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Airline Stock Roundup: JBLU, UAL Q3 Earnings Beat, RYAAY in Focus

The last week saw key airline players like JetBlue Airways JBLU, United Continental Holdings UAL and Hawaiian Holdings HA announcing their respective third-quarter 2017 numbers. While JetBlue and United Continental outperformed with respect to both earnings and revenues, Hawaiian Holdings reported mixed results. This Honolulu County, HI-based carrier reported better-than-expected earnings but lower-than-expected revenues.

Despite the earnings beat, shares of United Continental fell approximately 12% on Oct 19. The lack of clarity provided by the company, on the conference call, pertaining to its efforts to check costs and boost revenues disappointed investors. Consequently, the stock tumbled, registering its biggest one-day percentage decline in eight years.

European low-cost carrier Ryanair Holdings plc RYAAY also grabbed headlines by virtue of its dispute with pilots. Alaska Airlines, the wholly-owned subsidiary of Alaska Air Group ALK, featured in the news by virtue of the decision to expand its San Diego service.

On the price front, the NYSE ARCA Airline Index declined 2.4% to $110.24 in the past five days, mainly due to the issues related to United Continental.

Transportation - Airline Industry 5YR % Return

 

Transportation - Airline Industry 5YR % Return

 

(Read the last Airline Stock Roundup for Oct 17, 2017).

Recap of the Past Week’s Most Important Stories

1. Despite the recent hurricanes United Continental reported better-than-expected results in the third quarter of 2017. The company’s earnings (excluding 10 cents from non-recurring items) came in at $2.22 per share, beating the Zacks Consensus Estimate by 1.8%. Earnings were, however, 28.6% lower than the year-ago figure due to higher costs (read more: United Continental Q3 Earnings & Revenues Top Estimates).

2. JetBlue Airways’ third-quarter 2017 earnings of 55 cents per share surpassed the Zacks Consensus Estimate by 3 cents.  Quarterly earnings, however, declined 5.2% from the year ago figure due to higher costs. The recent hurricanes also hurt results. Operating revenues came in at $1,813 million, just ahead of the Zacks Consensus Estimate of $1,809.3 million. In fact, the top line increased 4.7% from the year-ago figure (read more: JetBlue's Q3 Earnings Top, Fall Y/Y on High Costs).

3. Hawaiian Holdings’ third-quarter adjusted earnings of $1.92 per share beat the Zacks Consensus Estimate of $1.85. Quarterly revenues of $719.6 million, however, fell short of the Zacks Consensus Estimate of $720.6 million. While earnings per share were flat, revenues increased on a year-over-year basis.

Operating revenue per available seat mile in the quarter climbed 5.8% year over year. However, the metric is projected to be down 1% to up 2% on a year-over-year basis in the fourth quarter of 2017. For full-year 2017, the same is forecasted to grow in the band of 5% to 6%.

Capacity is projected to grow between 4% and 6% in the final quarter of 2017. CASM, excluding fuel, is also projected to rise significantly for the ongoing quarter primarily due to the higher labor costs. Fuel cost per gallon (economic) is anticipated in the band of $1.75-$1.85 for the fourth quarter. The metric is expected in the band of $1.65 to $1.75 for full-year 2017.

4. According to a Reuters report, most pilots at the company’s largest base rejected the offer from the management pertaining to better pay and working conditions. This marks a setback for the company as it grapples with pilot shortages. The issue had disrupted operations, leading to multiple flight cancellations in the last few weeks.

5. In a bid to expand further along the West Coast, Alaska Airlines started operating new daily non-stop flights to Albuquerque from October 18. Markedly, Albuquerque is sixth new non-stop destination from San Diego since August for this low-cost carrier. The airline aims to operate 45 peak day flights to 29 nonstop destinations from San Diego by Dec 31, 2017. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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

-2.4%

-32.5%

UAL

-11.3%

-15.6%

GOL

-2.5%

44.6%

DAL

-1.4%

13.6%

JBLU

1.2%

-5.2%

AAL

-1.4%

11.9%

SAVE

1.3%

-40.6%

LUV

-0.5%

4.1%

CPA

-1.7%

11%

ALK

-1.9%

-12.5%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

The table above shows that most airline stocks traded in the red in the past week leading to the NYSE ARCA Airline Index’s significant decline. Over the last six months, the sector tracker lost 4%. Spirit Airlines was the major laggard during this period, experiencing a 40.6% price decline.

What's Next in the Airline Space?

The coming week will be flooded with third-quarter earnings reports from major players in the airline sector like American Airlines AAL and Southwest Airlines LUV.

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Southwest Airlines Company (LUV): Free Stock Analysis Report
 
Ryanair Holdings PLC (RYAAY): Free Stock Analysis Report
 
JetBlue Airways Corporation (JBLU): Free Stock Analysis Report
 
United Continental Holdings, Inc. (UAL): Free Stock Analysis Report
 
Hawaiian Holdings, Inc. (HA): Free Stock Analysis Report
 
American Airlines Group, Inc. (AAL): Free Stock Analysis Report
 
Alaska Air Group, Inc. (ALK): Free Stock Analysis Report
 
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