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Airline Stock Roundup: Q4 Earnings at Spirit Airlines, SkyWest; JetBlue's Bullish Capacity View

The past week saw air carriers like Spirit Airlines SAVE and SkyWest, Inc. SKYW reporting better-than-expected earnings per share for the fourth quarter of 2016. While SkyWest's bottom-line expanded on a year-over-year basis, the same declined significantly at Spirit Airlines due to higher costs. Also, the SkyWest stock declined after the earnings report due to the disappointing guidance issued for the first quarter of 2017.

On the non-earnings front, January traffic reports from Delta Air Lines DAL and Hawaiian Airlines, Inc. - a subsidiary of Hawaiian Holdings, Inc. HA - grabbed headlines. Moreover, JetBlue Airways Corp. JBLU lowered its capacity guidance for full-year 2017.

On the price front, the NYSE ARCA Airline index declined 1.57% $107.14 over the last five trading days.

Transportation - Airline Industry 5YR % Return

Transportation - Airline Industry 5YR % Return

(Read the last Airline Stock Roundup for Feb 01, 2017 ).

Recap of the Past Week's Most Important Stories

1. Spirit Airlines' fourth-quarter earnings (on an adjusted basis) came in at 77 cents per share. Earnings beat the Zacks Consensus Estimate of 74 cents per share, it declined 24.5% on a year-over-year basis. Increased labor costs contributed to the year-over-year decline. The carrier generated operating revenues of $578.4 million in the quarter. A 12.9% increase in flight volume contributed to the top line expanding 11.3% on a year-over-year basis.

In the reported quarter, operating revenue per available seat mile fell 3.6% year over year, while load factor (percentage of seats filled by passengers) decreased to 81.4% from 82.9% in the year-ago quarter. Load factor decreased as traffic growth (13.4%) was outpaced by capacity expansion (15.4%) during the quarter. Cost per available seat mile, excluding special items and fuel, increased 5.6% to 5.44 cents.Spirit Airlines carries a Zacks Rank #2 (Buy).You can see the complete list of today's Zacks #1 (Strong Buy) Rank stocks here .

2. St. George, UT-based SkyWest reported impressive numbers for the fourth quarter. The carrier outperformed both in terms of earnings and revenues. The regional carrier's earnings (on an adjusted basis) of 54 cents per share were 3 cents above the Zacks Consensus Estimate. Earnings also improved 10.2% from the year-ago figure. Quarterly revenues of $758 million beat the Zacks Consensus Estimate of $753 million and also increased marginally on a year-over-year basis. Results were aided by the company's fleet redeployment exercise.

The company expects adjusted earnings for 2017 to grow by a low-double digit rate on a year-over-year basis. However, escalated costs and adverse weather are likely to hurt the carrier's first-quarter 2017 earnings, which are expected to remain flat.

3. Delta unveiled disappointing traffic data for Jan 2017. Consolidated traffic - measured in revenue passenger miles (RPMs) - came in at 15.6 billion, up 0.4% year over year. While domestic RPMs climbed 3.1%, it declined 3.6% on the international front. Load factor, or the percentage of seats filled by passengers, decreased to 81.2% from 81.3% recorded a year ago. This is because capacity expansion (0.6%) outweighed traffic growth for the month (Read more: Delta Air Lines January Load Factor Declines, PRASM Down ).

4. JetBlue Airways now expects available seat miles (ASMs: a measure of capacity) for full-year 2017 to grow in the band of 5.5-7.5% (prior guidance, issued last month while releasing fourth-quarter results, had hinted at capacity growth in the band 6.5-8.5%). Capacity for the first quarter is still expected to grow in the band of 4.5-6.5%. Consolidated operating cost per available seat mile, excluding fuel, is expected to increase in the band of 1.5-3.5% for 2017 (old guidance: 1% to 3% increase) (Read more: JetBlue Airways Gains on Bullish Capacity Guidance ).

5. Hawaiian Airlines posted significant rise in air traffic in the month of January. RPMs came in at 1.33 billion, up 9.5% on a year-over-year basis. Additionally, consolidated capacity (or available seat miles/ASMs) inched up 5.8% to 1.59 billion. Moreover, load factor increased 280 basis points to 83.9% in the month. The load factor increase was due to traffic growth outpacing capacity expansion for the month.

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 -1.47% 12.12%
UAL 1.05% 47.02%
GOL -2.46% 15.11%
DAL 3.55% 28.61%
JBLU -4.82% 10%
AAL 0.62% 31.52%
SAVE -1.12% 32.77%
LUV 1.12% 41.63%
CPA -3.25% 24.10%
ALK 0.44% 42.88%

The table shows that airline stocks exhibited a mixed trend with respect to price over the past five trading days. Delta Air Lines was the biggest gainer, with its shares appreciating 3.55% while JetBlue, despite its bullish capacity-related guidance, emerged as the biggest laggard. Over the last six months, the NYSE ARCA Airline Index gained 21.64%.

What's Next in the Airline Business?

With the CEOs of leading U.S. carriers Delta, American Airlines Group AAL and United Continental Holdings UAL seeking to meet U.S. Secretary of State, Rex Tillerson, over the dispute with Gulf carriers, focus will be on updates on the issue. Additionally, the upcoming meeting of airline executives with President Donald Trump will also be looked forward to with interest.

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JetBlue Airways Corporation (JBLU): Free Stock Analysis Report

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

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

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

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

Spirit Airlines, Inc. (SAVE): 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.


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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