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In the past week, several airline companies like American Airlines Group Inc. (AAL - Free Report) , Southwest Airlines Co. (LUV - Free Report) , Spirit Airlines, Inc. (SAVE - Free Report) , Alaska Air Group, Inc. (ALK - Free Report) and SkyWest, Inc. (SKYW - Free Report) released their respective third-quarter 2018 financial numbers.
Even though all the abovementioned carriers reported better-than-expected earnings per share, high fuel costs limited bottom-line growth. At American Airlines and Alaska Air Group quarterly earnings declined year over year due to rise in fuel costs.
While investors reacted positively to the earnings reports of the likes of American Airlines and Spirit Airlines, the Southwest Airlines stock declined following the earnings release despite the outperformance. With fuel costs already denting profitability, Southwest Airlines’ commentary on the conference call that it expects unit costs (excluding fuel and profit sharing) to increase at least 3% in 2019 disappointed investors and sent the stock tumbling.
1. Spirit Airlines’ third-quarter 2018 earnings per share (excluding 5 cents from non-recurring items) came in at $1.47, surpassing the Zacks Consensus Estimate of $1.39. Moreover, the bottom line soared 56.4% year over year.
The carrier recorded revenues of $904.3 million, marginally beating the Zacks Consensus Estimate of $904.1 million. Also, the top line improved 31.6% year over year owing to 24.6% and 3% rise in passenger segments and operating yields, respectively. (Read more: Spirit Airlines Up on Q3 Earnings & Revenue Beat).
2. American Airlines’ third-quarter 2018 earnings (excluding 39 cents from non-recurring items) of $1.13 per share exceeded the Zacks Consensus Estimate of $1.12. Revenues totaled $11,559 million, which outpaced the Zacks Consensus Estimate of $11,551.6 million. The top line also improved on a year-over-year basis. Strong demand for air travel led to this year-over-year improvement in the top line. For 2018, the carrier still expects adjusted earnings per share between $4.50 and $5. (Read more: American Airlines Q3 Earnings Top, Dip Y/Y on Cost Woes).
3. Southwest Airlines’ third-quarter 2018 earnings of $1.08 per share came well ahead of the Zacks Consensus Estimate by 2 cents. Despite higher fuel prices, the bottom line improved 22.7% on a year-over-year basis. Results were aided by stronger revenues.
Operating revenues of $5,575 million outpaced the Zacks Consensus Estimate of $5,557 million. The top line also rose year over year. Passenger revenues, accounting for bulk (93.2%) of the top line, increased 5.1% year over year. Economic fuel costs, which increased 8.7% to $2.25 per gallon in the third quarter, are estimated to be between $2.30 and $2.35 per gallon in the final quarter of 2018. (Read more: Southwest Q3 Earnings Top Estimates on Higher Revenues).
4. Alaska Air Group reported third-quarter 2018 earnings per share (excluding 16 cents from non-recurring items) of $1.91, which exceeded the Zacks Consensus Estimate of $1.80.
Revenues came in at $2,212 million surpassing the Zacks Consensus Estimate of $2,203.9 million. Moreover, the top line increased 5% on a year-over-year basis. Passenger revenues, accounting for a bulk of the top line (92.4%), were up 4% year over year. (Read more: Alaska Air Group Q3 Earnings Top Estimates, Fall Y/Y).
5. SkyWest’s third-quarter 2018 earnings per share of $1.57 exceeded the Zacks Consensus Estimate by 16 cents and increased 55.5% on a year-over-year basis. A lower effective tax rate drove the company’s bottom-line growth. Due to the new tax law (Tax Cuts and Jobs Act), effective tax rate in the reported quarter was 24.5% compared with 38% a year ago. Quarterly revenues came in at $829.3 million, beating the Zacks Consensus Estimate of $826.4 million. The top line benefited from the company’s improved fleet mix. Tax rate is expected to be approximately 25% in the final quarter of 2018.
Price Performance
The following table shows the price movement of the major airline players over the past five trading days and during the last six months.
The table above shows all airline stocks, barring Southwest Airlines, traded in the green over the last week leading to the NYSE ARCA Airline Index increasing 3.3%. Over the course of six months, the sector tracker gained 0.9%.
What's Next in the Airline Space?
Investors will look forward to October traffic reports from the likes of Delta Air Lines, Inc. (DAL - Free Report) in the coming days. GOL Linhas Aéreas Inteligentes S.A.’s third-quarter earnings report on Nov 1 is also likely to grab attention.
3 Medical Stocks to Buy Now
The greatest discovery in this century of biology is now at the flashpoint between theory and realization. Billions of dollars in research have poured into it. Companies are already generating revenue, and cures for a variety of deadly diseases are in the pipeline.
So are big potential profits for early investors. Zacks has released an updated Special Report that explains this breakthrough and names the best 3 stocks to ride it.
Image: Bigstock
Airline Stock Roundup: Q3 Earnings Beat at AAL, LUV & Others Amid Fuel Cost Woes
In the past week, several airline companies like American Airlines Group Inc. (AAL - Free Report) , Southwest Airlines Co. (LUV - Free Report) , Spirit Airlines, Inc. (SAVE - Free Report) , Alaska Air Group, Inc. (ALK - Free Report) and SkyWest, Inc. (SKYW - Free Report) released their respective third-quarter 2018 financial numbers.
Even though all the abovementioned carriers reported better-than-expected earnings per share, high fuel costs limited bottom-line growth. At American Airlines and Alaska Air Group quarterly earnings declined year over year due to rise in fuel costs.
While investors reacted positively to the earnings reports of the likes of American Airlines and Spirit Airlines, the Southwest Airlines stock declined following the earnings release despite the outperformance. With fuel costs already denting profitability, Southwest Airlines’ commentary on the conference call that it expects unit costs (excluding fuel and profit sharing) to increase at least 3% in 2019 disappointed investors and sent the stock tumbling.
(Read the last Airline Stock Roundup for Oct 24, 2018)
Recap of the Past Week’s Most Important Stories
1. Spirit Airlines’ third-quarter 2018 earnings per share (excluding 5 cents from non-recurring items) came in at $1.47, surpassing the Zacks Consensus Estimate of $1.39. Moreover, the bottom line soared 56.4% year over year.
The carrier recorded revenues of $904.3 million, marginally beating the Zacks Consensus Estimate of $904.1 million. Also, the top line improved 31.6% year over year owing to 24.6% and 3% rise in passenger segments and operating yields, respectively. (Read more: Spirit Airlines Up on Q3 Earnings & Revenue Beat).
Spirit Airlines carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
2. American Airlines’ third-quarter 2018 earnings (excluding 39 cents from non-recurring items) of $1.13 per share exceeded the Zacks Consensus Estimate of $1.12. Revenues totaled $11,559 million, which outpaced the Zacks Consensus Estimate of $11,551.6 million. The top line also improved on a year-over-year basis. Strong demand for air travel led to this year-over-year improvement in the top line. For 2018, the carrier still expects adjusted earnings per share between $4.50 and $5. (Read more: American Airlines Q3 Earnings Top, Dip Y/Y on Cost Woes).
3. Southwest Airlines’ third-quarter 2018 earnings of $1.08 per share came well ahead of the Zacks Consensus Estimate by 2 cents. Despite higher fuel prices, the bottom line improved 22.7% on a year-over-year basis. Results were aided by stronger revenues.
Operating revenues of $5,575 million outpaced the Zacks Consensus Estimate of $5,557 million. The top line also rose year over year. Passenger revenues, accounting for bulk (93.2%) of the top line, increased 5.1% year over year. Economic fuel costs, which increased 8.7% to $2.25 per gallon in the third quarter, are estimated to be between $2.30 and $2.35 per gallon in the final quarter of 2018. (Read more: Southwest Q3 Earnings Top Estimates on Higher Revenues).
4. Alaska Air Group reported third-quarter 2018 earnings per share (excluding 16 cents from non-recurring items) of $1.91, which exceeded the Zacks Consensus Estimate of $1.80.
Revenues came in at $2,212 million surpassing the Zacks Consensus Estimate of $2,203.9 million. Moreover, the top line increased 5% on a year-over-year basis. Passenger revenues, accounting for a bulk of the top line (92.4%), were up 4% year over year. (Read more: Alaska Air Group Q3 Earnings Top Estimates, Fall Y/Y).
5. SkyWest’s third-quarter 2018 earnings per share of $1.57 exceeded the Zacks Consensus Estimate by 16 cents and increased 55.5% on a year-over-year basis. A lower effective tax rate drove the company’s bottom-line growth. Due to the new tax law (Tax Cuts and Jobs Act), effective tax rate in the reported quarter was 24.5% compared with 38% a year ago. Quarterly revenues came in at $829.3 million, beating the Zacks Consensus Estimate of $826.4 million. The top line benefited from the company’s improved fleet mix. Tax rate is expected to be approximately 25% in the final quarter of 2018.
Price Performance
The following table shows the price movement of the major airline players over the past five trading days and during the last six months.
The table above shows all airline stocks, barring Southwest Airlines, traded in the green over the last week leading to the NYSE ARCA Airline Index increasing 3.3%. Over the course of six months, the sector tracker gained 0.9%.
What's Next in the Airline Space?
Investors will look forward to October traffic reports from the likes of Delta Air Lines, Inc. (DAL - Free Report) in the coming days. GOL Linhas Aéreas Inteligentes S.A.’s third-quarter earnings report on Nov 1 is also likely to grab attention.
3 Medical Stocks to Buy Now
The greatest discovery in this century of biology is now at the flashpoint between theory and realization. Billions of dollars in research have poured into it. Companies are already generating revenue, and cures for a variety of deadly diseases are in the pipeline.
So are big potential profits for early investors. Zacks has released an updated Special Report that explains this breakthrough and names the best 3 stocks to ride it.
See them today for free >>