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Airline Stock Roundup: IATA's Bullish Forecast for 2023 Profit, GOL, RYAAY in Focus
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In the past week, European carrier Ryanair Holdings (RYAAY - Free Report) and Latin Americas’ Gol Linhas’ reported May traffic. The numbers were aided by an upbeat scenario with respect to air travel demand. Also, owing to the buoyant air travel demand scenario, International Air Transport Association or IATA doubled its 2023 net profit projection for airlines across the globe.
American Airlines (AAL - Free Report) was another news-maker courtesy of management’s decision to introduce an additional bag fee on transpacific flights. JetBlue Airways (JBLU - Free Report) made an expansion-related update in the past week.
Recap of the Past Week’s Most Important Stories
1. In May, 17 million passengers availed Ryanair flights. This compared favorably with the April figure of 16 million and the May 2022 figure of 15.4 million. Owing to upbeat traffic, load factor (percentage of seats filled by passengers) was as high as 94% in May compared with 92% a year ago. RYAAY, currently carrying a Zacks Rank #3 (Hold), operated more than 94,400 flights in May.You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
AAL was also in the news recently, courtesy of management’s decision to lift the second-quarter 2023 earnings per share forecast. That update was covered in detail in our previous week’s write-up.
2. In May, consolidated revenue passenger kilometers (a measure of air traffic) and available seat kilometers (a measure of capacity) increased 13.1% and 14.9%, respectively, on a year-over-year basis. Load factor was 76.1%. The number of flight departures at GOL in May registered a 20.7% year-over-year increase.
Domestic departures, accounting for more than 95% of total departures during the month, grew 19.3% on a year-over-year basis. On the domestic front, the number of seats increased 19.5% in May. International departures surged 66.9% in May on a year-over-year basis. The consolidated passenger on board metric rose 20.1% year over year.
3. Owing to the buoyant air travel demand scenario, IATA now expects the industry to generate a net profit of $9.8 billion in 2023 compared with $4.7 billion estimated in December last year. The top line in 2023 is now anticipated to be $803 billion compared with the previous estimate of $779 billion. The revised revenue forecast indicates a 9.7% increase from the 2022 actuals. In the event of the revenue forecast coming true, 2023 would be the first year since 2019 (pre-pandemic) when total revenues for airlines across the globe would exceed $800 billion. Notably, revenues were $838 billion in 2019.
Passenger revenues are the biggest driver of the rosy projection for 2023. Per IATA, passenger revenues in 2023 are now anticipated to be $546 billion compared with the previous estimate of $522 billion. The revised revenue forecast indicates a 27% increase from the 2022 actuals.
4. American Airlines has decided to charge $75 for the first checked bag for passengers who booked the cheapest tickets (Basic Economy) on several long-distance flights, including those flying to Israel, Australia and India, among others. Passengers will be charged $100 for the second bag, $200 for the third bag and so on. This change has come into effect from Jun 7.
5 JetBlue has decided to serve two more destinations, Belize and St. Kitts, as part of the attempt to expand its network in the Caribbean. JetBlue will offer nonstop flights (thrice a week: Tuesdays, Thursdays and Sundays) from New York’s John F. Kennedy International Airport (JFK) to Robert Llewellyn Bradshaw International Airport in St. Kitts from Nov 2. Non-stop flights from JFK to Belize City will take to the skies (on Mondays, Wednesdays, and Saturdays) from Dec 6.
Performance
The following table shows the price movement of the major airline players over the past week and during the last six months.
Image Source: Zacks Investment Research
The table above shows that all airline stocks traded in the green over the past week, resulting in the NYSE ARCA Airline Index gaining 4.2% to $69.37. Over the course of the past six months, the NYSE ARCA Airline Index has appreciated 17.4%.
What’s Next in the Airline Space?
Stay tuned for the usual news updates in the space.
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Airline Stock Roundup: IATA's Bullish Forecast for 2023 Profit, GOL, RYAAY in Focus
In the past week, European carrier Ryanair Holdings (RYAAY - Free Report) and Latin Americas’ Gol Linhas’ reported May traffic. The numbers were aided by an upbeat scenario with respect to air travel demand. Also, owing to the buoyant air travel demand scenario, International Air Transport Association or IATA doubled its 2023 net profit projection for airlines across the globe.
American Airlines (AAL - Free Report) was another news-maker courtesy of management’s decision to introduce an additional bag fee on transpacific flights. JetBlue Airways (JBLU - Free Report) made an expansion-related update in the past week.
Recap of the Past Week’s Most Important Stories
1. In May, 17 million passengers availed Ryanair flights. This compared favorably with the April figure of 16 million and the May 2022 figure of 15.4 million. Owing to upbeat traffic, load factor (percentage of seats filled by passengers) was as high as 94% in May compared with 92% a year ago. RYAAY, currently carrying a Zacks Rank #3 (Hold), operated more than 94,400 flights in May.You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
AAL was also in the news recently, courtesy of management’s decision to lift the second-quarter 2023 earnings per share forecast. That update was covered in detail in our previous week’s write-up.
2. In May, consolidated revenue passenger kilometers (a measure of air traffic) and available seat kilometers (a measure of capacity) increased 13.1% and 14.9%, respectively, on a year-over-year basis. Load factor was 76.1%. The number of flight departures at GOL in May registered a 20.7% year-over-year increase.
Domestic departures, accounting for more than 95% of total departures during the month, grew 19.3% on a year-over-year basis. On the domestic front, the number of seats increased 19.5% in May. International departures surged 66.9% in May on a year-over-year basis. The consolidated passenger on board metric rose 20.1% year over year.
3. Owing to the buoyant air travel demand scenario, IATA now expects the industry to generate a net profit of $9.8 billion in 2023 compared with $4.7 billion estimated in December last year. The top line in 2023 is now anticipated to be $803 billion compared with the previous estimate of $779 billion. The revised revenue forecast indicates a 9.7% increase from the 2022 actuals. In the event of the revenue forecast coming true, 2023 would be the first year since 2019 (pre-pandemic) when total revenues for airlines across the globe would exceed $800 billion. Notably, revenues were $838 billion in 2019.
Passenger revenues are the biggest driver of the rosy projection for 2023. Per IATA, passenger revenues in 2023 are now anticipated to be $546 billion compared with the previous estimate of $522 billion. The revised revenue forecast indicates a 27% increase from the 2022 actuals.
4. American Airlines has decided to charge $75 for the first checked bag for passengers who booked the cheapest tickets (Basic Economy) on several long-distance flights, including those flying to Israel, Australia and India, among others. Passengers will be charged $100 for the second bag, $200 for the third bag and so on. This change has come into effect from Jun 7.
5 JetBlue has decided to serve two more destinations, Belize and St. Kitts, as part of the attempt to expand its network in the Caribbean. JetBlue will offer nonstop flights (thrice a week: Tuesdays, Thursdays and Sundays) from New York’s John F. Kennedy International Airport (JFK) to Robert Llewellyn Bradshaw International Airport in St. Kitts from Nov 2. Non-stop flights from JFK to Belize City will take to the skies (on Mondays, Wednesdays, and Saturdays) from Dec 6.
Performance
The following table shows the price movement of the major airline players over the past week and during the last six months.
Image Source: Zacks Investment Research
The table above shows that all airline stocks traded in the green over the past week, resulting in the NYSE ARCA Airline Index gaining 4.2% to $69.37. Over the course of the past six months, the NYSE ARCA Airline Index has appreciated 17.4%.
What’s Next in the Airline Space?
Stay tuned for the usual news updates in the space.