The past week saw airline heavyweights like United Continental Holdings (UAL Quick QuoteUAL - Free Report) , JetBlue Airways (JBLU Quick QuoteJBLU - Free Report) and Delta Air Lines (DAL Quick QuoteDAL - Free Report) making presentations at the JPMorgan Aviation, Transportation & Industrials Conference.

Apart from the presentations, the past week saw premier trade organization – Airlines for America (‘A4A’) – making a positive forecast for the U.S. carriers. These companies are expected to profit considerably this spring (Mar 1– Apr 30) as travel demand is projected to increase 4%.

Also, the Bureau of Transportation Services revealed data on air fares for February. Furthermore, Spirit Airlines (SAVE Quick QuoteSAVE - Free Report) grabbed headlines by virtue of its disappointing forecast for first-quarter 2017 unit revenues.

On the price front, the NYSE ARCA Airline index gained 2.13% to $106.89 over the last five trading days.

(Read the last Airline Stock Roundup for Mar 15, 2017).

Recap of the Past Week’s Most Important Stories

1. At the above conference, United Continental raised its consolidated capacity guidance alongside trimming its view for Cost Per Available Seat Mile (CASM) for full-year 2017. The carrier now expects consolidated capacity in the band of 2.5–3.5% (the previous guidance had hinted at growth in the band of 1–2%). CASM is now expected to increase in the range of 5.6–7.2% compared with the previous projection of 6.6–8.2% (Read more: United Continental Revises 2017 CASM & Capacity Views).

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

2. According to a forecast made by A4A, approximately 145 million passengers are expected to opt for air travel in spring. In fact, the spring of 2017 is predicted to be the busiest one of all times for American carriers in terms of air travel. The forecast is of approximately 2.4 million fliers per day during the period, up 89,000 on a daily basis from the comparable figure last year (Read more: Will U.S. Carriers Fly High During Spring Travel Season?).

3. According to data released by the Bureau of Transportation Services, airfares climbed 4.2% month over month in Feb 2017. In fact, the February reading was up 2.4% from Jan 2017 (on a seasonally adjusted basis).  Improvement in oil prices increases the scope to raise ticket prices, thereby boosting revenues (Read more: Air Fares Continue to Rise: What's Ahead for Carriers?).

 4. Joining the likes of American Airlines Group (AAL Quick QuoteAAL - Free Report) and Southwest Airlines (LUV Quick QuoteLUV - Free Report) , Miramar, FL-based Spirit Airlines trimmed its forecast for first-quarter 2017 unit revenues. The low-cost carrier now expects the current quarter total revenue per available seat mile (TRASM: a key measure of unit revenues) to decline in the band of 4–5% (old guidance was of a decline of approximately 2.5% year over year). The sharp decline in the metric is expected due to the Easter holiday shift. TRASM, however, is projected to display year-over-year growth in the second quarter.

5. In a bid to expand, Delta Air Lines announced plans to add three daily flights to Chicago's O'Hare International Airport from Seattle. Through this move, Delta aims to expand further at Seattle, where it competes primarily with Alaska Air Group (ALK Quick QuoteALK - Free Report) (Read more: Delta Air Lines to Connect Seattle & Chicago Starting June).

Delta, at the above presentation, rendered a bullish projection about business yields. The Atlanta, GA-based carrier said that the measure, although lagging ‘historical levels”, has shown steady improvement. The carrier further said that it has reduced its debt levels by $3 billion in the 2013–2016 period. Moreover, it remains committed to rewarding shareholders through dividends and buybacks. JetBlue, which is also trying to reduce its debt levels, said in its presentation that it expects to realize structural cost savings in the band of $250–$350 million by 2020.

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 airline stocks exhibited a mixed trend over the last five trading days. Over the course of six months, most airline stocks have gained, leading the NYSE ARCA Airline Index to appreciate 19.72%. Shares of Alaska Air Group appreciated the most (39.5%) during the period on the back of its acquisition of Virgin America in Dec 2016.

What's Next in the Airline Space?

Stay tuned for usual news updates in the space.

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