The past week saw the creation of the fifth-largest airline in the U.S. (in terms of passenger traffic) as Alaska Air Group (ALK Quick QuoteALK - Free Report) completed the buyout of Virgin America. The completion of the merger has enabled Alaska Air Group to significantly expand its presence, particularly in the West Coast. The deal also gave the carrier greater access to key cities across the U.S.

Apart from the deal completion, Delta Air Lines (DAL Quick QuoteDAL - Free Report) grabbed headlines by virtue of its bullish investor day presentation. We note that the carrier is leaving no stone unturned to expand further in Seattle. Furthermore, Alaska Air and Delta have mutually agreed to end their code-sharing deal from May 1, 2017. Additionally, website issues at Southwest Airlines (LUV Quick QuoteLUV - Free Report) and the disappointing reading on November airfares drew attention.

 (Read the last  Airline Stock Roundup for Dec 14, 2016).

Recap of the Past Week’s Most Important Stories

1. Alaska Air Group expanded significantly by acquiring Virgin America. Following the completion of the acquisition, the merged entity gained access to most of the West Coast hubs (Seattle, Portland, Anchorage, San Francisco and Los Angeles). It will also be serving the maximum number of non-stop destinations from the West Coast. The merged entity will provide 1,200 departure options per day to 118 destinations across the U.S., Mexico, Canada, Costa Rica and Cuba. (Read more: Alaska Air Group Buys Virgin America: What's Ahead?).

2. Shares of Delta were positively impacted by the carrier’s bullish presentation at its investor day. The carrier issued an improved outlook for passenger revenue per available seat miles (PRASM: a key measure of unit revenue) for the current quarter and expects the metric to decline by approximately 3% (earlier outlook had estimated a decline in the band of 3% to 5%). Delta now expects fourth-quarter operating margin in the band of 10.5% to 11% (earlier outlook had projected the metric in the band of 9.5% to 10.5%) (Read more: Delta Air Lines Up on Bullish Investor Day Update).

3. According to data released by the Bureau of Transportation Services, average airfares (adjusted) in the U.S. in November fell 1.3% from the comparable figure in October. The November reading followed the 2.2% month-over-month decline in October. Moreover, airfares decreased 6.6% (unadjusted) in Nov 2016 on a year-over-year basis (Read more: Airfares Continue to Decline: What Awaits Airlines in 2017?).

4. According to a Reuters report, American Airlines Group (AAL Quick QuoteAAL - Free Report) won a favorable verdict in a case against Sabre Corp. (SABR Quick QuoteSABR - Free Report) . The carrier was awarded $5.1 million by the Manhattan federal jury, and the sum is to be automatically increased to $15.3 million under the federal antitrust law, according to the report. The antitrust lawsuit was filed by US Airways in 2011. American Airlines and US Airways merged in 2013, leading to the formation of American Airlines Group. US Airways had accused Sabre Corp. – a leading technology provider to the global travel industry – of charging exorbitant booking fees and harming competition.

5. Delta and Alaska Air Group have decided mutually to call-off their codesharing partnership from May 1, 2017. Dwindling revenues from the pact have been cited as one of the main reasons for ending the deal. With revenues already declining from the pact, Alaska Air expects minimal impact due to the deal termination. In fact, the Seattle, WA-based carrier to forego revenues in the range of $5 million to $10 million in 2017. Although the codesharing deal between the carriers will end, the interline agreement would continue to exist (Read more: Delta, Alaska Air to Terminate Codeshare Tie-up Next Year). Both Alaska Air and Delta carry a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

6. Technical glitches are the latest menace for carriers. During the course of the year, some of the biggest airlines have been adversely impacted by technological issues. Dallas-based low-cost carrier Southwest Airlines was the latest victim of disruption in operations due to technological failure.

The timing could not be worse as it comes during the busy holiday period, just a few days prior to Christmas. Apparently, the low-cost carrier’s website crashed on Dec 20, creating problems in booking and flight check-in procedures. According to a usatoday report, the carrier is working on resolving the issue. As technological infrastructure constitutes a key expense for airline companies, the profitability of carriers could be affected in the event of such malfunctions.

Performance

The following table shows the price movement of the major airline players over the past week and during the last 6 months. 

The table above shows that majority of the airline stocks traded in the green over the past week leading to the NYSE ARCA Airline index gaining 1.91% to $114.23. Shares of Hawaiian Holdings (HA Quick QuoteHA - Free Report) appreciated the most (6.68%). Shares of Gol Linhas depreciated the most (11.84%). Over the course of six months, the NYSE ARCA Airline index appreciated 37.7%.

What's Next in the Airline Space?

With Christmas only a few days away, carriers are leaving no stone unturned to meet the travel rush. Updates on that front will be keenly awaited. With Alaska Air having completed the Virgin America acquisition, news pertaining to the progress of the integration process are also expected.

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