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Airline Stock Roundup: Hawaiian Holdings' Q4 Earnings Miss; Technical Glitch at United Continental
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The past week saw Hawaiian Holdings Inc. (HA - Free Report) reporting mixed results for the fourth quarter of 2016. While the company reported better-than-expected revenues, earnings fell short of expectations.
On the non-earnings front, passengers at United Continental Holdings (UAL - Free Report) suffered undue harassments when a computer outage threw the carrier’s operations haywire. American Airlines Group (AAL - Free Report) also made it to the headlines due to its announcement that it will start selling Basic Economy tickets next month in select markets.
Additionally, the Bureau of Transportation Services (BTS) revealed that average airfares (adjusted) in the U.S. climbed in Dec 2016 on a month on month basis. This marked the highest monthly increase since Jun 2015.
On the price front, NYSE ARCA Airline Index was almost flat over the past week to $111.12.
1. Hawaiian Holdings’ fourth-quarter adjusted earnings of $1.28 per share were 2 cents below the Zacks Consensus Estimate. Quarterly revenues of $633 million, however, surpassed our expectation of $627.6 million. Higher passenger revenues boosted the top line. Both earnings and revenues increased on a year-over-year basis.
Operating revenue per available seat mile in the quarter climbed 6% year over year. The metric is projected to grow in the band of 4–7% in the first quarter of 2017. Capacity is projected to grow by 2.5–4.5% in the first quarter. Cost per available seat miles excluding fuel is also projected to rise significantly in the quarter for this Zacks Rank # 1 (Strong Buy) carrier. You can see the complete list of today’s Zacks #1 Rank stocks here.
2. According to data released by the BTS, average airfares (unadjusted) fell 4.7% in Dec 2016 from the previous month. However, on an adjusted basis, fares in December improved from November. Fares have reportedly been increased by the likes of JetBlue Airways (JBLU - Free Report) and Alaska Air Group (ALK - Free Report) in January.
3. The emergence and the subsequent growth and success of low-cost carriers like Spirit Airlines, Inc. (SAVE - Free Report) and Southwest Airlines (LUV - Free Report) have raised concerns for legacy carriers. In a price-sensitive economy, it is not only the survival of the fittest but also of the cheapest. After United Continental, American Airlines announced the introduction of “Basic Economy Fares” to attract more and more budget conscious passengers.
The carrier said that Basic Economy tickets (which are the cheapest at American Airlines) will be on sale from Feb 10. American Airlines has imposed certain restrictions, such as prohibition on carrying full size carry-on bag, on buyers of the tickets.
4 Technical glitches are the latest problems for carriers. In the last one year, some of the biggest airlines were adversely impacted by technological issues. United Continental was the latest victim of disruption in operations due to technological failure. The glitch on Jan 22 caused the cancellation/delay of many flights. The issue, however, has been resolved. As technological infrastructure constitutes a key expense for airline companies, the profitability of carriers could be affected in the event of such malfunctions.
5. In a move to aid football fans, JetBlue Airways announced that it will operate additional flights to Houston, TX. JetBlue’s decision will enable the fans to reach Houston in time for the Big Game. The flights are also equipped with all modern entertainment facilities like live TV
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
-4.9%
21.52%
UAL
0.52%
56.1%
GOL
11.62%
14.84%
DAL
-1.1%
26.9%
JBLU
0.73%
23.96%
AAL
1.41%
32.8%
SAVE
0.62%
29.28%
LUV
-1.43%
32.9%
CPA
2.17%
46.11%
ALK
-0.6%
42%
The table above shows that majority of the airline stocks traded in the green in the past week, although the gains were subdued in nature. Over the course of six months, the NYSE ARCA Airline Index appreciated 25.8%. Shares of United Continental Holdings appreciated the most (56.1%) during the period.
What's Next in the Airline Space?
The coming week will be flooded by earnings reports from major players in the airline sector like American Airlines (Jan 27), Southwest Airlines (Jan 26) and JetBlue Airways (Jan 26).
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Airline Stock Roundup: Hawaiian Holdings' Q4 Earnings Miss; Technical Glitch at United Continental
The past week saw Hawaiian Holdings Inc. (HA - Free Report) reporting mixed results for the fourth quarter of 2016. While the company reported better-than-expected revenues, earnings fell short of expectations.
On the non-earnings front, passengers at United Continental Holdings (UAL - Free Report) suffered undue harassments when a computer outage threw the carrier’s operations haywire. American Airlines Group (AAL - Free Report) also made it to the headlines due to its announcement that it will start selling Basic Economy tickets next month in select markets.
Additionally, the Bureau of Transportation Services (BTS) revealed that average airfares (adjusted) in the U.S. climbed in Dec 2016 on a month on month basis. This marked the highest monthly increase since Jun 2015.
On the price front, NYSE ARCA Airline Index was almost flat over the past week to $111.12.
Transportation - Airline Industry 5YR % Return
Transportation - Airline Industry 5YR % Return
(Read the last Airline Stock Roundup for Jan 18, 2017).
Recap of the Past Week’s Most Important Stories
1. Hawaiian Holdings’ fourth-quarter adjusted earnings of $1.28 per share were 2 cents below the Zacks Consensus Estimate. Quarterly revenues of $633 million, however, surpassed our expectation of $627.6 million. Higher passenger revenues boosted the top line. Both earnings and revenues increased on a year-over-year basis.
Operating revenue per available seat mile in the quarter climbed 6% year over year. The metric is projected to grow in the band of 4–7% in the first quarter of 2017. Capacity is projected to grow by 2.5–4.5% in the first quarter. Cost per available seat miles excluding fuel is also projected to rise significantly in the quarter for this Zacks Rank # 1 (Strong Buy) carrier. You can see the complete list of today’s Zacks #1 Rank stocks here.
2. According to data released by the BTS, average airfares (unadjusted) fell 4.7% in Dec 2016 from the previous month. However, on an adjusted basis, fares in December improved from November. Fares have reportedly been increased by the likes of JetBlue Airways (JBLU - Free Report) and Alaska Air Group (ALK - Free Report) in January.
3. The emergence and the subsequent growth and success of low-cost carriers like Spirit Airlines, Inc. (SAVE - Free Report) and Southwest Airlines (LUV - Free Report) have raised concerns for legacy carriers. In a price-sensitive economy, it is not only the survival of the fittest but also of the cheapest. After United Continental, American Airlines announced the introduction of “Basic Economy Fares” to attract more and more budget conscious passengers.
The carrier said that Basic Economy tickets (which are the cheapest at American Airlines) will be on sale from Feb 10. American Airlines has imposed certain restrictions, such as prohibition on carrying full size carry-on bag, on buyers of the tickets.
4 Technical glitches are the latest problems for carriers. In the last one year, some of the biggest airlines were adversely impacted by technological issues. United Continental was the latest victim of disruption in operations due to technological failure. The glitch on Jan 22 caused the cancellation/delay of many flights. The issue, however, has been resolved. As technological infrastructure constitutes a key expense for airline companies, the profitability of carriers could be affected in the event of such malfunctions.
5. In a move to aid football fans, JetBlue Airways announced that it will operate additional flights to Houston, TX. JetBlue’s decision will enable the fans to reach Houston in time for the Big Game. The flights are also equipped with all modern entertainment facilities like live TV
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
-4.9%
21.52%
UAL
0.52%
56.1%
GOL
11.62%
14.84%
DAL
-1.1%
26.9%
JBLU
0.73%
23.96%
AAL
1.41%
32.8%
SAVE
0.62%
29.28%
LUV
-1.43%
32.9%
CPA
2.17%
46.11%
ALK
-0.6%
42%
The table above shows that majority of the airline stocks traded in the green in the past week, although the gains were subdued in nature. Over the course of six months, the NYSE ARCA Airline Index appreciated 25.8%. Shares of United Continental Holdings appreciated the most (56.1%) during the period.
What's Next in the Airline Space?
The coming week will be flooded by earnings reports from major players in the airline sector like American Airlines (Jan 27), Southwest Airlines (Jan 26) and JetBlue Airways (Jan 26).
Zacks' Best Investment Ideas for Long-Term Profit
Today you can gain access to long-term trades with double and triple-digit profit potential rarely available to the public. Starting now, you can look inside our stocks under $10, home run and value stock portfolios, plus more. Want a peek at this private information? Click here >>