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Airline Stock Roundup: UAL's Order for Boeing 737 MAX Jets, GOL's Traffic Report & More

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United Airlines (UAL - Free Report) dominated headlines in the past week, thanks to its decision to buy 25 additional Boeing 737 MAX planes apart from moving forward the delivery of some other Boeing jets from the earlier scheduled date.

On the traffic front, the demand for Gol Linhas Aereas Inteligentes’ (GOL - Free Report) flights in domestic markets plunged 38% in February 2021 over the January levels due to the recent spike in coronavirus cases in Brazil. Meanwhile, European carrier Ryanair Holdings’ (RYAAY - Free Report) traffic tanked more than 90% year over year in February as the pandemic continues to dwarf air-travel demand.

Read the last Airline Roundup here.

 

Recap of the Past Week’s Most Important Stories

1. United Airlines, currently carrying a Zacks Rank #4 (Sell), has placed an order for 25 additional Boeing 737 MAX planes and pre-scheduled the delivery of some other orders in hopes of acceleration in travel-demand recovery. While the 25 additional Boeing 737 MAX aircraft are expected to be delivered in 2023, the carrier has moved up deliveries of 40 previously-ordered Boeing 737 MAX aircraft to 2022 and five of the same variant into 2023.

In total, the carrier has firm commitments for 188 Boeing 737 MAX jets.

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

In another development, United Airlines announced that it is partnering with premium ground transportation company, Landline, to offer connecting services to two popular destinations in Colorado through the Denver International Airport. Under the partnership, customers will enjoy seamless travel experience to Breckenridge and Fort Collins on a luxury bus from Denver, CO

2. Ryanair’s February traffic slumped 95% year over year to merely 0.5 million guests as coronavirus keeps air-travel demand suppressed. Load factor (% of seats filled by passengers) for the month was 78% compared with the prior year’s 92%. On a rolling-annual basis, total traffic at Ryanair (including the LaudaMotion unit) plummeted 79% to 32.7 million.

3. Due to pandemic-induced dwindling air-travel demand, Gol Linhas’ traffic, measured in revenue passenger kilometers, plummeted 50.3% year over year in February. With travel demand falling below the year-ago levels, the company reduced its capacity significantly. In February, capacity measured in available seat kilometers contracted 50.4%. Since traffic decline and capacity contraction is almost at par, load factor was unchanged on a year-over-year basis at 80.8%. Gol Linhas’ total monthly departures slumped 53.2% and seats tanked 52.6%.

4. Per the International Air Transport Association, total air-travel demand or traffic in January 2021 tanked 72% year over year. Moreover, the reading was worse than the 69.7% year-over-year slump recorded in Dec 2020. On the domestic front, demand was down 47.4% versus the pre-pandemic (January 2019) levels. In December 2020, it was down 42.9%. The downside was mainly due to stricter domestic travel controls in China over the Lunar New Year holiday period. In international markets, passenger demand in January was 85.6% below that witnessed in January 2019.

Price Performance

The following table shows the price movement of the major airline players over the past week and during the past six months.

The table above shows that most airline stocks traded in the red over the past week. Consequently, the NYSE ARCA Airline Index declined 1% over the past week to $102.92. Over the course of six months, the sector tracker surged 69.3%.

What's Next in the Airline Space?

Investors will look forward to the February traffic reports from the likes of Allegiant Travel Company (ALGT - Free Report) and Azul (AZUL - Free Report) .

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