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In the past week, Latin American carrier — Copa Holdings (CPA - Free Report) — unveiled disappointing numbers for the third quarter of 2018, wherein earnings and revenues missed estimates. Results were hurt by high fuel prices, and weakening Brazilian and Argentinian currencies.
On the non-earnings front, American Airlines Group (AAL - Free Report) was the primary news maker with its pilots union urging the company for a fresh pay-related contract. Talks on the issue are likely to begin in January 2019.
Per Airlines for America (A4A), the Thanksgiving week will be extremely busy for U.S. carriers. The upbeat forecast for the Thanksgiving holiday period (Nov 16–Nov 27) further confirms strong demand for air travel. Additionally, air fares are still low despite high fuel costs. Low ticket prices have also contributed to the favorable projection.
1. Copa Holdings’ third-quarter 2018 earnings per share of $1.36 missed the Zacks Consensus Estimate of $1.42. Moreover, the bottom line plunged significantly year over year. Meanwhile, quarterly revenues increased more than 2% year over year to $672.4 million but lagged the Zacks Consensus Estimate of $684.2 million. Passenger revenues inched up 1.4% year over year to $649.11 million. (Read more: Copa Holdings Q3 Earnings & Revenues Miss on Cost Woes).
The carrier also reported traffic figures for October. Load factor (% of seats filled by passengers) contracted 280 basis points to 82% in the month as traffic growth (2.7%) was outpaced by capacity expansion (6.2%). (Read more: Copa Holdings October Traffic Up, Load Factor Down).
2. In a bid to improve pay structure, pilots at American Airlines are looking to amend the existing contract, inked in 2015, before it becomes due for renewal in early 2020. To this end, Daniel Carey, president of the union (Allied Pilots Association) representing its 15,000 pilots, issued a letter to this Zacks Rank #3 (Hold) carrier. The union asked American Airlines to commence negotiations in January 2019 for a fresh contract. The pilots’ union is hoping that the talks would be fruitful and an “industry-changing agreement” would be in place next year itself. According to a Reuters report, the total pay of American Airlines pilots iscurrently below their counterparts at Delta Air Lines (DAL - Free Report) and United Continental Holdings (UAL - Free Report) . (Read more: American Airlines Pilots Aim for New Contract Talks in 2019).
3. At Alaska Air Group (ALK - Free Report) , traffic — measured in revenue passenger miles (RPMs) — increased 2.4% to 4.47 billion in October. Also, consolidated capacity (or available seat miles/ASMs) rose 2.4% to 5.34 billion on a year-over-year basis. Meanwhile, load factor remained flat year over year at 83.8%. (Read more: Alaska Air Group Traffic Rises in October, Load Factor Flat).
4. According to A4A, approximately 30.6 million passengers will travel on U.S. airlines during the Thanksgiving holiday period this year or 2.55 million fliers per day compared with 29 million people who chose to travel by air in the same period last year. The projection indicates 5.5% more passengers flying to various destinations compared with 2017. Moreover, Sunday, Nov 25, is likely to be the busiest day for carriers in the twelve-day period, with 3.06 million people expected to take to the skies.
To meet the surge in travel demand, U.S. carriers are increasing the number of available seats by 158,000 per day. Also, with the U.S. economy improving and consumer confidence remaining strong, more Americans are taking vacations. (Read more : Busiest Thanksgiving Travel Period Likely for U.S. Airlines).
5. In a bid to strengthen its footprint in Nashville, Southwest Airlines (LUV - Free Report) has decided to operate new nonstop flights connecting Nashville and two key cities in California — Burbank and San Jose. The Dallas-based carrier, which extended its bookable flight schedule through Aug 5, 2019, is also offering seasonal service (operational on Sundays) between Nashville and Omaha, NE.
Southwest Airlines has also decided to increase the frequency of operations on some of its Nashville routes from Jun 10, 2019. For instance, the carrier will operate four flights daily on the Nashville-Boston route. Some popular seasonal rotes (for example, the Nashville-Seattle flight) will again be operational from next June. The above decisions are aimed at catering to the increased demand from passengers pertaining to Nashville operations.
Price 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 leading to the NYSE ARCA Airline Index’s 3.4% decline over the past five trading days. Over the course of six months, the sector tracker declined 7.5% despite impressive gains at the likes of GOL Linhas and Spirit Airlines.
What's Next in the Airline Space?
With the earnings season over, stay tuned for the usual news updates in the space. Focus will also be on the movement of oil prices, which have been very volatile of late, given the inverse relationship between fuel costs and the health of airline stocks.
Looking for Stocks with Skyrocketing Upside?
Zacks has just released a Special Report on the booming investment opportunities of legal marijuana.
Ignited by new referendums and legislation, this industry is expected to blast from an already robust $6.7 billion to $20.2 billion in 2021. Early investors stand to make a killing, but you have to be ready to act and know just where to look.
Image: Bigstock
Airline Stock Roundup: CPA's Lackluster Q3, AAL Pilots' Contract Update & More
In the past week, Latin American carrier — Copa Holdings (CPA - Free Report) — unveiled disappointing numbers for the third quarter of 2018, wherein earnings and revenues missed estimates. Results were hurt by high fuel prices, and weakening Brazilian and Argentinian currencies.
On the non-earnings front, American Airlines Group (AAL - Free Report) was the primary news maker with its pilots union urging the company for a fresh pay-related contract. Talks on the issue are likely to begin in January 2019.
Per Airlines for America (A4A), the Thanksgiving week will be extremely busy for U.S. carriers. The upbeat forecast for the Thanksgiving holiday period (Nov 16–Nov 27) further confirms strong demand for air travel. Additionally, air fares are still low despite high fuel costs. Low ticket prices have also contributed to the favorable projection.
(Read the last Airline Stock Roundup for Nov 14, 2018)
Recap of the Past Week’s Most Important Stories
1. Copa Holdings’ third-quarter 2018 earnings per share of $1.36 missed the Zacks Consensus Estimate of $1.42. Moreover, the bottom line plunged significantly year over year. Meanwhile, quarterly revenues increased more than 2% year over year to $672.4 million but lagged the Zacks Consensus Estimate of $684.2 million. Passenger revenues inched up 1.4% year over year to $649.11 million. (Read more: Copa Holdings Q3 Earnings & Revenues Miss on Cost Woes).
The carrier also reported traffic figures for October. Load factor (% of seats filled by passengers) contracted 280 basis points to 82% in the month as traffic growth (2.7%) was outpaced by capacity expansion (6.2%). (Read more: Copa Holdings October Traffic Up, Load Factor Down).
2. In a bid to improve pay structure, pilots at American Airlines are looking to amend the existing contract, inked in 2015, before it becomes due for renewal in early 2020. To this end, Daniel Carey, president of the union (Allied Pilots Association) representing its 15,000 pilots, issued a letter to this Zacks Rank #3 (Hold) carrier. The union asked American Airlines to commence negotiations in January 2019 for a fresh contract. The pilots’ union is hoping that the talks would be fruitful and an “industry-changing agreement” would be in place next year itself. According to a Reuters report, the total pay of American Airlines pilots iscurrently below their counterparts at Delta Air Lines (DAL - Free Report) and United Continental Holdings (UAL - Free Report) . (Read more: American Airlines Pilots Aim for New Contract Talks in 2019).
You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
3. At Alaska Air Group (ALK - Free Report) , traffic — measured in revenue passenger miles (RPMs) — increased 2.4% to 4.47 billion in October. Also, consolidated capacity (or available seat miles/ASMs) rose 2.4% to 5.34 billion on a year-over-year basis. Meanwhile, load factor remained flat year over year at 83.8%. (Read more: Alaska Air Group Traffic Rises in October, Load Factor Flat).
4. According to A4A, approximately 30.6 million passengers will travel on U.S. airlines during the Thanksgiving holiday period this year or 2.55 million fliers per day compared with 29 million people who chose to travel by air in the same period last year. The projection indicates 5.5% more passengers flying to various destinations compared with 2017. Moreover, Sunday, Nov 25, is likely to be the busiest day for carriers in the twelve-day period, with 3.06 million people expected to take to the skies.
To meet the surge in travel demand, U.S. carriers are increasing the number of available seats by 158,000 per day. Also, with the U.S. economy improving and consumer confidence remaining strong, more Americans are taking vacations. (Read more : Busiest Thanksgiving Travel Period Likely for U.S. Airlines).
5. In a bid to strengthen its footprint in Nashville, Southwest Airlines (LUV - Free Report) has decided to operate new nonstop flights connecting Nashville and two key cities in California — Burbank and San Jose. The Dallas-based carrier, which extended its bookable flight schedule through Aug 5, 2019, is also offering seasonal service (operational on Sundays) between Nashville and Omaha, NE.
Southwest Airlines has also decided to increase the frequency of operations on some of its Nashville routes from Jun 10, 2019. For instance, the carrier will operate four flights daily on the Nashville-Boston route. Some popular seasonal rotes (for example, the Nashville-Seattle flight) will again be operational from next June. The above decisions are aimed at catering to the increased demand from passengers pertaining to Nashville operations.
Price 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 leading to the NYSE ARCA Airline Index’s 3.4% decline over the past five trading days. Over the course of six months, the sector tracker declined 7.5% despite impressive gains at the likes of GOL Linhas and Spirit Airlines.
What's Next in the Airline Space?
With the earnings season over, stay tuned for the usual news updates in the space. Focus will also be on the movement of oil prices, which have been very volatile of late, given the inverse relationship between fuel costs and the health of airline stocks.
Looking for Stocks with Skyrocketing Upside?
Zacks has just released a Special Report on the booming investment opportunities of legal marijuana.
Ignited by new referendums and legislation, this industry is expected to blast from an already robust $6.7 billion to $20.2 billion in 2021. Early investors stand to make a killing, but you have to be ready to act and know just where to look.
See the pot trades we're targeting>>