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Airline Stock Roundup: American Airlines' Impressive Traffic Data, Spirit Airlines, JetBlue in Focus

The past week saw airline heavyweights like American Airlines Group AAL, Southwest Airlines LUV and United Continental Holdings UAL revealing their respective traffic data for April. American Airlines’ figures were very impressive, which naturally impacted the stock positively. Also, the International Air Transport Association (IATA) revealed impressive traffic data for March.

Spirit Airlines SAVE was the latest carrier to face customer dissatisfaction as it had to cancel multiple flights due to pilot unrest. The past week also saw an expansion-related update from JetBlue Airways JBLU.

Transportation - Airline Industry 5YR % Return

 

Transportation - Airline Industry 5YR % Return

(Read the last Airline Stock Roundup for May 03, 2017).

Recap of the Past Week’s Most Important Stories

1. American Airlines’ traffic (measured in revenue passenger miles or RPMs) touched record levels in April. The metric improved 3.1% on a year-over-year basis to $18.6 billion. Consolidated capacity (or available seat miles/ASMs) inched up 0.8% to $22.6 billion.

Moreover, load factor or the percentage of seats filled by passengers increased to 82.2% from 80.4% in Apr 2016, as traffic growth outpaced capacity expansion. The Zacks Rank #3 (Hold) carrier raised its second-quarter projections with respect to a few key metrics.

Total revenue per available seat mile (TRASM) is now expected to grow in the band 3.5%–5.5% year over year. Pre-tax margin (excluding special items) is estimated in the range of 12%–14%. The company’s prior guidance for TRASM was 3%–5%, while that for pre-tax margin was 11%–13%. You can see https://www.zacks.com/stocks/buy-list/?ADID=zp_1link&ICI... _1link">the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

2. Southwest Airlines posted an 8.4% rise in traffic (to around $11.23 billion) in Apr 2017. Available Seat Miles (ASMs) inched up 7.6% to $13.37 billion. Load factor increased 60 basis points (bps) to 84% in Apr 2017, as traffic growth outpaced capacity expansion (Read more: Southwest Airlines Traffic & Load Factor Rise in April).

3. Consolidated traffic at United Continental increased 7.4% year over year to 17.6 billion. The carrier witnessed growth on both the domestic (7.7%) as well as international (7%) front. On a year-over-year basis, consolidated capacity  expanded 4% to 21.1 billion. Load factor increased 260 bps to 83.1% in Apr 2017, as capacity expansion was outweighed by traffic growth. The carrier still expects consolidated passenger unit revenues for the second quarter to increase in the band of 1%–3%.

 4. Spirit Airlines became the latest U.S. airline to face passenger dissatisfaction. The low-cost carrier had to cancel nine flights due to issues with its pilots. The incident not only impacted Spirit Airlines’ shares negatively, but also resulted in irate passengers clashing with its employees at Fort Lauderdale-Hollywood International Airport in Florida (Read more: Shares of Spirit Airlines Tumble After Flight Cancellations, Airport Chaos).

5. Hawaiian Airlines, the wholly owned subsidiary of Hawaiian Holdings HA, posted a 7.6% rise in traffic to around $1.29 billion in Apr 2017. Meanwhile, Available Seat Miles (ASMs) inched up 4.8% to $1.52 billion. Load factor increased 220 bps to 85.3% in Apr 2017, as traffic growth outpaced capacity expansion (Read more: Hawaiian Airlines Reports 7.6% Air Traffic Rise in April).

6. The monthly data released by the International Air Transport Association (IATA) revealed a 6.8% year-over-year increase in demand for air travel across the globe for Mar 2017. The rise was attributable to an increase in both international and domestic traffic (measured in revenue passenger kilometres) in the month.

Lower air fares and an improvement in economic conditions contributed to the healthy demand for air travel. The report also revealed a 6.1% rise in capacity (measured in available seat kilometers). The greater increase in traffic than capacity resulted in the load factor increasing 50 bps to 80.4% in March.

7. In a bid to expand further, JetBlue announced the enhancement of its operations between Fort Lauderdale-Hollywood International Airport (FLL) and Mexico City International Airport (MEX) as well as between Orlando International Airport (MCO) and MEX.JetBlue intends to increase its service to four daily roundtrips between Mexico City and the U.S. – two each on the Fort Lauderdale and Orlando routes.

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

-2.64%

16.91%

UAL

6.08%

31.4%

GOL

4.1%

-4.6%

DAL

3.31%

8.6%

JBLU

-0.51%

14.2%

AAL

7.2%

12.6%

SAVE

-5.74%

9.94%

LUV

-0.18%

33.7%

CPA

1.2%

36.12%

ALK

-3.21%

12.14%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

The table above shows airline stocks exhibited a mixed trend with respect to price over the past week resulting in the NYSE ARCA Airline Index being flat over the period. Over the course of six months, the NYSE ARCA Airline Index appreciated 15.6%. Shares of Copa Holdings CPA appreciated the most (36.12%) during the period.

What's Next in the Airline Space?

Investors interested in the space will keenly await some more traffic reports.

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Southwest Airlines Company (LUV): Free Stock Analysis Report
 
JetBlue Airways Corporation (JBLU): Free Stock Analysis Report
 
United Continental Holdings, Inc. (UAL): Free Stock Analysis Report
 
Copa Holdings, S.A. (CPA): Free Stock Analysis Report
 
Spirit Airlines, Inc. (SAVE): Free Stock Analysis Report
 
Hawaiian Holdings, Inc. (HA): Free Stock Analysis Report
 
American Airlines Group, Inc. (AAL): Free Stock Analysis Report
 
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