5 Airline Stocks in Focus this Winter Holiday Season

Earlier this month, Airlines for America (A4A), the industry trade organization for the leading U.S. airlines, issued a report saying that 51 million passengers are expected to fly globally on U.S. airlines during the upcoming 21-day winter holiday travel period.

An additional 1.7 million people are expected to travel during this period (Dec 15 through Jan 4) compared to last year's 49.3 million people, representing an increase of about 3.5%. The higher demand reflects an improving economy as well as affordable airfares.

According to A4A, 91,000 additional seats will be made available by airlines every day across their networks so that the additional 80,000 daily passengers can be accommodated during this period. Airlines expect to use larger planes and add more flights during the upcoming holiday season. December 21, December 22 and December 26 are expected to be the busiest travel days of the winter holiday season while December 16, Christmas Eve, Christmas Day and New Year's Eve are expected to be the lightest travel days.

With the third quarter of 2017 being challenging for the airline industry due to competitive pricing actions, higher fuel costs, Hurricanes Irma and Harvey and the earthquake in Mexico City, focus will remain on how the industry fares during the holiday season. Here is a look at five U.S. airline stocks that will remain in focus during the 21-day winter holiday season.

American Airlines Group Inc. AAL : American Airlines, together with its wholly-owned regional airline subsidiaries and third-party regional carriers operating as American Eagle, operates an average of almost 6,700 flights daily spanning 350 destinations across more than 50 countries. The Fort Worth, TX-based company has hubs in Charlotte, Chicago, Dallas/Fort Worth, Los Angeles, Miami, New York, Philadelphia, Phoenix and Washington, DC.

The company is investing in new aircraft and also working on driving efficiencies. American Airlines expects cost savings of $1 billion by 2021 on the back of increased use of technology, changes to process and procedures and further elimination of post-merger redundancies.

Shares of American Airlines are up 7.3% year to date, compared to the 11.1% rally of the industry it belongs to.

Southwest Airlines Co. LUV : Dallas, TX-based Southwest Airlines is a major passenger airline providing scheduled air transportation in the United States and near-international markets. At the end of the third quarter, the company had 687 aircraft in its fleet, reflecting the third quarter delivery of six new 737-800 aircraft from Boeing, nine new 737 MAX 8 aircraft from Boeing, and six pre-owned Boeing 737-700 aircraft from third parties. The company, which is replacing its old aircraft, expects to take delivery of 11 new 737-800 aircraft, five new 737 MAX 8 aircraft, and four pre-owned 737-700 aircraft during the fourth quarter. Southwest Airlines expects to exit the year with a fleet of 707 aircraft with the number expected to increase to 750 by the end of 2018.

Southwest Airlines reported a 3.4% increase in revenue passenger miles in November 2017 from the year-ago period and said that it now expects fourth quarter 2017 operating revenue per available seat mile ("RASM") to increase in the 1-2% range from the year-ago period. The company had previously said (on the third quarter conference call) that fourth quarter RASM would be up slightly to up 1.5% year-over-year.

Shares of Southwest Airlines are up 26.7% year to date, compared to the 11.1% rally of the industry it belongs to.

United Airlines UAL : Chicago, IL-based United Airlines operates about 4,500 flights a day to 337 airports spanning five continents through United and its regional carriers. The company's hubs in the United States include Chicago, Denver, Houston, Los Angeles, Newark/New York, San Francisco and Washington, DC. While 751 mainline aircraft are run by United, the airline's United Express carriers operate 489 regional aircraft.

The company recently reported that consolidated traffic (revenue passenger miles) increased 5.1% in November 2017. Moreover, the company witnessed the fewest cancelations of any month in its history and also set a new record with its best ever on-time arrival rate.

Delta Air Lines DAL : Atlanta, GA-based Delta serves more than 180 customers every year. Delta and the Delta Connection carriers offer service to 306 destinations across 52 countries on six continents. Over the last five years, Delta has invested about $2 billion to build a franchise with some of the best airline brands around the world including Virgin Atlantic, AeroMexico, GOL, China Eastern with the latest being an investment in the Air France-KLM group. Key hubs and markets include Atlanta, Boston, Detroit, Los Angeles, Minneapolis-St. Paul, New York-JFK, New York-LaGuardia, Salt Lake City, Seattle, Amsterdam, London-Heathrow, Paris-Charles de Gaulle, and Tokyo-Narita.

Shares of Delta are up 9% year to date, compared to the 11.1% rally of the industry it belongs to.

JetBlue Airways Corporation JBLU : JetBlue provides air transportation services across the United States, the Caribbean and Latin America with an average of 1,000 flights per day. Known as New York's Hometown Airline, JetBlue is the leading carrier in Boston, Fort Lauderdale-Hollywood, Los Angeles (Long Beach), Orlando, and San Juan. The company said that traffic in November increased 2.8% from the year-ago period.

JetBlue also updated its outlook for the fourth quarter with RASM year-over-year growth expected to range between minus 0.5% and 1.5%. This compares favorably to the previously issued guidance of a decline between minus 3% and 0%. The company also expects the negative impact from the recent hurricanes to be less than what had been previously forecasted.

While the stocks discussed above are all Zacks Rank #3 (Hold) stocks, you can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here .

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