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Airline Stock Roundup: January Traffic in Focus; Delta to Get New CEO; Spirit Airlines Q4 Earnings Strong

The past week saw heavyweights in the airline space like United Continental Holdings UAL , American Airlines Group Inc. AAL and Southwest Airlines Co. LUV revealing their respective traffic numbers for the month of January.

Airline behemoth Delta Air Lines Inc. DAL was also a key newsmaker over the last five trading sessions, courtesy its announcement of a new chief executive officer (CEO) who will join on May 2, following the retirement of the incumbent CEO Richard H. Anderson.

On the earnings front, low-cost carrier Spirit Airlines SAVE reported higher-than-expected earnings per share in the final quarter of 2015. The earnings beat pleased investors. Consequently, the stock gained 5.82% on Feb 9 to close the day's trading at $42.73.

Read the last Airline Stock Roundup for Feb 03, 2016 .

Recap of the Past Week's Most Important Stories

1. Delta will have a new man at its helm effective May 2, 2016. The development is a result of Delta's highly successful CEO Richard H. Anderson's decision to retire from his post from the same date. His decision, however, does not mean that his association with Delta will end as after his retirement, Anderson will assume the role of the Executive Chairman of Delta's Board of Directors. Replacing Anderson as the CEO will be Ed Bastian, the company's incumbent president (read more: Delta's CEO to Retire in May, President to Take Control ).

2. Southwest Airlines revealed healthy traffic numbers for the month of January with revenue passenger miles (RPMs: a measure of air traffic) rising 11.1% on a year-over-year basis to 8.9 billion. Available seat miles (ASMs: a measure of capacity) climbed 7.8% to 11.5 billion. Another important metric - load factor (% of seats filled by passengers) - improved 230 basis points to 77.5% in the month as traffic growth outpaced capacity expansion (read more: Why Southwest Airlines Fell Despite Strong January Traffic ).

3. United Airlines - the wholly owned subsidiary of United Continental Holdings - reported a nominal 0.1% rise in air traffic in the month of January on a 0.1% fall in capacity. The carrier expects consolidated passenger revenue per available seat mile (PRASM or unit revenue) to decline in the range of 6% to 8% in the first quarter of 2016 (read more: United Airlines January Traffic Gains on Favorable Factors ).

4. Hawaiian Airlines - a subsidiary of Hawaiian Holdings, Inc. HA - reported a 5.2% rise in air traffic in Jan 2016 on 1.5% growth in capacity. Load factor (% of seats filled by passengers) increased 290 basis points to 81.1% as traffic growth outpaced capacity expansion (read more: Hawaiian Airlines' January Traffic up on Favorable Factors ).

5. American Airlines unveiled impressive Jan 2016 traffic data with traffic increasing 1.6% and capacity declining 0.3% on a year-over-year basis. Load factor climbed 150 basis points to 79.7% in the first month of 2016 as traffic expanded while capacity contracted. American Airlines still forecasts a 6% to 8% drop in PRASM for the first quarter of 2016. Moreover, pre-tax margin (exclusive of special items) is likely to remain in the band of 12% to 14%.

6. Spirit Airlines' fourth-quarter 2015 earnings (on an adjusted basis) came in at $1.02 per share, beating the Zacks Consensus Estimate of 98 cents. Earnings improved 27.5% on a year-over-year basis. Results were once again aided by weak fuel costs.

Spirit Airlines reported a 9.6% year-over-year rise in operating revenues, which came roughly in line with the Zacks Consensus Estimate, driven by an increase in flight volume. In the reported quarter, operating revenue per available seat mile fell 14.7% year over year while load factor (% of seats filled by passengers) dropped to 84.7% from 86.7% in the year-earlier quarter. Load factor declined as traffic growth (27.1%) was outpaced by capacity expansion (30%) during the final quarter of 2015. Average economic fuel price per gallon declined 39.1% to $1.82.

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 -2.08% 34.15%
UAL -1.11% -18.67%
GOL -5.75% -67.43%
DAL -4.05% -9.37%
JBLU -6.60% -13.71%
AAL -2.82% -13.17%
SAVE -0.29% -28.15%
LUV -2.83% -6.72%
CPA 7.32% -20.17%
ALK -3.50% -16.53%

Over the course of last week, the NYSE ARCA Airline index declined marginally to $75.30. The worst performer was JetBlue Airways Corp. JBLU whose stock shed 6.60%.

Meanwhile, over the last 6 months, the NYSE ARCA Airline index lost 18% of its value. GOL Linhas was the main laggard, as it witnessed a 67.43% price decline. Hawaiian Holdings emerged as the sole gainer, as per the chart above, with its shares advancing 34.15% during the period.

What's Next in the Airline Biz?

We expect January traffic updates from some carriers in the coming days. Focus will also remain on fresh updates pertaining to the Zika virus, the spread of which has, of late, rung alarm bells among carriers.

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SOUTHWEST AIR (LUV): Free Stock Analysis Report

JETBLUE AIRWAYS (JBLU): Free Stock Analysis Report

DELTA AIR LINES (DAL): Free Stock Analysis Report

HAWAIIAN HLDGS (HA): Free Stock Analysis Report

UNITED CONT HLD (UAL): Free Stock Analysis Report

SPIRIT AIRLINES (SAVE): Free Stock Analysis Report

AMER AIRLINES (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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