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Airline Stock Roundup: LUV's Bleak Update, Azul's Q3 Loss, ALGT's Traffic & More

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In the past week, Southwest Airlines’ (LUV - Free Report) management stated that the carrier witnessed a slowdown in revenue trends for November and December in recent weeks. The company, which has seen a recovery in leisure-travel demand over the past few months, is uncertain about the reason behind the softness in bookings. The recent spike in coronavirus cases in the United States might have weakened the booking trends.

Meanwhile, Latin American carrier Azul (AZUL - Free Report) reported wider-than-expected loss for the third quarter due to the coronavirus-induced decrease in passenger revenues and depreciation of the Brazilian real. Also, because of the same reason, Allegiant Travel’s (ALGT - Free Report) October traffic dropped 29% year over year for scheduled service. However, JetBlue Airways (JBLU - Free Report) dominated the headlines by virtue of its announcement to operate at 100% capacity from Jan 8, 2021.

Synopsis of the Past Week’s Top Stories

1. Southwest Airlines, currently carrying a Zacks Rank #3 (Hold), expects November operating revenues to decline at 60-65% year over year. Load factor (percentage of seats filled with passengers) in the month is expected between 50% and 55%. Meanwhile capacity is predicted to drop approximately 35% in the ongoing period. The airline expects operating revenues to plunge 60-65% in December as well. Load factor is forecast in the range of 60-70% while capacity is estimated to fall 40-45% year over year next month.

You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

2. Azul incurred a loss (excluding a penny from non-recurring items) of $1.99 per share in the third quarter of 2020, wider than the Zacks Consensus Estimate of a loss of $1.05. However, in the year-ago period, the company reported adjusted earnings of 92 cents per share.

Meanwhile, total revenues of $149.8 million missed the Zacks Consensus Estimate of $165 million. The top line also tanked more than 70% year over year with passenger revenues plummeting 78.4%

Despite the year-over-year weakness, air-travel demand is improving gradually, which benefited Azul’s October traffic report. The report was discussed in the previous week’s write-up.

3.     At Allegiant Travel, October capacity for scheduled service contracted 6.4%. With traffic declining more than the extent of capacity reduction, load factor fell 20 points year over year to 63.1%. Allegiant Travel’s monthly departures for scheduled service dropped 9.5%. Moreover, the number of passengers transported by Allegiant Travel in October for scheduled service plunged 30.1%.

4.  Targeting the forthcoming Christmas and New Year celebrations, JetBlue’s president and COO Joanna Geraghty in a memo to crewmembers stated that the airline will operate planes with 85% onboard capacity from Dec 2 to Jan 7, 2021. The low-cost carrier has been running flights with 70% capacity since Oct 15, 2020.

5. With the holiday season approaching, Spirit Airlines (SAVE - Free Report) plans to resume six nonstop international services from Orlando, FL in December, which were suspended in March due to coronavirus-induced travel restrictions. Thanks to the gradual uptick in travel demand, the airline is judiciously resuming services to popular destinations. Effective Dec 4, 2020, the airline will relaunch nonstop services to Bogota, Colombia and San Pedro Sula, Honduras from Orlando.

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 all airline stocks have traded in the green over the past week owing to a positive update on Moderna's (MRNA - Free Report) COVID-19 vaccine candidate.

As a result, the NYSE ARCA Airline Index has rallied 7.2% over the past week. Over the course of the past six months, the NYSE ARCA Airline Index has also appreciated almost 92%.

What’s Next in the Airline Space?

Investors will look forward to further coronavirus-related updates and their impact on the airline space.

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