Airline Stock Roundup: LUV's Upbeat Update on August Demand, DAL, UAL in Focus

In the past week, Southwest Airlines LUV dominated headlines by virtue of its commentary that air-travel demand picked up in August following a disappointing phase in July due to a spike in coronavirus cases. Meanwhile, management at United Airlines UAL announced that the company intends to increase services to Shanghai after the Chinese aviation authority permitted U.S. carriers to double its flight operations to the nation. Upon China’s nod to the increased frequency, the U.S. Department of Transportation also allowed Chinese airlines to increase flights to the United States from four weekly round-trips to eight.

Meanwhile, American Airlines AAL announced its plans to suspend flights to 15 U.S. airports in October as air-travel demand continues to be weak due to the ongoing coronavirus concerns. Also, per a CNBC report, Delta Air Lines DAL intends to furlough 1,941 of its pilots if a suitable cost-cutting agreement is not reached with the concerned labor union in October due to continued softness in air-travel demand. Notably, the federal aid to the airlines including Delta prohibits them from laying off employees until Sep 30, 2020.

Read the Last Airline Stock Roundup here

Recap of the Past Week’s Most Important Stories

1. Management at currently Zacks Rank #4 (Sell) Southwest Airlines stated that booking trends for September have improved modestly. For the third quarter of 2020, this low-cost carrier expects capacity to fall 30-35% from the previous estimate of a 20-30% decline. To help passengers maintain social distancing, the carrier plans to keep middle seats vacant (for customers not traveling together) through at least Oct 31, 2020.

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

2. In a safety-oriented move aimed at restoring people’s confidence in boarding flights, Delta announced that it will block the middle seats and limit the number of passengers per flight through at least Jan 6, 2021. In another development, management at Delta announced plans to resume more than 50 international flights for winter 2020 and summer 2021.

3. In a bid to boost its flight service to China, United Airlines United Airlines aims to double operations between San Francisco and Shanghai to four weekly flights from two starting Sep 4. A Boeing 777-300ER aircraft will ply on this route on Wednesdays, Fridays, Saturdays and Sundays.

4. American Airlines will suspend services to Del Rio, TX (DRT); Dubuque, IA (DBQ); Florence, SC (FLO); Greenville, NC (PGV); Huntington, WV (HTS); Joplin, MO (JLN); Kalamazoo/Battle Creek, MI (AZO); Lake Charles, LA (LCH); New Haven, CT (HVN); New Windsor, NY (SWF); Roswell, NM (ROW); Sioux City, IA (SUX); Springfield, IL (SPI); Stillwater, OK (SWO) and Williamsport, PA (IPT). Approximately 700 flights to and from these airports will be suspended beginning Oct 7 through Nov 3.

5. Per a Reuters report, European low-cost carrier Ryanair Holdings RYAAY will trim its workforce less than the original estimate of 3,000. This favorable development followed the decision taken by 97% of its pilots and more than 90% of its cabin crew to accept pay cuts as the coronavirus continues to ravage the aviation industry by shrinking air-travel demand significantly


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


The table above shows that all airline stocks, barring Gol Linhas GOL, have traded in the green in the past week owing to the moderate recovery in air-travel demand. This upside led the NYSE ARCA Airline Index to gain 6.1% to $58.86. However, over the course of the past six months, the NYSE ARCA Airline Index has plunged 46.6%.

What's Next in the Airline Space?

Investors will await updates from airlines as they attempt to combat the pathetically low air-travel demand due to the prevalent pandemic.

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Southwest Airlines Co. (LUV): Free Stock Analysis Report
Ryanair Holdings PLC (RYAAY): Free Stock Analysis Report
Delta Air Lines, Inc. (DAL): Free Stock Analysis Report
Gol Linhas Aereas Inteligentes S.A. (GOL): Free Stock Analysis Report
United Airlines Holdings Inc (UAL): Free Stock Analysis Report
American Airlines Group Inc. (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 Nasdaq, Inc.

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