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Airline Stock Roundup: Q3 Earnings Beat at AAL, LUV, ALK & ALGT

Maharathi Basu

In the past week, American Airlines AAL, Southwest Airlines LUV, Alaska Air ALK and Allegiant Travel Company ALGT released their respective third-quarter 2019 financial numbers.

All the above-mentioned carriers delivered better-than-expected earnings per share, which also increased year over year, aided by low fuel costs. However, the revenue picture was not all that rosy with American Airlines and Southwest Airlines lagging estimates.

Moreover, American Airlines and Southwest Airlines, which have 24 and 34 Boeing 737 MAX jets in their respective fleets, issued not too impressive non-fuel unit cost views for the December quarter. Moreover, American Airlines anticipates its full-year 2019 pre-tax income to be hurt by roughly $540 million due to the grounding of the Boeing 737 MAX jets.

(Read the Last Airline Stock Roundup here).

Recap of the Past Week’s Most Important Stories

1. American Airlines’ third-quarter 2019 earnings (excluding 46 cents from non-recurring items) of $1.42 per share surpassed the Zacks Consensus Estimate by 4 cents. However, revenues came in at $11,911 million, falling short of the Zacks Consensus Estimate of $11,940.9 million. Meanwhile, total revenue per available seat miles (TRASM: a key measure of unit revenues) inched up 2% to 15.71 cents in the reported quarter. Further, passenger revenue per available seat miles (PRASM) increased 3% to 14.5 cents in the third quarter. (Read more: American Airlines' Q3 Earnings Top Estimates, Rise Y/Y)

2. Southwest Airlines delivered third-quarter 2019 earnings per share of $1.23, beating the Zacks Consensus Estimate of $1.09. Moreover, the bottom line improved 13.9% year over year despite higher costs from the MAX groundings. However, operating revenues of $5,639 million lagged the Zacks Consensus Estimate of $5,642 million. But the top line rose 1.2% year over year. Southwest expects non-fuel unit costs for the December quarter to increase year over year in the 4-6% range, primarily due to lower capacity from the MAX groundings. (Read more: Southwest Q3 Earnings Top Estimates Amid Rising Costs)

3. Alaska Air Group’s third-quarter earnings per share (excluding 3 cents from non-recurring items) of $2.63 beat the Zacks Consensus Estimate of $2.62. Also, revenues came in at $2,389 million, above the Zacks Consensus Estimate of $2,381 million. Additionally, the top line rose 8% year over year. Passenger revenues — contributing 92.5% to the top line — were up 8% on a year-over-year basis as well. The carrier expects non-fuel unit costs (excluding special items) to increase nearly 0.5% year over year (against the previous expectation of 1.2% decline) in the December quarter. (Read more: Alaska Air Group Q3 Earnings & Revenues Beat, Up Y/Y)

4. Allegiant’s third-quarter 2019 total earnings of $2.70 per share outpaced the Zacks Consensus Estimate of $2.21. Moreover, the bottom line soared in excess of 100% year over year, driven by low fuel costs and higher revenues. Air traffic (measured in revenue passenger miles) for scheduled service in the quarter under review rose 6.1% and capacity (measured in available seat miles) grew 5.8% year over year. The company now expects earnings per share of $14.25-$14.75 (earlier guidance: $13.50-$14.25) for the current year. (Read more: Why Allegiant Stock Hit a New 52-Week High on Friday)

Allegiant carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

5. Per Reuters, the impending deal between United Airlines UAL and Latin American carriers, namely Copa Holdings CPA and Avianca Holdings might see the possibility of a fourth entrant. United Airlines is in favor of including Azul in the proposed deal. With the fourth player not yet finalized, the deal has naturally got delayed. According to the report, the regulatory process may not commence before 2020.


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 most airline stocks traded in the green over the past week resulting in the NYSE ARCA Airline Index gaining 2.8% to $107.82. Impressive earnings performances boosted the index. Over the course of six months, the NYSE ARCA Airline Index has appreciated 3.6%.

What’s Next in the Airline Space?

Investors will keenly await third-quarter 2019 earnings report from GOL Linhas GOL on Oct 31.

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Allegiant Travel Company (ALGT) : Free Stock Analysis Report
American Airlines Group Inc. (AAL) : Free Stock Analysis Report
Copa Holdings, S.A. (CPA) : Free Stock Analysis Report
Alaska Air Group, Inc. (ALK) : Free Stock Analysis Report
Gol Linhas Aereas Inteligentes S.A. (GOL) : Free Stock Analysis Report
Southwest Airlines Co. (LUV) : Free Stock Analysis Report
United Airlines Holdings Inc (UAL) : Free Stock Analysis Report
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