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It’s been more than two weeks since Delta Air Lines Inc. (DAL - Free Report) kick started the first-quarter earnings season for the airline space. Overall, the season has been mixed for the industry. The sector still has to traverse a long way before it can reach the pre-pandemic level.
However, the pureplay airlines ETF U.S. Global Jets ETF (JETS - Free Report) was up 3.1% past week, down 1.3% in the past month and up 21.1% in the past three-month period. In fact, the fund beat the S&P 500 (up 8.6%) in the past three-month period.
This makes JETS a great bet for vaccine rollout and economic optimism. Still, we need to pay attention to the earnings picture of the industry. Let’s delve a little deeper.
Inside the Headlines
Delta Air Lines (DAL - Free Report) first-quarter 2021 loss (excluding $1.70 from non-recurring items) of $3.55 per share was wider than the Zacks Consensus Estimate of $3.08 as well as the first-quarter 2020 loss of 51 cents. This was the fifth successive quarterly loss incurred by this Atlanta-GA based company. Due to the passenger revenue weakness, total revenues in the March quarter tanked 51.7% and 60% to $4.150 billion from the first-quarter 2020 and 2019 levels, respectively. Revenues, however, topped the Zacks Consensus Estimate of $3.82 billion. Fuel price per gallon is anticipated in the $1.85-$1.95 range in Q2. The non-fuel unit cost (adjusted) is expected to increase between 6% and 9%.
United Airlines (UAL - Free Report) came out with a quarterly loss of $7.50 per share versus the Zacks Consensus Estimate of a loss of $6.97. This compared to loss of $2.57 per share a year ago. These figures are adjusted for non-recurring items. United posted revenues of $3.22 billion for the quarter ended March 2021, missing the Zacks Consensus Estimate by 0.99%.
American Airlines Group Inc.’s (AAL - Free Report) incurred a loss (excluding $2.35 from non-recurring items) of $4.32 per share, comparing favorably with the Zacks Consensus Estimate of a loss of $4.35. However, quarterly loss per share was wider than the year-ago loss of $2.65. Moreover, operating revenues of $4.01 billion slumped 52.9% year over year and also fell short of the Zacks Consensus Estimate of $4.03 billion.
Low-cost carrier Southwest Airlines Co. (LUV - Free Report) incurred a loss of $1.72 per share (excluding $1.91 from non-recurring items) in the first quarter of 2021, narrower than the Zacks Consensus Estimate of a loss of $1.82. In the year-ago period, the company incurred a loss of 15 cents per share. Results were affected by significant decline in passenger revenues as a consequence of persistent weakness in air-travel demand amid coronavirus concerns. Meanwhile, operating revenues of $2.05 billion surpassed the Zacks Consensus Estimate of $2.03 billion. While bookings are improving, the company expects fuel costs per gallon to rise in Q2 and remain between $1.85 and $1.95 in the second quarter of 2021. In the year-ago period, the same was $1.33.
JetBlue Airways (JBLU - Free Report) came out with a quarterly loss of $1.48 per share versus the Zacks Consensus Estimate of a loss of $1.68. This compares to loss of $0.42 per share a year ago. JetBlue, which belongs to the Zacks Transportation posted revenues of $733 million for the quarter ended March 2021, surpassing the Zacks Consensus Estimate by 2.31%.
Alaska Air Group (ALK - Free Report) , the parent company of Alaska Airlines, incurred a loss (excluding $2.46 from non-recurring items) of $3.51 per share, narrower than the Zacks Consensus Estimate of a loss of $3.71. In the year-ago quarter, the company incurred a loss of 82 cents. Results were hurt by significant decline in passenger revenues as coronavirus keeps air-travel demand suppressed. Revenues at Alaska Air came in at $797 million, surpassing the Zacks Consensus Estimate of $787.1 million. The top line, however, declined 51.3% year over year. Passenger revenues — contributing 81.3% to the top line — were down 68% on a year-over-year basis to $658 million.
ETF in Focus
The $3.77-billion-fund holds about 30 stocks in its portfolio and is concentrated on a few individual securities. All the above-mentioned stocks get a place in the portfolio. The product charges 60 bps in fees (see all industrials ETFs).
Bottom Line
While the earnings picture is still gloomy, some companies beat on top-line estimates. This shows a feeble hope for recovery in the coming days. If there is a steady improvement in the coronavirus scenario globally, one can surely see a jump in this otherwise-undervalued product JETS. However, any kind of worsening in the COVID situation may harm the fund over the medium term.
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Airlines Earnings Mixed: What Lies ahead of ETF?
It’s been more than two weeks since Delta Air Lines Inc. (DAL - Free Report) kick started the first-quarter earnings season for the airline space. Overall, the season has been mixed for the industry. The sector still has to traverse a long way before it can reach the pre-pandemic level.
However, the pureplay airlines ETF U.S. Global Jets ETF (JETS - Free Report) was up 3.1% past week, down 1.3% in the past month and up 21.1% in the past three-month period. In fact, the fund beat the S&P 500 (up 8.6%) in the past three-month period.
This makes JETS a great bet for vaccine rollout and economic optimism. Still, we need to pay attention to the earnings picture of the industry. Let’s delve a little deeper.
Inside the Headlines
Delta Air Lines (DAL - Free Report) first-quarter 2021 loss (excluding $1.70 from non-recurring items) of $3.55 per share was wider than the Zacks Consensus Estimate of $3.08 as well as the first-quarter 2020 loss of 51 cents. This was the fifth successive quarterly loss incurred by this Atlanta-GA based company. Due to the passenger revenue weakness, total revenues in the March quarter tanked 51.7% and 60% to $4.150 billion from the first-quarter 2020 and 2019 levels, respectively. Revenues, however, topped the Zacks Consensus Estimate of $3.82 billion. Fuel price per gallon is anticipated in the $1.85-$1.95 range in Q2. The non-fuel unit cost (adjusted) is expected to increase between 6% and 9%.
United Airlines (UAL - Free Report) came out with a quarterly loss of $7.50 per share versus the Zacks Consensus Estimate of a loss of $6.97. This compared to loss of $2.57 per share a year ago. These figures are adjusted for non-recurring items. United posted revenues of $3.22 billion for the quarter ended March 2021, missing the Zacks Consensus Estimate by 0.99%.
American Airlines Group Inc.’s (AAL - Free Report) incurred a loss (excluding $2.35 from non-recurring items) of $4.32 per share, comparing favorably with the Zacks Consensus Estimate of a loss of $4.35. However, quarterly loss per share was wider than the year-ago loss of $2.65. Moreover, operating revenues of $4.01 billion slumped 52.9% year over year and also fell short of the Zacks Consensus Estimate of $4.03 billion.
Low-cost carrier Southwest Airlines Co. (LUV - Free Report) incurred a loss of $1.72 per share (excluding $1.91 from non-recurring items) in the first quarter of 2021, narrower than the Zacks Consensus Estimate of a loss of $1.82. In the year-ago period, the company incurred a loss of 15 cents per share. Results were affected by significant decline in passenger revenues as a consequence of persistent weakness in air-travel demand amid coronavirus concerns. Meanwhile, operating revenues of $2.05 billion surpassed the Zacks Consensus Estimate of $2.03 billion. While bookings are improving, the company expects fuel costs per gallon to rise in Q2 and remain between $1.85 and $1.95 in the second quarter of 2021. In the year-ago period, the same was $1.33.
JetBlue Airways (JBLU - Free Report) came out with a quarterly loss of $1.48 per share versus the Zacks Consensus Estimate of a loss of $1.68. This compares to loss of $0.42 per share a year ago. JetBlue, which belongs to the Zacks Transportation posted revenues of $733 million for the quarter ended March 2021, surpassing the Zacks Consensus Estimate by 2.31%.
Alaska Air Group (ALK - Free Report) , the parent company of Alaska Airlines, incurred a loss (excluding $2.46 from non-recurring items) of $3.51 per share, narrower than the Zacks Consensus Estimate of a loss of $3.71. In the year-ago quarter, the company incurred a loss of 82 cents. Results were hurt by significant decline in passenger revenues as coronavirus keeps air-travel demand suppressed. Revenues at Alaska Air came in at $797 million, surpassing the Zacks Consensus Estimate of $787.1 million. The top line, however, declined 51.3% year over year. Passenger revenues — contributing 81.3% to the top line — were down 68% on a year-over-year basis to $658 million.
ETF in Focus
The $3.77-billion-fund holds about 30 stocks in its portfolio and is concentrated on a few individual securities. All the above-mentioned stocks get a place in the portfolio. The product charges 60 bps in fees (see all industrials ETFs).
Bottom Line
While the earnings picture is still gloomy, some companies beat on top-line estimates. This shows a feeble hope for recovery in the coming days. If there is a steady improvement in the coronavirus scenario globally, one can surely see a jump in this otherwise-undervalued product JETS. However, any kind of worsening in the COVID situation may harm the fund over the medium term.
Want key ETF info delivered straight to your inbox?
Zacks’ free Fund Newsletter will brief you on top news and analysis, as well as top-performing ETFs, each week. Get it free>>