The past week saw a low-cost US carrier, Frontier Airlines, make significant progress with its initial public offering (IPO) plans. To this end, the Denver, CO-based carrier filed a registration statement with the U.S. Securities and Exchange Commission (SEC).

Apart from this, JetBlue Airways (JBLU Quick QuoteJBLU - Free Report) grabbed headlines by virtue of its announcement of expanding its popular Mint service.

Delta Air Lines’ (DAL Quick QuoteDAL - Free Report) issues with respect to passenger unit revenues (PRASM) continued. The Atlanta, GA-based carrier trimmed its first-quarter 2017 forecast for the metric for the second successive month. Alaska Air Group’s (ALK Quick QuoteALK - Free Report) Investor Day presentation also invited attention during the past week.

(Read the last Airline Stock Roundup for Mar 29, 2017).

Recap of the Past Week’s Most Important Stories

1. Frontier Airlines is reportedly aiming to make its trading debut, under the symbol ‘FRNT,’ in the current quarter itself. Frontier Airlines is the latest name in the low-cost segment of the U.S. aviation industry seeking to go public. The last U.S. carrier to go public was Virgin America.

The carrier, also belonging to the low-cost segment, made its trading debut in late 2014. Virgin America was acquired late last year by Alaska Air Group, another low-cost carrier. Another successful low-cost carrier, Spirit Airlines (SAVE Quick QuoteSAVE - Free Report) , went public in 2011 (Read more: Frontier Airlines Nears IPO, Files Papers with SEC).

2. Delta’s shares were adversely impacted when it announced that passenger unit revenues for the first quarter are now expected to decline approximately 0.5% year over year in the first quarter of 2017. Last month, the carrier had estimated the metric to remain flat in the first quarter. The initial guidance issued in January had projected the metric in a range of flat to 2% increase.

We believe that the successive reductions in the guidance are due to the below-par performance of the metric in the first two months of the quarter, especially in January. In the first month of 2017, PRASM had declined 2.5%, mainly due to winter storm Jonas. In February, the metric remained flat on a year-over-year basis.

Delta’s performance with respect to PRASM improved in March, increasing 0.5% on a year-over-year basis. In fact, this was the first time since Nov 2015 that the carrier recorded improvement in the metric. Delta expects to fare well in the second half of 2017. The improving scenario with respect to PRASM is projected to mitigate the adverse impact of rising costs.

Operating margin is still estimated in the range of 10%–11%. The rise in fuel costs is expected to hurt first-quarter results significantly. Fuel costs (inclusive of taxes, transportation and refinery results) per gallon are projected in the band of $1.68–$1.73. Cost per available seat miles (CASM), excluding profit sharing, is expected to increase in the band of 5% to 6% in the first quarter. System capacity is projected to decline approximately 0.5% in the January–March quarter.

Delta unveiled the views alongside its March traffic results. Consolidated traffic – measured in revenue passenger miles (RPMs) – inched up 2.3% year over year to 18.16 billion. On a year-over-year basis, consolidated capacity (or available seat miles/ASMs) expanded 1% to 21.16 billion. Consolidated load factor, or percentage of seats filled by passengers, improved 100 basis points to 85.8%. This is because traffic growth outweighed capacity expansion in the month. Additionally, the airline recorded an 86.9% on-time performance and 99.5% completion factor for the same month.

3. In a bid to meet the surge in demand, JetBlue Airways announced plans to expand its premium service (Mint). The low-cost carrier intends to operate 70 Mint flights by Dec 31, 2017. In fact, the carrier aims to offer the service for approximately one out of 14 JetBlue operated flights. JetBlue’s Mint service has gained tremendous popularity, particularly among the corporate class, since it was launched. This is mainly because of its affordability in comparison to its peers.

In keeping with its expansion efforts, JetBlue announced the introduction of non-stop flights to Atlanta. The flight from Boston’s Logan International Airport to Hartsfield–Jackson Atlanta International Airport was inaugurated in Mar 30. Atlanta is considered to be the carrier’s 101^st destination (Read more: JetBlue Airways Starts Flight Service to Atlanta) .

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

 4. Alaska Air Group unveiled a bullish long-term view at its Investor Day presentation. The carrier, which acquired Virgin America late last year, said that the integration process is progressing well with major milestones expected to be attained in 2018. Single operating certificate is projected to be available by the Jun 30, 2018.

The single passenger service system is projected to be operation by the end of 2018. The other integration objectives are expected to be attained in the 2019-2020 time frame. The carrier aims to expand further in the coming days. Alaska reiterated that the Virgin America name will likely be done away with sometime in 2019 in a bid to maintain uniformity and ensure better service.

Alaska further said that cost savings targets have increased substantially since announcement. The increased savings are expected to mitigate pressure on the bottom-line due to rising expenses. The carrier further said that it has increased its quarterly dividend payout 200% since inception to the current 30 cents per share.

The company expects to repurchase shares worth $50 million in 2017. It expects to shell out approximately $145 million in dividends this year, up 6.7% over 2016 levels. The carrier is evaluating the composition of its fleet. A decision in this respect is expected by Dec 31, 2017.

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 most airline traded in the red over the past week leading to the NYSE ARCA Airline index declining 2.12% to $109.1 over the past five trading days. Shares of Alaska Air Group depreciated the most (4.73%).

Over the past six months all airline stocks traded in the red with the NYSE ARCA Airline index appreciating 19.24%.

What's Next in the Airline Space?

We expect March traffic reports from the likes of American Airlines Group (AAL Quick QuoteAAL - Free Report) , United Continental Holdings (UAL Quick QuoteUAL - Free Report) and Southwest Airlines (LUV Quick QuoteLUV - Free Report) in the coming days.

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