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Airline Stock Roundup: January Traffic Reports from UAL, JBLU, UAL & Others


With the Q4 earnings season at the tail end, January traffic reports for airline companies have been dominating the headlines over the past five trading days. In fact, key airline players like United Continental Holdings UAL, Southwest Airlines LUV, JetBlue Airways JBLU and GOL Linhas Aereas Inteligentes S.A. GOL unveiled their respective traffic reports for the first month of 2018.

Although the reports of the likes of Southwest, GOL Linhas and Allegiant Travel Company ALGT were impressive with load factor (percentage of seats filled with passengers) increasing on traffic growth outpacing capacity expansion, JetBlue and United Continental disappointed as traffic declined while capacity expanded.

On the price front, the NYSE ARCA Airline Index was up 1.2% to $115.48 over the past five trading days. Notably, it was the direction taken by the broader market which governed the sector tracker rather than any specific development in the airline space. Also, the U.S. equity market seems to have rebounded over the past few days, after both the Dow and the S&P 500 slipped into correction territory on Feb 8.

Transportation – Airline Industry 5YR % Return

Transportation – Airline Industry 5YR % Return

(Read the last Airline Stock Roundup for Feb 7, 2018).

Recap of the Past Week’s Most Important Stories

1. At GOL Linhas, consolidated traffic — measured in revenue passenger kilometers (RPK) — increased 5.2% to 4.15 billion in January. On a year-over-year basis, consolidated capacity (or available seat kilometers/ASKs) rose 4.9% to 4.92 billion primarily owing to the expansion of 2.3% and 27.5% in domestic and international capacity, respectively. Load factor improved to 83.5% from 83.2% a year ago as traffic expansion exceeded capacity growth (Read more: GOL Linhas Reports Robust January Traffic Figures).

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

2. Southwest’s traffic (measured in revenue passenger miles or RPMs) improved 4% to around 9.73 billion. Meanwhile, capacity or available seat miles (ASMs) inched up 1.9% to 12.5 billion. Load factor increased 150 basis points to 77.8% in the month as traffic growth outpaced capacity expansion. Additionally, passenger count was up 6% to 11.99 billion (Read more: Southwest Airlines Posts Impressive January Traffic Figures).

In an employee friendly move, Southwest announced that it will pay $543 million to its employees as part of its 2017 profit sharing plan. This (the 44th consecutive profit sharing arrangement) is in addition to the bonus of $1,000 (to each eligible employee) declared last month, following the introduction of the new tax law. The 2017 payment, to be made on Mar 15, equates to approximately 11.3% of each employee’s earnings in the year.

3. Allegiant’s traffic for the total system, including scheduled service and fixed fee contract, increased 9.3% to 877.42 million on a year-over-year basis. System capacity improved 6.1% to 1.1 billion as well. While Allegiant’s passenger count gained 8.7% in January, its system-wide average fuel cost per gallon was approximately $2.23 in the same month (Read more: Allegiant Reports Impressive January Traffic Statistics).

4. United Continental reported unimpressive traffic numbers for January, with load factor declining owing to capacity overexpansion. Traffic was 16.33 billion, up 1.8% from the year-ago figure. On a year-over-year basis, consolidated capacity also gained 3.3% to 20.62 billion. However, load factor declined 120 basis points to 79.2%. (Read more: United Continental January Traffic Up, Load Factor Down).

5. JetBlue’s traffic decreased 1.7% to 3.79 billion. Moreover, capacity inched up 0.1% leading to load factor declining 140 basis points to 81.9% in January. Moreover, JetBlue’s completion factor was 94.1% with 65.8% flights on schedule.

Price Performance

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

The table above shows that most airline stocks traded in the red over the past week, primarily due to softness exhibited by the broader market. Shares of Spirt Airlines SAVE depreciated the most (3.3%) in the period. On the other hand, shares of Hawaiian Holdings HA gained the most (3.7%) in the period.

Over the course of six months, the NYSE ARCA Airline index appreciated 6.5%. Shares of GOL Linhas appreciated the most (72.6%) in the period.

What's Next in the Airline Space?

Apart from a few traffic reports, focus will be on usual news updates in the coming days.

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