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Airline Stock Roundup: AAL, LUV & Others Post Q2 Loss Due to Coronavirus Woes
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In the past week, the aviation space put up a dismal show in the ongoing second-quarter earnings season, intensifying investors’ woes.
Heavyweight airlines, namely American Airlines (AAL - Free Report) , Southwest Airlines (LUV - Free Report) , Alaska Air Group (ALK - Free Report) , Hawaiian Holdings (HA) and JetBlue Airways (JBLU - Free Report) incurred losses for the second quarter of 2020. This underperformance was due to a massive drop in passenger revenues as air-travel demand remains suppressed due to the continued pandemic situation.
The likes of United Airlines (UAL - Free Report) and Spirit Airlines (SAVE - Free Report) also performed disappointingly in the June quarter as both posted weak financial numbers in the previous week.
Recap of the Past Week’s Most Important Stories
1. American Airlines, currently carrying a Zacks Rank #3 (Hold), suffered a loss (excluding $3 from non-recurring items) of $7.82 per share, comparing unfavorably with the Zacks Consensus Estimate of a loss of $6.75. Operating revenues of $1,622 million also slumped 86.4% year over year but surpassed the Zacks Consensus Estimate of $1,481.1 million. Passenger revenues, which accounted for bulk of the top line (68.3%), however, plunged 89.9% to $1,108 million, highlighting the coronavirus-induced air-travel demand woes.
2. Southwest Airlines endured a loss of $2.67 per share (excluding $1.04 from non-recurring items) for the second quarter, wider than the Zacks Consensus Estimate of a loss of $2.53. What is worse is that the spike in COVID-19 cases across some parts of the United States due to an anticipated second wave dampened the modest improvement in demand, which Southwest Airlines witnessed in May and June. With bookings having decreased and trip cancellations slightly increased, the carrier fears operating revenues to plummet 70-75% year over year in July. In the same period, capacity is estimated to decline approximately 30% year over year while load factor is expected in the 40-45% band. For August, operating revenues are anticipated to tumble 70-80% year over year. The company predicts capacity to contract approximately 20% year over year next month while load factor is estimated in the range of 30-40%.
3. Alaska Air Group incurred a loss of $3.54 per share (excluding $1.81 from non-recurring items) for the second quarter, wider than the Zacks Consensus Estimate of a loss of $3.39. However, in the year-ago quarter, the company reported earnings of $2.17. Revenues came in at $421 million, surpassing the Zacks Consensus Estimate of $307.7 million. But the top line declined 82% year over year with passenger revenues tanking 85% on a year-over-year basis due to low travel demand.
4. JetBlue reported a loss (excluding 84 cents from non-recurring items) of $2.02 per share in second-quarter results, comparing unfavorably with the Zacks Consensus Estimate of a loss of $1.86. Revenues for the third quarter are expected to dive approximately 80% year over year. Capacity is anticipated to contract at least 45% year over year in the third quarter. Average fuel cost per gallon (including fuel taxes) is estimated to be $1.24. JetBlue still expects average daily cash burn for the September quarter in the $7-$9 million band.
5. Hawaiian Holdings’ second-quarter 2020 loss (excluding $1.48 from non-recurring items) of $3.81 per share was wider than the Zacks Consensus Estimate of a loss of $3.72. The carrier, however, delivered earnings of $1.23 in second-quarter 2019. Quarterly revenues of $60 million missed the Zacks Consensus Estimate of $61 million and also slumped 91.6% year over year due to the 95.4% fall in passenger revenues. Airline traffic, measured in revenue passenger miles, dropped 97.9% in the quarter under review. Capacity (measured in available seat miles (ASMs) contracted 92.1%. Load factor (percentage of seats filled by passengers) for scheduled operations declined to 23.2% from 87.1% a year ago as the decline in traffic was more than the capacity reduction. Economic fuel cost per gallon was down 41.1% to $1.26.
The company expects August capacity to decrease 85% year over year. As of Jun 30, 2020, the carrier received $214.2 million in grants and $49.0 million in loans pursuant to the CARES Act financial assistance.
Performance
The following table shows the price movement of major airline players over the past week and during the past six months.
The table above shows that most airline stocks have traded in the red in the past week due to the discouraging second-quarter 2020 reports. This downside caused a nearly 1% dip in the NYSE ARCA Airline Index to $52.84. Over the course of the past six months, the NYSE ARCA Airline Index has plunged 51.4%.
What's Next in the Airline Space?
Investors will keenly await the second-quarter 2020 earnings releases of SkyWest (SKYW - Free Report) on Jul 30 and Gol Linhas on Jul 31.
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This outperformance has not just been a recent phenomenon. From 2000 – 2019, while the S&P averaged +6.0% per year, our top strategies averaged up to +54.7% per year.
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Airline Stock Roundup: AAL, LUV & Others Post Q2 Loss Due to Coronavirus Woes
In the past week, the aviation space put up a dismal show in the ongoing second-quarter earnings season, intensifying investors’ woes.
Heavyweight airlines, namely American Airlines (AAL - Free Report) , Southwest Airlines (LUV - Free Report) , Alaska Air Group (ALK - Free Report) , Hawaiian Holdings (HA) and JetBlue Airways (JBLU - Free Report) incurred losses for the second quarter of 2020. This underperformance was due to a massive drop in passenger revenues as air-travel demand remains suppressed due to the continued pandemic situation.
The likes of United Airlines (UAL - Free Report) and Spirit Airlines (SAVE - Free Report) also performed disappointingly in the June quarter as both posted weak financial numbers in the previous week.
Recap of the Past Week’s Most Important Stories
1. American Airlines, currently carrying a Zacks Rank #3 (Hold), suffered a loss (excluding $3 from non-recurring items) of $7.82 per share, comparing unfavorably with the Zacks Consensus Estimate of a loss of $6.75. Operating revenues of $1,622 million also slumped 86.4% year over year but surpassed the Zacks Consensus Estimate of $1,481.1 million. Passenger revenues, which accounted for bulk of the top line (68.3%), however, plunged 89.9% to $1,108 million, highlighting the coronavirus-induced air-travel demand woes.
You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
2. Southwest Airlines endured a loss of $2.67 per share (excluding $1.04 from non-recurring items) for the second quarter, wider than the Zacks Consensus Estimate of a loss of $2.53. What is worse is that the spike in COVID-19 cases across some parts of the United States due to an anticipated second wave dampened the modest improvement in demand, which Southwest Airlines witnessed in May and June. With bookings having decreased and trip cancellations slightly increased, the carrier fears operating revenues to plummet 70-75% year over year in July. In the same period, capacity is estimated to decline approximately 30% year over year while load factor is expected in the 40-45% band. For August, operating revenues are anticipated to tumble 70-80% year over year. The company predicts capacity to contract approximately 20% year over year next month while load factor is estimated in the range of 30-40%.
3. Alaska Air Group incurred a loss of $3.54 per share (excluding $1.81 from non-recurring items) for the second quarter, wider than the Zacks Consensus Estimate of a loss of $3.39. However, in the year-ago quarter, the company reported earnings of $2.17. Revenues came in at $421 million, surpassing the Zacks Consensus Estimate of $307.7 million. But the top line declined 82% year over year with passenger revenues tanking 85% on a year-over-year basis due to low travel demand.
4. JetBlue reported a loss (excluding 84 cents from non-recurring items) of $2.02 per share in second-quarter results, comparing unfavorably with the Zacks Consensus Estimate of a loss of $1.86. Revenues for the third quarter are expected to dive approximately 80% year over year. Capacity is anticipated to contract at least 45% year over year in the third quarter. Average fuel cost per gallon (including fuel taxes) is estimated to be $1.24. JetBlue still expects average daily cash burn for the September quarter in the $7-$9 million band.
5. Hawaiian Holdings’ second-quarter 2020 loss (excluding $1.48 from non-recurring items) of $3.81 per share was wider than the Zacks Consensus Estimate of a loss of $3.72. The carrier, however, delivered earnings of $1.23 in second-quarter 2019. Quarterly revenues of $60 million missed the Zacks Consensus Estimate of $61 million and also slumped 91.6% year over year due to the 95.4% fall in passenger revenues. Airline traffic, measured in revenue passenger miles, dropped 97.9% in the quarter under review. Capacity (measured in available seat miles (ASMs) contracted 92.1%. Load factor (percentage of seats filled by passengers) for scheduled operations declined to 23.2% from 87.1% a year ago as the decline in traffic was more than the capacity reduction. Economic fuel cost per gallon was down 41.1% to $1.26.
The company expects August capacity to decrease 85% year over year. As of Jun 30, 2020, the carrier received $214.2 million in grants and $49.0 million in loans pursuant to the CARES Act financial assistance.
Performance
The following table shows the price movement of major airline players over the past week and during the past six months.
The table above shows that most airline stocks have traded in the red in the past week due to the discouraging second-quarter 2020 reports. This downside caused a nearly 1% dip in the NYSE ARCA Airline Index to $52.84. Over the course of the past six months, the NYSE ARCA Airline Index has plunged 51.4%.
What's Next in the Airline Space?
Investors will keenly await the second-quarter 2020 earnings releases of SkyWest (SKYW - Free Report) on Jul 30 and Gol Linhas on Jul 31.
Today's Best Stocks from Zacks
Would you like to see the updated picks from our best market-beating strategies? From 2017 through 2019, while the S&P 500 gained an impressive +53.6%, five of our strategies returned +65.8%, +97.1%, +118.0%, +175.7% and even +186.7%.
This outperformance has not just been a recent phenomenon. From 2000 – 2019, while the S&P averaged +6.0% per year, our top strategies averaged up to +54.7% per year.
See their latest picks free >>