Yahoo Finance Airline Stock Roundup: LUV's Bearish Q4 Outlook, SAVE's Labor Deal & More
In the past week, Southwest Airlines’ LUV management stated that following the mass flight cancellations, the carrier is likely to incur a loss in fourth-quarter 2022. Meanwhile, American Airlines AAL has decided to drop service to three cities in the United States mainly due to pilot shortage.
Alaska Airlines, the wholly-owned subsidiary of Alaska Air Group ALK, also hogged the limelight courtesy of its plan to significantly boost its workforce during the current year. In another positive update, Spirit Airlines SAVE inked a pay-related deal with its pilots’ union, Air Line Pilots’ association or ALPA.
Recap of the Latest Top Stories
1 American Airlines’ management has decided to stop operating flights to Columbus, GA, Del Rio, TX and Long Beach, CA, in the spring of this year. Flights to these three cities are operated by AAL’s regional partners. Management has cited a pilot shortage and soft demand on those routes as reasons behind the decision. After the exit of AAL, Delta Air Lines DAL will be the only carrier to operate flights at the Columbus airport. Following their withdrawal from the abovementioned three U.S. cities, the total number of markets exited by AAL since the commencement of the pandemic is 18.
American Airlines currently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here
2. Per a SEC filing, LUV had to cancel in excess of 16,700 flights in the Dec 21 – Dec 31, 2022 timeframe due to the inclement weather. Following the massive cancellations, LUV expects available seat miles (a measure of capacity) to decline approximately 6% in fourth-quarter 2022 from fourth-quarter 2019 actuals. The previous guidance hinted at a 2% decline in available seat miles for fourth-quarter 2022. Revenues are likely to be adversely impacted to the tune of $400-$425 million.
3. Spirit Airlines received encouraging tidings on the labor front when the union, ALPA, covering its pilots ratified a pay-related deal. The majority of the pilots (69%) voted in favor of the deal. The ratification implies that pilots at SAVE are eligible for a 34% pay hike over the next two years. This ratified deal is effective retroactively to Jan 1, 2023. Per the terms of the deal, SAVE’s pilots are eligible to immediately restart negotiations in the event of SAVE’s impending takeover by JetBlue Airways JBLU not materializing.
JetBlue was in the news recently owing to its management’s decision to add flights to London. That story was covered in the previous week’s write-up.
4. Alaska Airlines intends to hire 3,525 employees across various roles (maintenance technicians, contact center agents, flight attendants to pilots, customer service agents, software engineers among others) in 2023. Per Andy Schneider, the senior vice president of people at Alaska Airlines, “We offer a wide variety of positions, and we pride ourselves on nurturing talent and providing opportunities to learn new skills and move into new, challenging roles. Come join our winning team!." Given the carrier’s plans to expand its fleet and the buoyant air-travel demand, the decision to go on a hiring spree seems to be a prudent one.
Performance
The following table shows the price movement of the major airline players over the past week and during the last six months.
Image Source: Zacks Investment Research
The table above shows that all airline stocks traded in the green over the past week. The NYSE ARCA Airline Index increased 9.5% to $60.45 over the past week. Over the course of the past six months, the NYSE ARCA Airline Index also increased 9.5%.
What's Next in the Airline Space?
For the airline space, Delta will kickstart the fourth-quarter 2022 earnings season on Jan 13. Upbeat air-travel demand is expected to have aided DAL’s fourth-quarter performance. High operating expenses, however, may have restricted bottom-line growth.
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
Delta Air Lines, Inc. (DAL) : Free Stock Analysis Report
Southwest Airlines Co. (LUV) : Free Stock Analysis Report
JetBlue Airways Corporation (JBLU) : Free Stock Analysis Report
American Airlines Group Inc. (AAL) : Free Stock Analysis Report
Alaska Air Group, Inc. (ALK) : Free Stock Analysis Report
Spirit Airlines, Inc. (SAVE) : Free Stock Analysis Report
