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Airline Stock Roundup: DAL's January Traffic, Earnings Beat at SKYW & ALGT
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In the past week, key players like SkyWest (SKYW - Free Report) and Allegiant Travel Company (ALGT - Free Report) released their respective fourth-quarter 2018 financial numbers.
With oil prices declining substantially in the October-December timeframe (the fourth quarter period), it was not surprising that the aforementioned carriers registered better-than-expected earnings. Low fuel costs apart, fleet transition initiatives aided SkyWest’s results. Meanwhile, robust passenger revenues provided a boost to Allegiant’s fourth-quarter performance.
However, European low-cost carrier Ryanair Holdings (RYAAY - Free Report) reported lackluster results for the third quarter of fiscal 2019 (ended Dec 31, 2018) due to declining air fares.
On the non-earnings front, Delta Air Lines’ (DAL - Free Report) January traffic report failed to impress investors as load factor (% of seats filled by passengers) was flat with traffic growth matching capacity expansion. An expansion-related updated was also available from Southwest Airlines (LUV - Free Report) in the past week.
1. SkyWest’s fourth-quarter 2018 earnings of $1.28 per share, surpassed the Zacks Consensus Estimate of $1.09. Also, the bottom line improved 58% on a year-over-year basis.
Quarterly revenues came in at $803.5 million, which exceeded the Zacks Consensus Estimate of $789.6 million and improved year over year on the company’s improved fleet mix. (Read more: SkyWest Q4 Earnings & Revenues Top on Fleet Upgrade).
2. Allegiant’s fourth-quarter 2018 earnings of $2.56 per share outpaced the Zacks Consensus Estimate of $2.49. Total operating revenues increased 8.7% year over year to $412.1 million and also surpassed the consensus mark of $409.1 million. The top line was primarily driven by a 10.1% rise in passenger revenues. (Read more: Allegiant Stock Up 3% on Q4 Earnings & Revenue Beat).
3. Ryanair suffered a loss of €19.6 million in the third quarter of fiscal 2019 compared to a profit of €105.6 million a year-ago. Results were hurt by a 6% decline average fares to €30. Excess winter capacity in Europe led to the decline. What is worse is that the carrier stated fares may continue to decrease due to overcapacity.
High costs too impacted the company’s results. The top line, however, expanded 9% to €1.53 billion on the back of an 8% rise in traffic to 33 million. In the meantime, load factor was flat at 96%. Ryanair still expects fiscal 2019 profit after tax in the €1-€1.1 billion range. Winter fares are still anticipated to decline 7% year over year. The company said that it might lower its fiscal 2019 profit forecast further in the event of “unexpected Brexit or security developments which adversely impact yields between now and the end of March”.
In another development, Ryanair announced a structural overhaul. The carrier announced that it is moving to a group structure with each group having its own CEO and management team. Ryanair’s current CEO Michael O'Leary will be the group’s CEO. He has inked a five-year contract to this effect.
Ryanair’s January traffic was impressive, with the metric (including 0.3 million from its LaudaMotion unit) increasing 11% year over year to 10.3 million. However, load factor remained unaltered at 91%.
4. Southwest Airlinesannounced a package of new seasonal services and subsequently extended its flight schedule through Oct 1, 2019. Additionally, the carrier has announced the resumption of a few previously-operated seasonal services. The airline will initiate a non-stop Saturday service between Dallas Love Field and Corpus Christi, beginning Aug 10, 2019.(Read more: Southwest to Launch Seasonal Services This August).
5. At Delta, consolidated traffic — measured in revenue passenger miles (RPMs) — came in at 16.56 billion, up 5.9% year over year. Consolidated capacity (or available seat miles/ASMs) also climbed 5.9% to 20.79 billion on a year-over-year basis. As a result, consolidated load factor remained flat at 79.7%.
Additionally, the company recorded an on-time performance (mainline) of 86.7% and a completion factor (mainline) of 99.6%. Notably, Delta’s passenger count inched up 6.2% to around 14.1 million in January.
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 most airline stocks traded in the green in the past week leading to the NYSE ARCA Airline Index gaining 2.8%. Shares of GOL Linhas appreciated the most (12.4%) in the period.
Over the last six months, the sector tracker lost 6.7%, reflecting the multiple headwinds like capacity woes and high costs confronting the space. Shares of Hawaiian Holdings (HA - Free Report) depreciated the most (26.8%) in the period.
What's Next in the Airline Space?
We expect more January traffic reports in the coming days.
Zacks' Top 10 Stocks for 2019
In addition to the stocks discussed above, would you like to know about our 10 finest buy-and-holds for the year?
Who wouldn't? Our annual Top 10s have beaten the market with amazing regularity. In 2018, while the market dropped -5.2%, the portfolio scored well into double-digits overall with individual stocks rising as high as +61.5%. And from 2012-2017, while the market boomed +126.3, Zacks' Top 10s reached an even more sensational +181.9%.
Image: Bigstock
Airline Stock Roundup: DAL's January Traffic, Earnings Beat at SKYW & ALGT
In the past week, key players like SkyWest (SKYW - Free Report) and Allegiant Travel Company (ALGT - Free Report) released their respective fourth-quarter 2018 financial numbers.
With oil prices declining substantially in the October-December timeframe (the fourth quarter period), it was not surprising that the aforementioned carriers registered better-than-expected earnings. Low fuel costs apart, fleet transition initiatives aided SkyWest’s results. Meanwhile, robust passenger revenues provided a boost to Allegiant’s fourth-quarter performance.
However, European low-cost carrier Ryanair Holdings (RYAAY - Free Report) reported lackluster results for the third quarter of fiscal 2019 (ended Dec 31, 2018) due to declining air fares.
On the non-earnings front, Delta Air Lines’ (DAL - Free Report) January traffic report failed to impress investors as load factor (% of seats filled by passengers) was flat with traffic growth matching capacity expansion. An expansion-related updated was also available from Southwest Airlines (LUV - Free Report) in the past week.
(Read the last Airline Stock Roundup for Jan 30, 2019)
Recap of the Past Week’s Most Important Stories
1. SkyWest’s fourth-quarter 2018 earnings of $1.28 per share, surpassed the Zacks Consensus Estimate of $1.09. Also, the bottom line improved 58% on a year-over-year basis.
Quarterly revenues came in at $803.5 million, which exceeded the Zacks Consensus Estimate of $789.6 million and improved year over year on the company’s improved fleet mix. (Read more: SkyWest Q4 Earnings & Revenues Top on Fleet Upgrade).
SkyWest carries a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
2. Allegiant’s fourth-quarter 2018 earnings of $2.56 per share outpaced the Zacks Consensus Estimate of $2.49. Total operating revenues increased 8.7% year over year to $412.1 million and also surpassed the consensus mark of $409.1 million. The top line was primarily driven by a 10.1% rise in passenger revenues. (Read more: Allegiant Stock Up 3% on Q4 Earnings & Revenue Beat).
3. Ryanair suffered a loss of €19.6 million in the third quarter of fiscal 2019 compared to a profit of €105.6 million a year-ago. Results were hurt by a 6% decline average fares to €30. Excess winter capacity in Europe led to the decline. What is worse is that the carrier stated fares may continue to decrease due to overcapacity.
High costs too impacted the company’s results. The top line, however, expanded 9% to €1.53 billion on the back of an 8% rise in traffic to 33 million. In the meantime, load factor was flat at 96%. Ryanair still expects fiscal 2019 profit after tax in the €1-€1.1 billion range. Winter fares are still anticipated to decline 7% year over year. The company said that it might lower its fiscal 2019 profit forecast further in the event of “unexpected Brexit or security developments which adversely impact yields between now and the end of March”.
In another development, Ryanair announced a structural overhaul. The carrier announced that it is moving to a group structure with each group having its own CEO and management team. Ryanair’s current CEO Michael O'Leary will be the group’s CEO. He has inked a five-year contract to this effect.
Ryanair’s January traffic was impressive, with the metric (including 0.3 million from its LaudaMotion unit) increasing 11% year over year to 10.3 million. However, load factor remained unaltered at 91%.
4. Southwest Airlinesannounced a package of new seasonal services and subsequently extended its flight schedule through Oct 1, 2019. Additionally, the carrier has announced the resumption of a few previously-operated seasonal services. The airline will initiate a non-stop Saturday service between Dallas Love Field and Corpus Christi, beginning Aug 10, 2019.(Read more: Southwest to Launch Seasonal Services This August).
5. At Delta, consolidated traffic — measured in revenue passenger miles (RPMs) — came in at 16.56 billion, up 5.9% year over year. Consolidated capacity (or available seat miles/ASMs) also climbed 5.9% to 20.79 billion on a year-over-year basis. As a result, consolidated load factor remained flat at 79.7%.
Additionally, the company recorded an on-time performance (mainline) of 86.7% and a completion factor (mainline) of 99.6%. Notably, Delta’s passenger count inched up 6.2% to around 14.1 million in January.
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 most airline stocks traded in the green in the past week leading to the NYSE ARCA Airline Index gaining 2.8%. Shares of GOL Linhas appreciated the most (12.4%) in the period.
Over the last six months, the sector tracker lost 6.7%, reflecting the multiple headwinds like capacity woes and high costs confronting the space. Shares of Hawaiian Holdings (HA - Free Report) depreciated the most (26.8%) in the period.
What's Next in the Airline Space?
We expect more January traffic reports in the coming days.
Zacks' Top 10 Stocks for 2019
In addition to the stocks discussed above, would you like to know about our 10 finest buy-and-holds for the year?
Who wouldn't? Our annual Top 10s have beaten the market with amazing regularity. In 2018, while the market dropped -5.2%, the portfolio scored well into double-digits overall with individual stocks rising as high as +61.5%. And from 2012-2017, while the market boomed +126.3, Zacks' Top 10s reached an even more sensational +181.9%.
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