Back to top

Image: Bigstock

Airline Stock Roundup: AAL Issues Bullish Q1 Projection, UAL, DAL & LUV in Focus

Read MoreHide Full Article

in the past week, American Airlines’ (AAL - Free Report) management provided an improved forecast for the March quarter of 2021. This rosier projection was owing to the subsidence in cases with new coronavirus infections and the rising incidence of vaccination drives, which in turn is helping air-travel demand pick up the pace.

Expecting the sunnier scenario to continue into the summer season, United Airlines (UAL - Free Report) and Southwest Airlines (LUV - Free Report) look forward to boost their respective domestic networks to meet the anticipated demand swell in the hotter months.

Notably, Alaska Air Group’s (ALK - Free Report) subsidiary Alaska Airlines also recently announced its plan to bolster its domestic network in a bid to meet the anticipated surge in air-travel demand during summer. This was mentioned in detail in the previous week’s writeup.

Recap of the Past Week’s Most Important Stories

1. In a SEC filing, management of American Airlines stated that it now expects system capacity (measured in available seat miles) for the March quarter to decline roughly in the 40-45% band from the levels achieved in first-quarter 2019. Earlier, the expectation was for a capacity reduction of 45% from the first-quarter 2019 reading. Management, however, refrained from providing capacity guidance for the June quarter. On another positive note, management stated that bookings (with respect to domestic markets and short-haul international flights) recently picked up. Notably, bookings were affected in the early part of the March quarter due to the order imposed the Centers for Disease Control and Prevention that required to test negative for COVID-19 to enter the United States. Reflective of this improvement, the seven-day moving average as of Mar 26 pertaining to the net bookings at the currently Zacks Rank #3 (Hold) American Airlines, was roughly 90% of the level achieved in 2019. Moreover, the reading related to the domestic load factor (% of seats filled by passengers) was nearly 80% in the period, further reflecting the betterment in air-travel demand.

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

2. To fulfill the projected buoyancy in air-travel demand, Southwest Airlines decided to broaden its domestic network. As part of this Dallas-based carrier’s efforts to widen its summer travel options for passengers, the airline aims to initiate services to Myrtle Beach International Airport on May 23. Integral to its expansion drive to the popular vacation attraction in South Carolina, the airline intends to commence operating 10 nonstop routes from the city. For example, nonstop flights will be operated to Nashville, Baltimore/Washington and Chicago Midway May 23 onward.

3. In line with its efforts to rebuild international demand, Delta Air Lines (DAL - Free Report) intends to boost its global network. To this end, the Atlanta-based carrier aims to add routes to destinations in Iceland from its U.S. hubs. Owing to this move, passengers will have greater options to visit and enjoy the world-renowned hot springs like the Blue Lagoon and the iconic capital city of Reykjavík.

4. In a bid to facilitate travel bookings for an entire trip, JetBlue Airways (JBLU - Free Report) launched a travel website called Paisly. The purpose of this travel website is to help passengers, who already bought a JetBlue flight, book the rest of their trip as well. The website uses travellers’ flight information to make personalized suggestions on aspects like hotels, car rentals and theme park offers. Moreover, the carrier expects to add hotels, vacation rentals, other activities and retail products in the coming months as and when it finds partners that match its website’s mission.

5. Anticipating an increase in summer-travel demand, United Airlines plans to resume more than 20 domestic services and operate more than 100% of its 2019 schedule to Latin America. The carrier expects its overall schedule to be 52% in May 2021 compared with the 2019 levels. This is a significant improvement from May 2020 when the airline operated only 14% of its 2019 schedule.   Per Ankit Gupta, vice president of United Airlines’ domestic network planning and scheduling, the airline has seen the “strongest flight bookings since the start of the pandemic” over the past few weeks. Expecting a rise in demand for leisure travel, United Airlines will run more flights to Mexico, the Caribbean, Central America and South America in May 2021 compared with 2019.



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 have traded in the green the past week, leading the NYSE ARCA Airline Index gain 2.6% to $103.63. This uptick was owing to the improvement in air-travel demand in the United States. Over the course of the past six months, the NYSE ARCA Airline Index has appreciated 87%.

What’s Next in the Airline Space?

Investors would look forward to the March traffic reports of the likes of Ryanair Holdings (RYAAY - Free Report) .

Breakout Biotech Stocks with Triple-Digit Profit Potential

The biotech sector is projected to surge beyond $775 billion by 2024 as scientists develop treatments for thousands of diseases. They’re also finding ways to edit the human genome to literally erase our vulnerability to these diseases.

Zacks has just released Century of Biology: 7 Biotech Stocks to Buy Right Now to help investors profit from 7 stocks poised for outperformance. Our recent biotech recommendations have produced gains of +50%, +83% and +164% in as little as 2 months. The stocks in this report could perform even better.

See these 7 breakthrough stocks now>>