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Airline Stock Roundup: Q1 Earnings Beat at ALK, HA & JBLU


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Over the past five trading days, several airline companies like JetBlue Airways Corporation JBLU , Alaska Air Group, Inc. ALK and Hawaiian Holdings, Inc. HA reported their respective first-quarter 2018 earnings results.

Even though all three carriers delivered better-than-expected earnings per share, Hawaiian Holdings was the most impressive performer. This Honolulu County, HI-based carrier outpaced earnings and revenue estimates. Moreover, both the metrics improved on a year-over-year basis. Strong demand for air travel aided results.

Alaska Air Group also outperformed with respect to earnings per share and revenues. However, the bottom line contracted significantly due to high fuel costs. On the flip side, JetBlue reported lower-than-expected revenues.

In fact, high fuel costs have emerged as a major headwind for airlines in Q1 and the trend is likely to continue for the remainder of the season. Expenses pertaining to fuel represent one of the major input costs for airlines. Naturally, the rise in fuel costs does not bode well for stocks in this space.

On the non-earnings front, United Continental Holdings, Inc. UAL dominated headlines as it seeks a new chairman following the incumbent's decision to step down.

On the price front, the NYSE ARCA Airline Index declined 6.4% to $109.84 over the past five trading days.

Transportation - Airline Industry 5YR % Return

Transportation - Airline Industry 5YR % Return

(Read the last  Airline Stock Roundup for Apr 19, 2018 ).

Recap of the Past Week's Most Important Stories

1. Alaska Air Group reported first-quarter 2018 earnings (excluding 11 cents from non-recurring items) of 14 cents, surpassing the Zacks Consensus Estimate by 3 cents. However, the bottom line declined 86.7% on a year-over-year basis due to high costs. Revenues came in at $1,832 million, marginally above the consensus mark of $1,830.6 million. The top line also improved 5% on a year-over-year basis (Read more: Alaska Air Group Q1 Earnings Top Estimates, Decline Y/Y ).

2. JetBlue Airways' first-quarter 2018 earnings per share of 27 cents surpassed the Zacks Consensus Estimate of 22 cents. The bottom line also increased 8% on a year-over-year basis backed by higher passenger revenues (Read more: JetBlue Q1 Earnings Surpass Estimates, Increase Y/Y ).

3. Hawaiian Holdings' earnings per share (on an adjusted basis) of $1.09 easily outpaced the Zacks Consensus Estimate of 82 cents. Quarterly revenues of $665.4 million were also ahead of the consensus mark of $652.4 million.

Economic fuel cost per gallon increased 19.5% in the quarter to $1.96 per gallon. Operating revenue per available seat mile (RASM) in the reported quarter climbed 4.9% year over year. The metric is anticipated to be flat to up 3% on a year-over-year basis in the second quarter of 2018.

Cost per available seat mile (CASM), excluding fuel, is anticipated to rise between 4% and 7% in the second quarter, while the same is projected to be up in the 0.5-3.5% band in 2018. Capacity (measured in average seat miles) is projected to grow between 5% and 7% in the second quarter. The metric is anticipated to expand in the 5-8% range in the current year.

While fuel cost per gallon (economic) is projected in the band of $2.00-$2.10 for the second quarter of 2018, the same is expected between $2.05 and $2.15 for the current year.

Hawaiian Holdingscarries a Zacks Rank #3 (Hold). You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here .

4. United Continental's CEO, Oscar Munoz's 2017 pay was reportedly half compared with his 2016 total compensation. This was because Munoz refused a bonus in 2017 on accountability grounds. Notably, the carrier earned criticism from across the globe last year, following the infamous David Dao incident. This Chicago-based carrier also had other setbacks in the same year. Apart from the compensation of its CEO, the carrier will appoint a new chairman as the current chairman, Robert Milton, has decided against seeking re-election to the post.

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

-3.7%

9.2%

UAL

-4%

3.5%

GOL

-12.6%

8.2%

DAL

-3.4%

4.8%

JBLU

-2.5%

4.2%

AAL

-4.9%

2.3%

SAVE

-0.4%

13.2%

LUV

-4.2%

2.9%

CPA

-8%

-1.7%

ALK

-1.9%

1.8%

The table above shows that all airline stocks traded in the red over the past week resulting in the NYSE ARCA Airline Index declining significantly. Over the course of six months, the NYSE ARCA Airline Index appreciated 1% with most carriers gaining in the period.

What's Next in the Airline Space?

Investors will await first-quarter earnings reports of the likes of American Airlines Group Inc. AAL , Spirit Airlines, Inc. SAVE and Southwest Airlines Co. LUV on Apr 26.

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

JetBlue Airways Corporation (JBLU): Free Stock Analysis Report

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

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

Hawaiian Holdings, Inc. (HA): Free Stock Analysis Report

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

Alaska Air Group, Inc. (ALK): 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 , Earnings , Stocks
Referenced Symbols: LUV , JBLU , UAL , SAVE , HA



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