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Airline Stock Roundup: Brussels Attacks in Focus, Virgin America Reportedly on Sale, American Airlines Says Yes to Profit Sharing

The past week saw quite a few updates in the airline space with the twin attacks in Brussels taking up most of the attention. Terror attacks on Mar 22 at the Brussels airport and the Maelbeek metro station in central Brussels negatively impacted travel stocks, which includes the airline players.

Apart from the horrific attacks, the past week saw Fort Worth, TX-based American Airlines Group AAL finally giving in to the profit sharing scheme after opposing it for a long time. Moreover, reports of the low-cost carrier Virgin America VA putting itself up for sale also grabbed headlines. Meanwhile, customer-friendly updates from United Continental Holdings UAL and JetBlue Airways Corporation JBLU also invited attention.

On the earnings front, Brazilian carrier GOL Linhas GOL continued its disappointing performance, reporting lackluster numbers in the final quarter of 2015.

Read the last Airline Stock Roundup for Mar22, 2016 .

Recap of the Past Week's Most Important Stories

1. Airline stocks shed value following the twin terror attacks in Brussels which claimed over 25 lives apart from injuring more than 200 people. However, the impact of such terror attacks is generally found to be short-term in nature. Moreover, according to media reports, U.S. carriers do not have a huge exposure in Belgium. This should further limit the damage caused to stocks in the US airline industry (read more Airlines Attractive Despite Brussels Attacks: 5 Solid Picks ).

2. American Airlines reversed its stance on profit sharing and announced that it would pay 5% of 2016 pretax profits to its employees apart from those in management. Consequently, the carrier's first profit sharing payment will be made early next year (read more: Airlines Profit Sharing in Vogue, Courtesy Cheap Oil ).

3. Virgin America was a major news maker last week following a Bloomberg report on Mar 23 that suggested that the airline is up for sale . Reportedly, JetBlue Airways and Alaska Air Group Inc. ALK have submitted bids to buy the California-based low-cost carrier (read more: Virgin America Taking Bids: Gains 10% on the Day ).

4. In line with its efforts to expand further, United Continental inked a multi-year deal with premier Chinese carrier Air China. The carriers have also established a joint strategic initiative aimed at benefiting fliers in the two countries (read more: United Continental Aims to Broaden Chinese Footprint ).

5. In a customer-friendly move, JetBlue Airways announced the expansion of its partnership with Azul Brazilian Airlines. The unilateral codesharing pact inked by the two carriers will however take effect once it receives government clearance (read more: JetBlue Extends Partnership with Azul Brazilian Airlines ).

6. GOL Linhas reported lackluster results in the fourth quarter of 2015, hit by a weak economy and currency headwind. The Latin-American carrier reported net loss of R$1,130 million (approximately $294 million), significantly wider than the year-ago loss of R$631 million (about $248 million). Net revenues declined 2.8% to R$2,652 million (approximately $689 million). GOL expects departures to decline in the band of 15% to 18% in 2016 with supply falling in the 5% to 8% range.

Performance

The following table shows the price movement of the major airline players over the past week and during the last 6 months.

Company Past Week Last 6 months
HA 4.24% 91.33%
UAL -0.58% 10.57%
GOL 14.41% -7.32%
DAL 0.90% 9.49%
JBLU 6.40% -18.35%
AAL -3.81% 6.49%
SAVE 1.47% 2.43%
LUV 0.39% 17.35%
CPA -0.96% 7.93%
ALK 1.65% 3.65%

Despite the Brussels attacks, the NYSE ARCA Airline index gained 1.36% over the past week to $90.12, further highlighting the short-term nature of the negative effect of terror attacks. Shares of GOL Linhas gained the most (14.41%) over the past week.

Over the course of six months too, most airline stocks have gained with the NYSE ARCA Airline index rising 4.18%. Shares of Hawaiian Holdings appreciated the most (91.33%) during the period.

What's Next in the Airline Biz?

We expect March traffic updates from carriers like Delta Air Lines DAL in the coming days. Moreover, further updates on Virgin America's sale will also be awaited by investors over the next week.

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JETBLUE AIRWAYS (JBLU): Free Stock Analysis Report

GOL LINHAS-ADR (GOL): Free Stock Analysis Report

DELTA AIR LINES (DAL): Free Stock Analysis Report

ALASKA AIR GRP (ALK): Free Stock Analysis Report

UNITED CONT HLD (UAL): Free Stock Analysis Report

AMER AIRLINES (AAL): Free Stock Analysis Report

VIRGIN AMERICA (VA): 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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