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Airline Stock Roundup: Q1 Earnings of Delta, United Continental, JetBlue Traffic & More

Zacks

The past week saw Atlanta, GA-based Delta Air Lines DAL kick-starting the first-quarter earnings season for the airline space. While the company’s earnings beat estimates, revenues lagged expectations. Moreover, both earnings and revenues declined on a year-over-year basis.

Chicago-based United Continental Holdings UAL reported better-than-expected results in the quarter. The quarterly performance finally brought some positive news to the carrier, which has been under fire for the passenger fiasco on flight 3411 on Apr 9, at Chicago’s O’Hare International Airport. The carrier offered to refund all 70 passengers who were on board the infamous flight. The carrier also changed its policy on crew-booking to avoid repetition of the incident.

On the non-earnings front, JetBlue Airways Corp. JBLU and Copa Holdings CPA disclosed their respective traffic numbers for March.

Transportation – Airline Industry 5YR % Return


Transportation – Airline Industry 5YR % Return

(Read the last Airline Stock Roundup for Apr 12, 2017).

Recap of the Past Week’s Most Important Stories

1. Delta’s first-quarter earnings (excluding special items) of 77 cents per share beat the Zacks Consensus Estimate of 73 cents. The bottom line, however, declined 41.7% year over year. Operating revenues of $9,148 million fell short of the Zacks Consensus Estimate. Revenues also declined marginally from the year-ago figure (Read more: Delta Air Lines Earnings Beat in Q1, Revenues Miss).

Delta carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

2. United Continental’s first-quarter 2017 earnings (on an adjusted basis) of 41 cents per share beat the Zacks Consensus Estimate by 4 cents. The bottom line, however, plunged 66.7% year over year due to higher costs. Operating revenues of $8,420 million in the first quarter were marginally ahead of the Zacks Consensus Estimate of $8,362.5 million. Revenues increased 2.7% year over year.

While releasing earnings results, United Continental’s CEO, Oscar Munoz, issued yet another apology for the “passenger dragging” incident. Munoz called the incident a “humbling” one for which he took full responsibility as the head of the company (Read more: United Continental Beats on Q1 Earnings & Revenues).

3. At JetBlue Airways, March traffic (measured in revenue passenger miles or RPMs) increased 2.9% on a 4.2% rise in capacity. The low-cost carrier now expects revenue per available seat mile (RASM) in the first quarter to decline around 4.8% year over year (the previous guidance had called for a decline in the band of 4–5%). The company, however, expects April RASM (adjusted for Easter) to increase more than that in March (Read more: JetBlue Airways Down on Bearish Q1 RASM View).

4. Copa Holdings, S.A. revealed impressive traffic numbers for the month of March. RPMs improved 11.9% year over year to 1.54 billion. Load factor increased 430 basis points to 79.6%. This was because traffic growth outpaced capacity expansion (5.9%) in the month.

5. According to the April Air Travel Consumer Report released by the U.S. Department of Transportation, the rate of cancelled scheduled domestic flights fell to 1.5% in Feb 2017. The figure compared favorably to the readings in Jan 2017 (2%) and Feb 2016 (1.6%).

According to the report, 82.6% flights operated by U.S. carriers (mentioned in the report) touched down on time in Feb 2017. This represents a marked improvement from the comparable figure of 76% in Jan 2017. The figure was 83.6% in Feb 2016. In Feb 2017, Delta Air Lines secured the top spot with 89.5% of its flights arriving on time during the month. Delta was followed by American Airlines Group AAL, with 85.2% of its flights arriving on time.

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

0.21%

1.23%

UAL

-2.9%

22.2%

GOL

5.1%

36.5%

DAL

-3.1%

8.6%

JBLU

-2.4%

14%

AAL

-2.4%

7.8%

SAVE

9.4%

19.6%

LUV

0.44%

28.8%

CPA

0.3%

23.4%

ALK

-2.8%

17.8%

The table above shows that airline stocks exhibited a mixed trend in the past week. Over the course of the last five trading days, the NYSE ARCA Airline Index was almost flat at $111.01. Over the course of the last six months, the NYSE ARCA Airline Index appreciated 14.9%. Shares of GOL Linhas GOL appreciated the most (36.5%) during the period.

What's Next in the Airline Space?

Investors will keenly await earnings reports from Hawaiian Holdings, Inc. HA and JetBlue Airways on Apr 20 and Apr 25 respectively over the course of the next five trading days.


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