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Airline Stock Roundup: July Traffic Data Grab Spotlight; Delta, Hawaiian Holdings Impress

The past week saw key airline players like Delta Air Lines DAL, United Continental Holdings UAL and Hawaiian Airlines — the wholly owned Hawaiian Holdings HA — revealing traffic data for Jul 2017. Delta and Hawaiian reported an increase in their respective load factors (% of seats filled by passengers) while the metric decreased at United Continental as capacity expansion outpaced traffic growth at the Chicago-based carrier in the month.

Moreover, the International Air Transport Association (IATA) revealed encouraging global traffic data for the month of June as well as the first half of 2017. On the non-traffic front, Alaska Airlines, a wholly owned subsidiary of Alaska Air Group ALK, started operating flights from San Francisco and Los Angeles to Mexico City.

On the price front, the NYSE ARCA Airline Index declined 0.82% to $110.78 over the past week. 

Transportation - Airline Industry 5YR % Return

Transportation - Airline Industry 5YR % Return

(Read the last Airline Stock Roundup for Aug 02, 2017)

Recap of the Past Week’s Most Important Stories

1. At Delta, consolidated traffic – measured in revenue passenger miles (RPMs) – came in at 21.73 billion, up 2.7% year over year. The upside was driven by a 4.8% increase in domestic RPMs. In fact, consolidated capacity (or available seat miles/ASMs) expanded 1.5% to 24.65 billion on a year-over-year basis (read more: Delta Air Lines' July Traffic & Load Factor Increase).

Delta sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

2. Hawaiian Holdings’ wholly owned subsidiary Hawaiian Airlines reported a 1.9% rise in traffic, measured in revenue passenger miles (RPMs) for the month of July. The figure increased to 1.48 billion from 1.45 billion a year ago. On a year-over-year basis, consolidated capacity (or available seat miles/ASMs) inched up 0.5% to 1.69 billion. Also, the load factor or percentage of seats filled by passengers rose to 87.3% from 86.2% recorded in Jul 2016, as traffic growth outpaced capacity expansion (read more: Hawaiian Holdings' Arm Sees Rise in Traffic Figures for July).

3. Allegiant Travel Company ALGT too reported traffic numbers for the month of July. Traffic for the total system, which includes scheduled service and fixed fee contract and measured in revenue passenger miles (RPMs), increased 2.7% on a year-over-year basis to 1.16 billion. System capacity, measured in available seat miles (ASMs), improved 3.6% in the month to 1.31 billion.

With capacity growth outpacing the rise in traffic, load factor declined 80 basis points year over year to 88.8%. Allegiant’s passenger count rose 6.8% in Jul 2017. Allegiant maintained its third-quarter guidance for total revenue per available seat miles, which it gave last month while releasing second-quarter results.

4. United Continental, the parent company of United Airlines posted impressive traffic numbers for the month of July. Traffic – measured in revenue passenger miles (RPMs) – was 21.5 billion, up 3.9% from a year ago.

On a year-over-year basis, consolidated capacity expanded 4.6% to 24.8 billion. Consequently, load factor decreased to 86.9% from 87.5%, a year ago. This was because capacity expansion outpaced traffic growth. The carrier still expects passenger unit revenue for the third quarter to be down 1% to up 1% on a year-over-year basis.

 5. The monthly data released by the IATA revealed a 7.8% year-over-year increase in demand for air travel across the globe for the month of Jun 2017. The rise was attributable to an increase in both international and domestic traffic (measured in revenue passenger kilometers) in the month. The report also revealed a 6.5% rise in capacity (measured in available seat kilometers).

The greater increase in traffic compared with capacity resulted in the load factor improving 100 basis points to 81.9% in June. Moreover, traffic grew at the highest pace (7.9%) in 12 years in the first half of the year on the back of an improving economy and subdued air fares. Load factor also touched a record 80.7% in the first half of 2017.

6. In a bid to expand further, Alaska Airlines started operating non-stop flights connecting Mexico City to two key U.S. cities —San Francisco and Los Angeles. The start of the new services marks the most significant network expansion in the company’s history. In fact, 29 new routes are expected to be launched by the year-end.

Performance

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

Company

Past Week

Last 6 months

HA

0.95%

-17.23%

UAL

-0.46%

-6.65%

GOL

9%

40.5%

DAL

-0.95%

2.13%

JBLU

-1.41%

10.2%

AAL

-2.12%

7.64%

SAVE

-7.94%

-29.32%

LUV

-0.9%

0.2%

CPA

-0.33%

27.75%

ALK

0.6%

-12.53%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

The table above shows that the majority of airline stocks traded in the red over the past week. However, the losses were mostly muted in nature. Shares of GOL Linhas gained the most (9%) while Spirit Airlines SAVE emerged as the biggest laggard (7.94%)

Over the course of six months, the NYSE ARCA Airline Index remained flat on impressive gains at Latin American carriers GOL Linhas and Copa Holdings. Shares of Hawaiian Holdings depreciated the most (17.23%) over the period.

What's Next in the Airline Space?

We expect July traffic reports from the likes of JetBlue Airways Corp. JBLU in the coming days.

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JetBlue Airways Corporation (JBLU): Free Stock Analysis Report
 
Delta Air Lines, Inc. (DAL): Free Stock Analysis Report
 
United Continental Holdings, Inc. (UAL): Free Stock Analysis Report
 
Spirit Airlines, Inc. (SAVE): Free Stock Analysis Report
 
Hawaiian Holdings, Inc. (HA): Free Stock Analysis Report
 
Allegiant Travel Company (ALGT): Free Stock Analysis Report
 
Alaska Air Group, Inc. (ALK): Free Stock Analysis Report
 
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