Airline Stock Liftoff: JetBlue, GOL and PEOPLExpress in Focus - Analyst Blog

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Airline stocks continue to fly high in the last five trading days, with most of the major companies gaining price momentum. This marks bullish trading for the airline industry since May 19.

One of the major news that surfaced in the past one week is the launch of PEOPLExpress, which is scheduled to start operations from June-end. In addition, JetBlue Airways Corporation 's ( JBLU ) codeshare agreement with Singapore Airlines and GOL Linhas Aereas SA 's ( GOL ) strategic partnership with France-KLM SA were some of the other highlights of the past week.

Recap of the Past One Week's Most Important Stories

1.    Southwest Airlines Co. ( LUV ) was reportedly fined $200,000 for misleading customers through deceptive TV commercials. According to the U.S. Department of Transportation (DOT), Southwest Airlines advertised flight fares for a mere $59 from Atlanta to New York, Chicago and Los Angeles. However, no seats were booked at that price. Consequently, regulators charged the company for violating rules related to advertising of airline fares. (Read more: Southwest Airlines in Trouble over TV Ads )

On the positive side, the company announced the launch of mobile boarding passes instead of printed ones across all airports in the United States.

2.    In an attempt to strengthen its network, Delta Air Lines Inc. ( DAL ) has announced new non-stop flights from Seattle to popular ski and beach destinations across the Americas.  Delta is eyeing the maximum number of international destination flights from Seattle, higher than any of its peers. (Read More: Delta to Expand Seattle Network )

3.    Brazilian carrier GOL Linhas has received the green signal from its board to proceed with its exclusive strategic partnership with European giant Air France-KLM SA. This deal will provide GOL with an opportunity to expand its operations between Brazil and Europe. (Read more : GOL-Air France-KLM Deal Gets Approval )

4.    On May 29, JetBlue Airways announced that it has applied to the U.S. Department of Transportation to enter into a bilateral codeshare agreement with Singapore Airlines. The latest agreement, which is awaiting regulatory approval, will provide access to five new destinations across Europe and Asia for JetBlue passengers. (Read more: JetBlue, Singapore Airlines in Codeshare Pact ).

5.    Once lost in the history of the airline industry, PEOPLExpress is now set to make a comeback. However, this time it is a new airline carrier reviving the old brand name of PEOPLExpress, which operated during 1981-87 as a low-cost carrier, prior to its merger with Continental Airlines, subsidiary of United Continental Holdings, Inc. ( UAL ). (Read more: PEOPLExpress to Fly as Budget Carrier )

Performance

The following table shows the price movement of the major Airline players over the past 5 trading days and during the last 6 months:

Company

Last 5 Days

Last 6 Months

AAL

4.12%

85.08%

ALK

0.48%

32.44%

CPA

1.96%

-3.23%

DAL

2.19%

47.23%

GOL

-12.01%

51.80%

HA

3.20%

78.13%

JBLU

6.35%

17.41%

LUV

3.15%

49.70%

SAVE

1.03%

34.63%

UAL

5.84%

27.82%

Over the trailing 5 trading days, most of the airline stocks have witnessed growth in prices, except GOL Linhas, which dropped 12.01%.  

Top gainers include JetBlue Airways, United Continental Holdings and American Airlines Group Inc. ( AAL ) with growth of 6.4%, 5.8% and 4.1%, respectively.

In terms of performance over the past 6 months, most of the stocks have also fared reasonably well with the exception of Copa Holdings, which dropped 3.2% over the period. The biggest gainers in the 6-month span were American Airlines and Hawaiian Holdings ( HA ), sporting growth of 85.1% and 78.1%, respectively.

What's Next in the Airline Biz?

The current week records some major announcements by the International Air Transport Association (IATA). Early this week, IATA announced its 2014 profit outlook for the global airline industry, which has been trimmed down by $700 million from the previous forecast to $18 billion.

However, in the annual general meeting in Doha, IATA director general and chief executive, Tony Tyler projected $746 billion in global revenues, which is up by $1 billion from the previous guidance given in March.

While IATA chief economist Brian Pearce remains hopeful about the performance of Middle East and North American aviation companies, a slowdown in China's economy and volatile global trade are key factors that force a conservative outlook on this year's industry profits.

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SOUTHWEST AIR (LUV): Free Stock Analysis Report

JETBLUE AIRWAYS (JBLU): Free Stock Analysis Report

GOL LINHAS-ADR (GOL): Free Stock Analysis Report

DELTA AIR LINES (DAL): Free Stock Analysis Report

UNITED CONT HLD (UAL): Free Stock Analysis Report

HAWAIIAN HLDGS (HA): Free Stock Analysis Report

AMER AIRLINES (AAL): Free Stock Analysis Report

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.



This article appears in: Investing , Business , Stocks

Referenced Stocks: DOT , LUV , JBLU , GOL , DAL

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