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Airline Stock Roundup: Delta-Aeromexico Deal in Focus, GOL Linhas 2017 View and More
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The past week was a relatively quiet one for the airline industry. The week, which had a day less of trading owing to the holiday on Dec 26, saw Delta Air Lines (DAL - Free Report) grabbing headlines as it aims to extend its long-standing partnership with Mexico’s largest airline, Grupo Aeromexico.
Apart from the deal-related update, Delta was also in the news due to its agreement with The Boeing Company (BA - Free Report) , pertaining to the cancellation of an order in excess of $4 billion for eighteen 787-8 Dreamliners. The past week also saw Latin American carrier GOL Linhas revealing a disappointing forecast for 2017. JetBlue Airways Corp. (JBLU - Free Report) also drew attention by virtue of its intention to expand its presence in Bermuda.
1. The partnership between Delta and Grupo Aeromexico is likely to be expanded. A major hurdle to that end was removed with both companies accepting the conditions laid down by the U.S. Department of Transportation. The order grants antitrust immunity to the carriers, thereby setting the stage for the formation of the largest trans-border association between Mexico and the U.S. (Read more: Delta Air Lines and Aeromexico to Extend Partnership).
On a separate note, Delta apparently cancelled an order for eighteen 787 Dreamliner aircraft. The carrier, which purchased Northwest Airlines in 2008, inherited the order as part of the acquisition. The order was placed in 2005 by the erstwhile Northwest Airlines. The Atlanta, GA-based carrier will continue to take delivery of 737-900ER planes through 2019 as it aims to modernize its fleet.
2. Consistent with the struggling Brazilian economy, GOL Linhas unveiled a preliminary forecast for 2017. The company expects earnings before interest and taxes margin – a measure of the company's earnings ability – in the band of 5–7% next year. Moreover, the company, which projects an average fleet size of 115, expects capacity (available seat kilometers) to either remain flat or decline about 2% on a year-over-year basis. (Read more: GOL Linhas Provides 2017 Forecast; Departures to Decline).
3. In a bid to expand its presence further, the Long Island City, NY-based JetBlue Airways recently announced its intention to expand its service to Bermuda. The additional flights will be in operation from May 18, 2017. (Read more: JetBlue on Track to Expand its Presence in Bermuda).
4. In an employee-friendly move, United Continental Holdings (UAL - Free Report) settled a lawsuit that was filed against it in 2015. The carrier was accused of flouting the federal Occupational Safety and Health Act of 1970. Following the resolution, the carrier agreed to install new conveyor belts and undertake other measures at its Newark Liberty International Airport hub in New Jersey to improve safety of its baggage handlers.
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
3.34%
57.96%
UAL
0.26%
91.71%
GOL
11.94%
27.12%
DAL
-0.47%
45.26%
JBLU
-1.68%
41.64%
AAL
-0.35%
81.58%
SAVE
0.94%
38.75%
LUV
0.28%
34.89%
CPA
0.13%
84.21%
ALK
0.23%
59.65%
The table above shows that majority of the airline stocks traded in the green over the past week, although the gains were subdued in nature. The NYSE ARCA Airline Index inched up 0.35% to $112.84 over the past week. Over the course of six months, the NYSE ARCA Airline Index appreciated 43.1%. Shares of United Continental Holdings appreciated the most (91.71%) during the period.
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Airline Stock Roundup: Delta-Aeromexico Deal in Focus, GOL Linhas 2017 View and More
The past week was a relatively quiet one for the airline industry. The week, which had a day less of trading owing to the holiday on Dec 26, saw Delta Air Lines (DAL - Free Report) grabbing headlines as it aims to extend its long-standing partnership with Mexico’s largest airline, Grupo Aeromexico.
Apart from the deal-related update, Delta was also in the news due to its agreement with The Boeing Company (BA - Free Report) , pertaining to the cancellation of an order in excess of $4 billion for eighteen 787-8 Dreamliners. The past week also saw Latin American carrier GOL Linhas revealing a disappointing forecast for 2017. JetBlue Airways Corp. (JBLU - Free Report) also drew attention by virtue of its intention to expand its presence in Bermuda.
Transportation - Airline Industry 5YR % Return
Transportation - Airline Industry 5YR % Return
(Read the last Airline Stock Roundup for Dec 21, 2016).
Recap of the Past Week’s Most Important Stories
1. The partnership between Delta and Grupo Aeromexico is likely to be expanded. A major hurdle to that end was removed with both companies accepting the conditions laid down by the U.S. Department of Transportation. The order grants antitrust immunity to the carriers, thereby setting the stage for the formation of the largest trans-border association between Mexico and the U.S. (Read more: Delta Air Lines and Aeromexico to Extend Partnership).
On a separate note, Delta apparently cancelled an order for eighteen 787 Dreamliner aircraft. The carrier, which purchased Northwest Airlines in 2008, inherited the order as part of the acquisition. The order was placed in 2005 by the erstwhile Northwest Airlines. The Atlanta, GA-based carrier will continue to take delivery of 737-900ER planes through 2019 as it aims to modernize its fleet.
2. Consistent with the struggling Brazilian economy, GOL Linhas unveiled a preliminary forecast for 2017. The company expects earnings before interest and taxes margin – a measure of the company's earnings ability – in the band of 5–7% next year. Moreover, the company, which projects an average fleet size of 115, expects capacity (available seat kilometers) to either remain flat or decline about 2% on a year-over-year basis. (Read more: GOL Linhas Provides 2017 Forecast; Departures to Decline).
3. In a bid to expand its presence further, the Long Island City, NY-based JetBlue Airways recently announced its intention to expand its service to Bermuda. The additional flights will be in operation from May 18, 2017. (Read more: JetBlue on Track to Expand its Presence in Bermuda).
4. In an employee-friendly move, United Continental Holdings (UAL - Free Report) settled a lawsuit that was filed against it in 2015. The carrier was accused of flouting the federal Occupational Safety and Health Act of 1970. Following the resolution, the carrier agreed to install new conveyor belts and undertake other measures at its Newark Liberty International Airport hub in New Jersey to improve safety of its baggage handlers.
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
3.34%
57.96%
UAL
0.26%
91.71%
GOL
11.94%
27.12%
DAL
-0.47%
45.26%
JBLU
-1.68%
41.64%
AAL
-0.35%
81.58%
SAVE
0.94%
38.75%
LUV
0.28%
34.89%
CPA
0.13%
84.21%
ALK
0.23%
59.65%
The table above shows that majority of the airline stocks traded in the green over the past week, although the gains were subdued in nature. The NYSE ARCA Airline Index inched up 0.35% to $112.84 over the past week. Over the course of six months, the NYSE ARCA Airline Index appreciated 43.1%. Shares of United Continental Holdings appreciated the most (91.71%) during the period.
What's Next in the Airline Space?
We expect carriers like Delta Air Lines, Alaska Air Group (ALK - Free Report) and Hawaiian Holdings, Inc. (HA - Free Report) to unveil their respective traffic numbers for December in the coming days. Hawaiian Holdings sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
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