It’s been a month since Delta Air Lines Inc. DAL kick started the second-quarter earnings season for the airline space. Overall, the season has been mixed for the industry. The sector’s business scenario has improved somewhat from the pandemic days, but occasional global recessionary fears and geopolitical tensions have been weighing on the fund (read: Time for Airlines ETFs on Raised Profit Forecast for 2024?).
However, the pureplay airlines exchange-traded fund (ETF) U.S. Global Jets ETF JETS has gained 8.9% past month (as of Aug. 9, 2024). In fact, the fund beat (up 5.8%) the S&P 500 (down 0.04%) last week. Let’s pay attention to the earnings picture of the industry.
Inside the Headlines: Airline Earnings
Delta Air Lines DAL has reported second-quarter 2024 earnings (excluding 35 cents from non-recurring items) of $2.36 per share, which marginally missed the Zacks Consensus Estimate of $2.37. Earnings decreased 11.9% on a year-over-year basis.
Apart from high costs, the carrier blamed the discounting pressure at the low end of the market, which hurt its pricing power, for the disappointing performance. Revenues of $16.65 billion surpassed the Zacks Consensus Estimate of $16.25 billion and increased 6.9% year over year, driven by upbeat air travel demand.
United Airlines’ UAL reported second-quarter 2024 earnings per share (EPS) of $4.14 (excluding 18 cents from non-recurring items), which surpassed the Zacks Consensus Estimate of $3.97. Earnings decreased 17.7% on a year-over-year basis. Operating revenues of $14.98 billion missed the Zacks Consensus Estimate of $15.13 billion. The top line increased 5.7% year over year due to upbeat air-travel demand.
American Airlines AAL second-quarter 2024 earnings of $1.09 per share (excluding 8 cents from non-recurring items) beat the Zacks Consensus Estimate of $1.04. In the second quarter of 2023, AAL reported earnings of $1.92 per share. The year-over-year bottom-line contraction was mainly due to high costs. Operating revenues of $14.33 billion fell short of the Zacks Consensus Estimate of $14.42 billion but increased 2% year over year.
Southwest Airlines Co. LUV reported second-quarter 2024 earnings of 58 cents per share, which outpaced the Zacks Consensus Estimate of 50 cents but declined 46.7% from the year-ago reported quarter. Revenues of $7.354 billion surpassed the Zacks Consensus Estimate of $7.323 billion and improved 4.5% year over year.
JetBlue Airways’ JBLU second-quarter 2024 earnings of 8 cents per share (excluding one cent per share from non-recurring items) beat the Zacks Consensus Estimate of a loss of 13 cents. In Q2 2023, JBLU reported earnings of 45 cents. Operating revenues of $2.43 billion beat the Zacks Consensus Estimate of $2.39 billion. However, the top line decreased 7% year over year.
Alaska Air Group ALK reported second-quarter 2024 earnings per share (EPS) of $2.55, which outpaced the Zacks Consensus Estimate of $2.36. Earnings decreased 15% on a year-over-year basis. Operating revenues of $2.89 billion missed the Zacks Consensus Estimate of $2.94 billion. The top line jumped 2% year over year, with passenger revenues accounting for 91.5% of the top line and increasing 2% owing to continued recovery in air-travel demand.
ETF in Focus: U.S. Global Jets ETF
The $941.1-million-fund holds about 30 stocks in its portfolio and is concentrated on a few individual securities. All the above-mentioned stocks get a place in the portfolio. The product charges 60 bps in fees.
Bottom Line
While the earnings picture is still moderately gloomy, some companies beat on estimates. This shows a feeble hope for recovery in the coming days. However, any kind of worsening in the global economic scenario may harm the fund over the medium term.
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United Airlines Holdings Inc (UAL) : Free Stock Analysis Report
Southwest Airlines Co. (LUV) : Free Stock Analysis Report
JetBlue Airways Corporation (JBLU) : Free Stock Analysis Report
American Airlines Group Inc. (AAL) : Free Stock Analysis Report
Alaska Air Group, Inc. (ALK) : Free Stock Analysis Report
U.S. Global Jets ETF (JETS): ETF Research Reports
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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.
