In the past week, Copa Holdings CPA reported better-than-expected earnings per share for the second quarter of 2024. However, quarterly earnings declined significantly year over year due to high operating costs. Another Latin American carrier Azul AZUL reported a wider-than-expected loss per share for the second quarter of 2024.
JetBlue Airways JBLU was downgraded by Moody’s Investors Service and S&P Global Ratings, assuming that the headwinds surrounding the company will continue for quite some time. Alaska Airlines, the wholly-owned subsidiary of Alaska Air Group ALK, renewed its partnership with Air Space Intelligence or ASI, the creator of Flyways. This renewal strengthens the airline’s commitment to using innovative technology, including artificial intelligence. Ryanair Holdings RYAAY reported impressive traffic numbers for July, driven by the upbeat air travel demand scenario.
Read the last Airline Roundup here.
Recap of the Recent Most Important Stories
1 Copa Holdings’ second-quarter 2024 earnings per share of $2.88 surpassed the Zacks Consensus Estimate of $2.77 but declined 26.5% year over year. Revenues of $819.4 million lagged the Zacks Consensus Estimate of $841 million but rose 1.3% year over year on the back of upbeat passenger revenues. Passenger revenues (which contributed 95.4% to the top line) increased 1% from second-quarter 2023, owing to a 10.6% year-over-year increase in passenger traffic.
CPA’s management now expects consolidated capacity to grow 9% (prior view: 10%) year over year. The load factor (% of seats filled by passengers) is now expected to be 86.5% (prior view: 87%).
CPA currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here
2. Alaska Airlines’ decision to renew its AI-related partnership with Air Space Intelligence is in line with its sustainability goals and long-term aim of achieving net-zero carbon emissions. For the past four years, Alaska Airlines has used ASI's Flyways AI platform and the Dispatch application in its Network Operations Center. Dispatchers utilize Flyways to optimize flight routes, reduce fuel consumption and carbon emissions and improve on-time arrivals.
3 While trimming JBLU’s credit rating to B3 from B2, Moody’s Investors Service stated that to improve its operating profit and cash flow enough to merit an upgrade, JBLU would likely take “a number of years.” Factors like increasing competition on the East Coast and a greater consumer appetite for premium offerings are major hiccups for JetBlue, per the credit rating agency.
S&P Global Ratings slashed JetBlue’s issuer credit rating to B- from B, anticipating continued weakness. S&P Global stated, “We expect the operating environment to remain weak over the next 12-24 months due to excess industry capacity on many of JetBlue's key domestic routes, higher labor costs and infrastructure-related constraints, and capacity growth limited by aircrafts on the ground due to engine issues.”
JBLU aims to raise over $3 billion in debt. To this end, the low-cost carrier announced a private offering of $1.5 billion in senior secured notes, a $1.25 billion term loan secured by TrueBlue, its loyalty program and another $400 million through a convertible note offering.
4. In July, 20.2 million passengers were transported on Ryanair flights, reflecting an 8% year-over-year increase. RYAAY’s traffic in July was also higher than the readings in March, April, May and June of 13.6 million, 17.3 million, 18.9 million and 19.3 million, respectively. The June load factor (percentage of seats filled by passengers) of 96% remained flat on a year-over-year basis.
5. Azul incurred a loss (excluding $5.18 from nonrecurring items) of $1.23 per share in the second quarter of 2024, wider than the Zacks Consensus Estimate of a loss of 76 cents. Loss per share was 81 cents in the second quarter of 2023. Total revenues of $800.7 million surpassed the Zacks Consensus Estimate of $791.4 million but decreased 7.2% year over year. The year-over-year top-line decrease was mainly due to a 2.3% decline in passenger revenues, which accounted for most of the top line. Cargo and other revenues declined 2.2% year over year.
Performance
The following table shows the price movement of the major airline players over the past week and during the last six months.
Image Source: Zacks Investment Research
The table above shows that most airline stocks traded in the red over the past week. The NYSE ARCA Airline Index decreased 1% to $47.36. Over the past six months, the NYSE ARCA Airline Index has decreased 26.3%.
What’s Next in the Airline Space?
With the earnings season over for airlines, news updates are likely to take center stage. Apart from traffic-related news, updates pertaining to the reduced pricing power of airlines cannot be ruled out going forward. With air travel demand remaining buoyant, airlines are likely to add routes to match the buoyancy.
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Ryanair Holdings PLC (RYAAY) : Free Stock Analysis Report
JetBlue Airways Corporation (JBLU) : Free Stock Analysis Report
Copa Holdings, S.A. (CPA) : Free Stock Analysis Report
Alaska Air Group, Inc. (ALK) : Free Stock Analysis Report
AZUL (AZUL) : 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.
