Technology

The Zacks Analyst Blog Highlights: Delta Air Lines, Air France-KLM, JetBlue Airways, American Airlines and United Airlines

For Immediate Release

Chicago, IL – December 2, 2019 – Zacks.com announces the list of stocks featured in the Analyst Blog. Every day the Zacks Equity Research analysts discuss the latest news and events impacting stocks and the financial markets. Stocks recently featured in the blog include: Delta Air Lines DAL, Air France-KLM AFLYY, JetBlue Airways JBLU, American Airlines AAL and United Airlines UAL.

Here are highlights from Friday’s Analyst Blog:

U.S. Gives Final Nod to Transatlantic Joint Venture Agreement

Joint Ventures in the airline industry are quite common, given the vast majority of benefits that the collaborations provide. These pacts allow airlines, engaged in partnerships, to better serve customers by jointly coordinating schedules, sales, marketing and customer services to offer wider travel options while simultaneously growing their own network.

Delta, Air France-KLM & Virgin Atlantic Deal

The U.S. Department of Transportation recently approved one such joint venture between Delta Air Lines, Air France-KLM and Virgin Atlantic that enables the carriers to expand their network between Europe and the United States.

The agreement will offer customers more travel options on the European flights, increased availability of seats and expansion of reciprocal frequent-flyer benefits. The airlines previously estimated the partnership to generate approximately $85 million in annual benefits to customers.

The combined capacity of the carriers between Europe and the United States is expected to rise 3.4% year over year in 2019, per Diio data. The companies plan for further growth next year, focusing on capacity expansion to the United States. Within United States, they aim at boosting capacity to one of Delta’s focus cities (Austin, Cincinnati, Nashville, Raleigh/Durham and San Jose).

Notably, the joint venture replaces Delta’s separate agreements with Air France-KLM and Virgin Atlantic. Previously, Italy’s flag carrier Alitalia was also part of the joint venture agreement between Delta and Air France-KLM.

Backstory

In July 2017, Delta, Air France-KLM and Virgin Atlantic first announced plans to integrate their separate joint venture agreements into a single alliance covering the transatlantic region. Back then, executives stated that Alitalia would be a part of the pact.

However, later in July 2018, Delta, Air France-KLM and Virgin Atlantic filed for an amended joint venture application that excluded Alitalia. The airlines cited the bankrupt carrier’s restructuring process as the reason behind the decision. The Italian government is trying to rescue this loss-making company by gathering some investors so that the struggling carrier can make a turnaround. In this regard, Delta agreed to acquire a 10% stake in the carrier upon its transformation.

The proposed joint venture agreement was opposed by JetBlue Airways on the grounds that the deal “would reduce and foreclose” competition on US-Europe routes. JetBlue carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
 
Overcoming opposition, the deal received a tentative nod in August wherein Alitalia was not included. However, executives said in May that the stressed carrier can resume ties as an “associate member” upon completion of its restructuring process.

Other Notable Joint Ventures in the Airline Industry

American Airlines received approval for its joint venture agreement with Australia’s leading carrier Qantas Airways in July. The deal strengthens the carriers’ partnership of more than 30 years with Qantas by fostering air travel between the United States and Australia as well as New Zealand.

United Airlines has an Atlantic joint venture with Air Canada, Lufthansa, Austrian Airlines, Swiss and Brussels Airlines. Together, these carriers aim at improving efficiency and offering a variety of competitive products in the Atlantic region.

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Past performance is no guarantee of future results. Inherent in any investment is the potential for loss. This material is being provided for informational purposes only and nothing herein constitutes investment, legal, accounting or tax advice, or a recommendation to buy, sell or hold a security. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. It should not be assumed that any investments in securities, companies, sectors or markets identified and described were or will be profitable. All information is current as of the date of herein and is subject to change without notice. Any views or opinions expressed may not reflect those of the firm as a whole. Zacks Investment Research does not engage in investment banking, market making or asset management activities of any securities. These returns are from hypothetical portfolios consisting of stocks with Zacks Rank = 1 that were rebalanced monthly with zero transaction costs. These are not the returns of actual portfolios of stocks. The S&P 500 is an unmanaged index. Visit http://www.zacks.com/performance for information about the performance numbers displayed in this press release.


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American Airlines Group Inc. (AAL): Free Stock Analysis Report

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

Air France-KLM SA (AFLYY): Free Stock Analysis Report

JetBlue Airways Corporation (JBLU): Free Stock Analysis Report

United Airlines Holdings Inc (UAL): Free Stock Analysis Report

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