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Airline Stock Roundup: AAL's Q1 Hit by Fuel Cost Woes, LUV, SKYW in Focus


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The past week in the airline space was all about numbers, with several airline companies like American Airlines Group Inc. AAL , Southwest Airlines Co. LUV , Spirit Airlines, Inc. SAVE and SkyWest, Inc. SKYW reporting their respective first-quarter 2018 financial numbers.

Notably, SkyWest impressed the most as it posted better-than-expected earnings per share and revenues. Moreover, both the metrics increased on a year-over-year basis. Results were aided by the company's improved fleet mix and a lower tax rate. Shares of this regional carrier appreciated following its robust earnings report.

However, shares of American Airlines and Spirit Airlines declined after the companies unveiled their respective earnings results. This was despite the carriers reporting better-than-expected earnings. High fuel costs were primarily responsible for the stocks shedding value. While average fuel price (consolidated and inclusive of taxes) increased 23.6% year over year at American Airlines, the metric surged 21.5% at Spirit Airlines.

Moreover, American Airlines trimmed its current-year earnings projection mainly owing to high fuel costs. On the non-earnings front, United Continental Holdings, Inc. UAL hit the headlines by virtue of its decision to increase the company's stake in Brazilian carrier, Azul S.A. AZUL .

Transportation - Airline Industry 5YR % Return

Transportation - Airline Industry 5YR % Return

(Read the last  Airline Stock Roundup for Apr 25, 2018 ).

Recap of the Past Week's Most Important Stories

1. American Airlines' first-quarter 2018 earnings (excluding 36 cents from non-recurring items) of 75 cents per share surpassed the Zacks Consensus Estimate by a penny. Quarterly earnings increased approximately 23% on a year-over-year basis despite higher costs. Revenues came in at $10,401 million, missing the Zacks Consensus Estimate of $10,411.9 million.

The top line, however, improved on a year-over-year basis. Strong demand for air travel led to the year-over-year improvement in the top line (Read more: American Airlines Q1 Earnings Top Estimates, Up Y/Y ).

2. Southwest Airlines reported earnings per share (excluding 4 cents from non-recurring items) of 75 cents, in line with the Zacks Consensus Estimate. The bottom line, however, surged on a year-over-year basis. Operating revenues of $4,944 million lagged the Zacks Consensus Estimate of $5,017.6 million.

However, the top line improved year over year and was boosted by high passenger revenues accounting for bulk (92.7%) of the same (Read more: Southwest Airlines Q1 Earnings In Line, Q2 View Bleak ).

3. SkyWest's earnings per share came in at $1.03, well above the Zacks Consensus Estimate of 84 cents. Also, the bottom line expanded 58.5% on a year-over-year basis. Moreover, quarterly revenues increased significantly year over year to $783.4 million, outpacing the Zacks Consensus Estimate of $754.5 million (Read more: SkyWest Earnings Surpass Estimates in Q1, Up Y/Y ).

SkyWest sports a Zacks Rank #1 (Strong Buy). You can see  the complete list of today's Zacks #1 Rank stocks here .  

4. Spirit Airlines'earnings per share came in at 44 cents (excluding $1.10 from non-recurring items), a penny ahead of the Zacks Consensus Estimate. The metric, however, declined year over year due to high fuel costs. Revenues came in at $704.1 million, missing the Zacks Consensus Estimate of $705 million.

The top line, however, grew substantially year over year owing to healthy passenger revenues (Read more: Spirit Airlines Stock Down Despite Q1 Earnings Beat ).

5. United Continental's wholly owned subsidiary, United Airlines, has increased its stake in Azul S.A. Notably, United Airlines purchased shares of Azul from Hainan Airlines, thereby raising its stake to 8% from its previous 3.7% in Azul (Read more: United Continental Arm Ups Azul Stake to 8%, Shares Up ).

Price Performance

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

Company

Past Week

Last 6 months

HA

1.1%

25.2%

UAL

3.5%

17.4%

GOL

-0.7%

26.9%

DAL

-3.5%

4.8%

JBLU

1.4%

1.3%

AAL

-4.2%

-8.6%

SAVE

-3.3%

2.4%

LUV

-1.7%

-1.9%

CPA

2.7%

-6.1%

ALK

-1.4%

2.8%

The table above shows exhibited a mixed trend in the past week. The NYSE ARCA Airline index appreciated marginally in the period.

Shares of United Continental have gained the most (3.5%) over the past week, courtesy of its decision to increase its Latin American footprint. On the flipside, shares of American Airlines have declined the most (4.2%) due to fuel cost-related woes.

Over the course of six months, the NYSE ARCA Airline index appreciated 4.6%.

What's Next in the Airline Space?

Investors would look forward to April traffic reports from the likes of Delta Air Lines, Inc. DAL over the next five trading days.

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Southwest Airlines Co. (LUV): Free Stock Analysis Report

Delta Air Lines, Inc. (DAL): Free Stock Analysis Report

United Continental Holdings, Inc. (UAL): Free Stock Analysis Report

Spirit Airlines, Inc. (SAVE): Free Stock Analysis Report

SkyWest, Inc. (SKYW): Free Stock Analysis Report

American Airlines Group Inc. (AAL): Free Stock Analysis Report

AZUL SA (AZUL): Free Stock Analysis Report

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Zacks Investment Research

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



This article appears in: Investing , Business , Stocks
Referenced Symbols: LUV , DAL , UAL , SAVE , SKYW



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