metric’s prior outlook was in the band of 15.95 billion to 16 billion.

Fourth-quarter cost per available seat mile (CASM), excluding fuel and special items, is anticipated between 8.63 cents and 8.68 cents, higher than the previous view of 8.50 cents to 8.55 cents (Read more: Alaska Air Group Posts November Traffic Data, View Revised).

4. Spirit Airlines announced that Ted Christie — the company’s current executive vice president and chief financial officer — will succeed Bob Fornaro as the new CEO with effect from Jan 1, 2019. However, before assuming that role, Christie will serve as the president and join the company's board of directors from next year (Read more: Spirit Airlines Picks Successor to CEO Bob Fornaro).

5. At Copa Holdings, RPMs increased 10.6% to 1.62 billion in November. ASMs climbed 8.5% to 1.97 billion. As the increase in traffic outpaced capacity growth, load factor (% of seats filled by passengers) expanded 160 basis points (bps) to 82.2% in the same month (Read more: Copa Holdings Reports Robust Traffic Statistics for November).

Price Performance

The following table shows the price movement of the major airline players over the past week and during the last six months.  

 

The table above shows that most airline stocks traded in the green in the past week resulting in the NYSE ARCA Airline Index gaining. Over the course of six months, the NYSE ARCA Airline Index depreciated almost 1% due to significant declines at the likes of United Continental Holdings UAL, Hawaiian Holdings HA and Alaska Air Group.

What's Next in the Airline Space?

Investors will keenly await updates related to the tax reform bill, which on becoming a law is expected to aid airline stocks significantly.

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JetBlue Airways Corporation (JBLU) : Free Stock Analysis Report
 
Delta Air Lines, Inc. (DAL) : Free Stock Analysis Report
 
United Continental Holdings, Inc. (UAL) : Free Stock Analysis Report
 
Copa Holdings, S.A. (CPA) : Free Stock Analysis Report
 
Spirit Airlines, Inc. (SAVE) : Free Stock Analysis Report
 
Hawaiian Holdings, Inc. (HA) : Free Stock Analysis Report
 
Alaska Air Group, Inc. (ALK) : Free Stock Analysis Report
 
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