The past week saw key airline players like Delta Air Lines (DAL Quick QuoteDAL - Free Report) , American Airlines Group (AAL Quick QuoteAAL - Free Report) and JetBlue Airways Corporation (JBLU Quick QuoteJBLU - Free Report) revealing updates on their intention to add additional flights in a bid to expand their presence.

On a more sombre note, the week also saw two terror attacks on two Spanish cities that claimed multiple lives apart from injuring many. Naturally, travel-focused stocks, which include airline players, lost value in the aftermath.

According to many market watchers, the impact of the terror attacks in Spain is likely to be short term. This is in keeping with the trend that market weakness resulting from such anti-social incidents is usually short lived, especially when the frequency of occurrence is rapid as has been the case of late.

In another major development, Warren Buffett’s Berkshire Hathaway reduced its stake in three major U.S. carriers — Delta, American Airlines and United Continental Holdings (UAL Quick QuoteUAL - Free Report) — in the second quarter of 2017. On the traffic front, Latin American carrier Copa Holdings (CPA Quick QuoteCPA - Free Report) unveiled its traffic data for the month of July.

On the price front, the NYSE ARCA Airline Index declined 4.2% to $106.1 over the past week due to the terror attacks in Spain apart from the market pullback following concerns pertaining to recent actions of the Trump administration. 

Transportation - Airline Industry 5YR % Return

 

Transportation - Airline Industry 5YR % Return

(Read the last Airline Stock Roundup for Aug 16, 2017).

Recap of the Past Week’s Most Important Stories

1. Delta has announced plans to begin flights to Lagos, Nigeria from the airline’s New York-JFK hub. Scheduled to operate thrice a week, the service is expected to start from Mar 24, 2018 and will complement the existing one to Lagos from Atlanta. The current flights from Atlanta ply four times a week. We note that Delta already has an impressive presence in Africa, serving four cities (read more: Delta Air Lines to Launch Flights to Lagos From New York).

2. American Airlines has announced new flights to Europe, catering to high customer demand for Europe travel during summer. The carrier will offer special summer services to Budapest and Prague from Philadelphia, plus an additional one to Venice from Chicago, beginning May 4, 2018. Budapest and Prague will be extra destinations on the airlines’ travel route (read more: American Airlines Summer Service to Expand European Base).

3. In a bid to expand, JetBlue Airways aims to expand its Atlanta service to three of its focus cities. To this end, the low-cost carrier announced the date for commencement of flights connecting Hartsfield – Jackson Atlanta International Airport with three of the airline’s focus cities. The service is expected to start from Mar 8, 2018. Following this, JetBlue will double the number of daily flights in Atlanta (read more: JetBlue Airways to Add New Flights With Focus on Atlanta).

4. On Aug 17, a van went through a crowd of tourists in Barcelona, killing at least 13 and injuring many. Such an inhuman act was followed by a second attack in the coastal town of Cambrils, located approximately 120 kilometers south of Barcelona.

Reportedly, the five terrorists involved in the Cambrils attacks were shot dead by the police. Both the incidents have claimed the lives of at least 14 and have left 130 others severely injured. Such acts of terrorism affected airline stocks as there is a possibility of waning travel demand due to security concerns.

In fact, the timing of the attacks could not have been worse as the three-month period between June and August has been predicted to be the busiest one for U.S. carriers in terms of air travel.

5. Copa Holdings revealed impressive traffic numbers for the month of July. Traffic, measured in revenue passenger miles (RPMS), improved 17.2% year over year 1,913 million. Load factor increased 150 basis points to 87.6%. This was because traffic growth outpaced capacity expansion (15.1%) in the month for the Zacks Rank #3 (Hold) carrier. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

6. According to the 13-F filing by Warren Buffett’s Berkshire Hathaway in the second quarter, the company reduced its stake in three major U.S. carriers. Reportedly, the Omaha, NE-based company reduced its stake in Delta, American Airlines and United Continental by 4.6%, 3.5% and 2.6%, respectively, on a sequential basis. Moreover, the Oracle of Omaha’s investment in low-cost carrier Southwest Airlines Co. (LUV Quick QuoteLUV - Free Report) reportedly remained unchanged.

Performance

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

The table above shows that all airline stocks apart from GOL Linhas and Hawaiian Holdings traded in the red in the past week leading to the NYSE ARCA Airline Index’s significant decline. Longer term, over the last six months, the sector tracker lost 3.4%. Spirit Airlines (SAVE Quick QuoteSAVE - Free Report) was the major laggard during this period, experiencing a 31% price decline.

What's Next in the Airline Space?

With the earnings season over, stay tuned for the usual news updates in the space.

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