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Airline Stock Roundup: HA & JBLU Beat on Q3 Earnings, UAL Misses, ALK in Focus
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The past week witnessed earnings releases from key airline players like United Continental Holdings, Inc. (UAL - Free Report) , JetBlue Airways Corporation (JBLU - Free Report) and Hawaiian Holdings, Inc. (HA - Free Report) .
While JetBlue and Hawaiian Holdings reported better-than-expected earnings per share, United Continental fell short on the bottom-line front. While surging fuel costs hurt the bottom-line performance of all the abovementioned US based carriers, impressive passenger revenues driven by the solid demand for air travel bolstered revenues.
Meanwhile, low average air fares (down 3%) apart from high costs resulted in a 7% decline in profit after tax to €1.2 billion at European low-cost carrier Ryanair Holdings plc (RYAAY - Free Report) in the first half of fiscal 2019 (ended Sep 30, 2018). However, a 6% increase in traffic resulted in an 8% rise in revenues in the first six months of fiscal 2019. Moreover, load factor came in at 96%. During the period, the carrier returned €540 million to shareholders through buybacks.
On the non-earnings front, Alaska Air Group, Inc. (ALK - Free Report) announced that it will increase its fees for checked bags. The new fee structure will be applicable from Dec 5, 2018.
1. United Continental’s third-quarter 2018 earnings (on an adjusted basis) of $3.06 per share fell short of the Zacks Consensus Estimate of $3.09. Operating revenues came in at $11,003 million, outpacing the Zacks Consensus Estimate of $10,956.4 million. Moreover, the top-line figure was up 11.2% year over year. (Read more: United Continental's Q3 Earnings Miss, Revenues Beat)
2. JetBlue’s third-quarter 2018 earningsper share (excluding 27 cents from non-recurring items) of 43 cents outpaced the Zacks Consensus Estimate by a penny. However, the bottom line decreased 21.8% on a year-over-year basis primarily owing to higher costs. However, total operating revenues of $2,008 million fell short of the Zacks Consensus Estimate of $2,011.9 million. Nevertheless, the top line increased 10.5% from the year-ago figure. Passenger revenues, which accounted for bulk of the top line (96.7%), improved 10.8% in the quarter under review. Other revenues increased 3.5%. (Read more: JetBlue Q3 Earnings Surpass Estimates, Decrease Y/Y)
3. Ryanair Holdings performed miserably in the second quarter of fiscal 2019, reporting lower-than-expected earnings per share and revenues. The carrier’s earnings (excluding 18 cents from non-recurring items) of $4.42 per share lagged the Zacks Consensus Estimate by 20 cents. Revenues of $3,207.6 million also fell short of the Zacks Consensus Estimate of $3,217.5 million. However, the top and bottom lines improved 8.5% and 1.8%, respectively, on a year-over-year basis.
The carrier expects airfares to decline around 2% in the second half of fiscal 2019. Profit after tax (excluding Laudamotion) in fiscal 2019 is still projected between €1.10 billion and €1.25 billion. The carrier remains concerned about a Brexit-related impact.
4. Hawaiian Holdings’ third-quarter 2018 earnings (excluding 7 cents from non-recurring items) of $1.91 per share outpaced the Zacks Consensus Estimate of $1.73. However, quarterly revenues of $759.1 million fell short of the Zacks Consensus Estimate of $763.6 million. Revenues increased 6% on a year-over-year basis, courtesy of the new accounting standards adopted on Jan 1, 2018. Passenger revenues, which accounted for bulk (91.8%) of the top line, increased 4.3%. Balance came from other sources.
Operating revenue per available seat mile in the reported quarter decreased 2% year over year. The metric is projected to be between down 2.5% and up 0.5% year over year in the final quarter of 2018.
Capacity is projected to grow between 4.5% and 6.5% in the fourth quarter. The metric is expected to increase in the band of 5.5-7.5% for 2018. CASM, excluding fuel, is projected between down 2% and up 1% year over year for the fourth quarter. Fuel cost per gallon (economic) is anticipated to be in the band of $2.20-$2.30 in the fourth quarter. The metric is envisioned in the $2.05-$2.15 band for 2018.
5 Joining the likes of American Airlines Group Inc. (AAL - Free Report) and United Continental, Alaska Air Group have decided to hike baggage fees by $5. The move, aimed at combating the threat posed by rising fuel costs, will see the carrier charging $30 and $40 for the first and second checked bags, respectively.
Price Performance
The following table shows the price movement of the major airline players over the last week and during the past six months.
The table above shows that most airline stocks traded in the red over the past week leading to a 2.7% decrease in the NYSE ARCA Airline Index. Over the course of six months, the sector tracker has decreased 10.2% due to multiple headwinds like high fuel costs.
What's Next in the Airline Space?
Investors will look forward to third-quarter earnings reports from the likes of American Airlines, Alaska Air Group and Southwest Airlines Co. (LUV - Free Report) on Oct 25.
Will You Make a Fortune on the Shift to Electric Cars?
Here's another stock idea to consider. Much like petroleum 150 years ago, lithium power may soon shake the world, creating millionaires and reshaping geo-politics. Soon electric vehicles (EVs) may be cheaper than gas guzzlers. Some are already reaching 265 miles on a single charge.
With battery prices plummeting and charging stations set to multiply, one company stands out as the #1 stock to buy according to Zacks research.
Image: Bigstock
Airline Stock Roundup: HA & JBLU Beat on Q3 Earnings, UAL Misses, ALK in Focus
The past week witnessed earnings releases from key airline players like United Continental Holdings, Inc. (UAL - Free Report) , JetBlue Airways Corporation (JBLU - Free Report) and Hawaiian Holdings, Inc. (HA - Free Report) .
While JetBlue and Hawaiian Holdings reported better-than-expected earnings per share, United Continental fell short on the bottom-line front. While surging fuel costs hurt the bottom-line performance of all the abovementioned US based carriers, impressive passenger revenues driven by the solid demand for air travel bolstered revenues.
Meanwhile, low average air fares (down 3%) apart from high costs resulted in a 7% decline in profit after tax to €1.2 billion at European low-cost carrier Ryanair Holdings plc (RYAAY - Free Report) in the first half of fiscal 2019 (ended Sep 30, 2018). However, a 6% increase in traffic resulted in an 8% rise in revenues in the first six months of fiscal 2019. Moreover, load factor came in at 96%. During the period, the carrier returned €540 million to shareholders through buybacks.
On the non-earnings front, Alaska Air Group, Inc. (ALK - Free Report) announced that it will increase its fees for checked bags. The new fee structure will be applicable from Dec 5, 2018.
(Read the last Airline Stock Roundup for Oct 16, 2018)
Recap of the Past Week’s Most Important Stories
1. United Continental’s third-quarter 2018 earnings (on an adjusted basis) of $3.06 per share fell short of the Zacks Consensus Estimate of $3.09. Operating revenues came in at $11,003 million, outpacing the Zacks Consensus Estimate of $10,956.4 million. Moreover, the top-line figure was up 11.2% year over year. (Read more: United Continental's Q3 Earnings Miss, Revenues Beat)
United Continental currently carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
2. JetBlue’s third-quarter 2018 earningsper share (excluding 27 cents from non-recurring items) of 43 cents outpaced the Zacks Consensus Estimate by a penny. However, the bottom line decreased 21.8% on a year-over-year basis primarily owing to higher costs. However, total operating revenues of $2,008 million fell short of the Zacks Consensus Estimate of $2,011.9 million. Nevertheless, the top line increased 10.5% from the year-ago figure. Passenger revenues, which accounted for bulk of the top line (96.7%), improved 10.8% in the quarter under review. Other revenues increased 3.5%. (Read more: JetBlue Q3 Earnings Surpass Estimates, Decrease Y/Y)
3. Ryanair Holdings performed miserably in the second quarter of fiscal 2019, reporting lower-than-expected earnings per share and revenues. The carrier’s earnings (excluding 18 cents from non-recurring items) of $4.42 per share lagged the Zacks Consensus Estimate by 20 cents. Revenues of $3,207.6 million also fell short of the Zacks Consensus Estimate of $3,217.5 million. However, the top and bottom lines improved 8.5% and 1.8%, respectively, on a year-over-year basis.
The carrier expects airfares to decline around 2% in the second half of fiscal 2019. Profit after tax (excluding Laudamotion) in fiscal 2019 is still projected between €1.10 billion and €1.25 billion. The carrier remains concerned about a Brexit-related impact.
4. Hawaiian Holdings’ third-quarter 2018 earnings (excluding 7 cents from non-recurring items) of $1.91 per share outpaced the Zacks Consensus Estimate of $1.73. However, quarterly revenues of $759.1 million fell short of the Zacks Consensus Estimate of $763.6 million. Revenues increased 6% on a year-over-year basis, courtesy of the new accounting standards adopted on Jan 1, 2018. Passenger revenues, which accounted for bulk (91.8%) of the top line, increased 4.3%. Balance came from other sources.
Operating revenue per available seat mile in the reported quarter decreased 2% year over year. The metric is projected to be between down 2.5% and up 0.5% year over year in the final quarter of 2018.
Capacity is projected to grow between 4.5% and 6.5% in the fourth quarter. The metric is expected to increase in the band of 5.5-7.5% for 2018. CASM, excluding fuel, is projected between down 2% and up 1% year over year for the fourth quarter. Fuel cost per gallon (economic) is anticipated to be in the band of $2.20-$2.30 in the fourth quarter. The metric is envisioned in the $2.05-$2.15 band for 2018.
5 Joining the likes of American Airlines Group Inc. (AAL - Free Report) and United Continental, Alaska Air Group have decided to hike baggage fees by $5. The move, aimed at combating the threat posed by rising fuel costs, will see the carrier charging $30 and $40 for the first and second checked bags, respectively.
Price Performance
The following table shows the price movement of the major airline players over the last week and during the past six months.
The table above shows that most airline stocks traded in the red over the past week leading to a 2.7% decrease in the NYSE ARCA Airline Index. Over the course of six months, the sector tracker has decreased 10.2% due to multiple headwinds like high fuel costs.
What's Next in the Airline Space?
Investors will look forward to third-quarter earnings reports from the likes of American Airlines, Alaska Air Group and Southwest Airlines Co. (LUV - Free Report) on Oct 25.
Will You Make a Fortune on the Shift to Electric Cars?
Here's another stock idea to consider. Much like petroleum 150 years ago, lithium power may soon shake the world, creating millionaires and reshaping geo-politics. Soon electric vehicles (EVs) may be cheaper than gas guzzlers. Some are already reaching 265 miles on a single charge.
With battery prices plummeting and charging stations set to multiply, one company stands out as the #1 stock to buy according to Zacks research.
It's not the one you think.
See This Ticker Free >>