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Airline Stock Q1 Earnings Roster for Apr 22: LUV, AAL & More

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After being rattled by the coronavirus-led demand depression for air travel, things are looking up for the U.S. airlines this year. With more and more Americans getting vaccinated each day, air-travel demand is improving particularly on the leisure front.

Despite this recent uptick, air-travel demand is still way below the pre-pandemic levels. As a result, both Delta Air Lines (DAL - Free Report) and United Airlines (UAL - Free Report) reported losses for the March quarter, primarily due to passenger revenue weakness. With most aviation stocks yet to report earnings, we fear that their stories are unlikely to be any different from the results of Delta and United Airlines. Moreover, the increase in fuel price per gallon (up 22% in the January-March period) is likely to hurt the bottom lines of most participants.

Upcoming Airline Releases

Given the above-mentioned factors, investors interested in the airline space will await the first-quarter 2021 earnings releases of Southwest Airlines (LUV - Free Report) , American Airlines (AAL - Free Report) , Alaska Air Group (ALK - Free Report) and  Controladora Vuela Compañía de Aviación, S.A.B. de C.V. or Volaris (VLRS - Free Report) . These four carriers are scheduled to report March-quarter results on Apr 22.

Let’s see how things have been shaping up for these prominent airline companies ahead of their earnings releases.

Our quantitative model predicts an earnings beat for the company with a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) as this combination increases the chances of an earnings beat. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

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

We expect Dallas-based Southwest Airlines’ first-quarter performance to have been aided by the uptick in passenger revenues amid the recent improvement in air-travel demand. Evidently, the Zacks Consensus Estimate for first-quarter passenger revenues indicates a 1.5% increase from the fourth-quarter 2020 reported figure. However, in light of the year-over-year softness in travel demand, the consensus mark for passenger revenues suggests a 56.1% drop from the number reported in first-quarter 2020. With this anticipated decline in passenger revenues, the Zacks Consensus Estimate for total revenues hints at a 52.8% fall from the year-ago reported number.

Our proven Zacks model predicts an earnings beat for Southwest Airlines this time around as Southwest Airlines currently has a Zacks Rank #3 and an Earnings ESP of +0.26%. In fact, our model had also predicted a positive surprise for the company when we issued its first-quarter earnings preview article. Back then, the stock had an Earnings ESP of +1.07% and the same Zacks Rank.

Southwest Airlines Co. Price and EPS Surprise

Southwest Airlines Co. Price and EPS Surprise

Southwest Airlines Co. price-eps-surprise | Southwest Airlines Co. Quote

Owing to the betterment witnessed in booking trends, American Airlines’ first-quarter results are likely to reflect higher passenger revenues (accounts for bulk of the top line) sequentially. The Zacks Consensus Estimate for first-quarter passenger revenues implies a 4.9% increase from the fourth-quarter 2020 reported figure. However, with air-travel demand continuing to be dismal on a year-over-year basis, the consensus mark for passenger revenues indicates a 56.4% decline from the year-ago quarter’s reported number.

Moreover, our proven model does not conclusively predict an earnings beat for American Airlines this reporting cycle as it currently has a Zacks Rank of 3 and an Earnings ESP of 0.00%. Earlier too, our Zacks methodology had not predicted an earnings beat for the company when we issued its first-quarter earnings preview article.

Akin to fourth-quarter 2020, Alaska Air’s first-quarter 2021 performance is likely to have been affected by coronavirus-induced low passenger revenues due to diminished air-travel demand. The Zacks Consensus Estimate for passenger revenues indicates a 58.7% decline from the number reported in the year-ago quarter.

Our proven Zacks model does not predict an earnings beat for Alaska Air this season as the carrier is currently Zacks #3 Ranked and has an Earnings ESP of -1.68%. In fact, our model had not predicted a positive surprise for the company when we issued its first-quarter earnings preview article. Back then, the stock had an Earnings ESP of -0.62% and the same Zacks Rank.

Alaska Air Group, Inc. Price and EPS Surprise

Alaska Air Group, Inc. Price and EPS Surprise

Alaska Air Group, Inc. price-eps-surprise | Alaska Air Group, Inc. Quote

Mexican carrier Volaris’ March-quarter performance is likely to have been poor on a year-over-year basis amid lackluster air-travel demand. However, the company’s efforts to control costs are likely to have boosted its bottom- line.

Moreover, our proven model does not conclusively predict an earnings beat for Volaris this time around as it currently has a Zacks Rank #4 and an Earnings ESP of 0.00%.

 

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