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Airline Stock Roundup: AAL, LUV Beat on Q4 Earnings, JBLU Misses, ALK & HA Meet

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The past week in the airline space was all about numbers, with several airline companies like American Airlines Group (AAL - Free Report) , Southwest Airlines (LUV - Free Report) , Hawaiian Holdings (HA - Free Report) and JetBlue Airways Corp. (JBLU - Free Report) reporting their respective fourth-quarter 2017 earnings results.

Notably, American Airlines and Southwest Airlines impressed the most as both companies posted better-than-expected earnings per share and revenues. Moreover, both metrics improved on a year-over-year basis. Strong demand for air travel aided results.

On the contrary, JetBlue disappointed investors with its below-par results. Not only did this low-cost carrier report lower-than-expected earnings per share but the bottom line decreased significantly on a year-over-year basis due to high costs.

Even though Alaska Air Group (ALK - Free Report) , like Hawaiian Holdings, reported in line earnings, the carrier came out with an investor-friendly announcement of a 7% dividend hike.

On the price front, the NYSE ARCA Airline Index declined 3.7% to $117.95 over the past five trading days. This is because the sector continues to feel the heat of United Continental’s (UAL - Free Report) Jan 23 commentary on capacity expansion.

Transportation - Airline Industry 5YR % Return

 

Transportation - Airline Industry 5YR % Return

 

(Read the last Airline Stock Roundup for Jan 24, 2018).

Recap of the Past Week’s Most Important Stories

1. American Airlines’ fourth-quarter 2017 earnings (excluding 41 cents from non-recurring items) of 95 cents per share surpassed the Zacks Consensus Estimate by 3 cents. The bottom line increased 3% on a year-over-year basis despite higher costs. Also, revenues of $10,600 million were 8.3% above the year-ago figure, outpacing the Zacks Consensus Estimate of $10,581.1 million. Total revenue per available seat miles (TRASM: a key measure of unit revenue) improved 5.6% to 15.74 cents in the reported quarter (Read more: American Airlines Q4 Earnings Top Estimates, Up Y/Y) .

American Airlines carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

2 Southwest Airlines’ earnings per share (excluding $2.41 from non-recurring items) of 77 cents topped the Zacks Consensus Estimate of 76 cents. The bottom line increased 4.1% on a year-over-year basis. Operating revenues of $5,274 million surpassed the consensus estimate of $5,242.1 million and also improved 3.9% year over year. Passenger revenues accounted for bulk (89.8%) of the same (Read more: Southwest Airlines Beats on Q4 Earnings & Revenues).

3. JetBlue’s earnings (excluding $1.76 from non-recurring items) of 32 cents per share, fell short of the Zacks Consensus Estimate of 34 cents. The bottom line decreased 36% on a year-over-year basis due to high costs. Meanwhile, operating revenues of $1,756 million matched the Zacks Consensus Estimate. Operating cost per available seat mile (CASM) was up 10.8% to 11.29 cents in the reported quarter. Excluding fuel, the metric climbed 8.1% to 8.63 cents backed by the rise in labor costs (Read more: JetBlue Q4 Earnings Miss Estimates, Decrease Y/Y).

4. Hawaiian Holdings’ earnings per share (excluding $2.19 from non-recurring items) of $1.10 were in line with the Zacks Consensus Estimate. Quarterly revenues of $686.5 million marginally fell short of the consensus mark. While the bottom line declined 14.1% due to high costs, the top line increased 8.5% on a year-over-year basis.

Operating revenue per available seat mile (RASM) in the reported quarter climbed 3.3% year over year. However, the metric is projected to be down 0.5% to up 2.5% on a year-over-year basis in the first quarter of 2018.

Cost per available seat mile (CASM), excluding fuel, is anticipated to rise between 3.5% and 6.5% in the first quarter while the same is projected to be down 0.5% to up 2.5% in 2018. While fuel cost per gallon (economic) is projected in the band of $1.90-$2 for the first quarter of 2018, the metric is expected between $1.97 and $2.07 for the current year.

5. Alaska Air Group’s fourth-quarter 2017 earnings (excluding $2.14 from non-recurring items) of 83 cents came in line with the Zacks Consensus Estimate. The bottom line plunged 46.79% on a year-over-year basis. Revenues came in at $1,962 million, marginally above the consensus mark of $1,961.8 million. The top line also improved 28.7% on a year-over-year basis (Read more: Alaska Air Group Q4 Earnings In Line, Decline Y/Y) .

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 majority of the airline stocks traded in the red over the past week. Shares of United Continental have declined the most (12.4%) in the same period. In the last six months, the NYSE ARCA Airline Index has gained 5.6% on the back of impressive gains from GOL Linhas.

What's Next in the Airline Space?

Investors are looking forward to fourth-quarter earnings reports of SkyWest and Spirit Airlines (SAVE - Free Report) on Feb 1 and Feb 6, respectively.

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