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Airline Stock Roundup: SAVE's Route Additions, Gol's Investor Update & More

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In the past week, Spirit Airlines (SAVE - Free Report) announced that it intends to expand its operations at Orlando International Airport (MCO). With the plan in place to operate its largest-ever Orlando schedule, the carrier expects to provide more than 80 daily departures from MCO by 2021 end.

With air-travel demand picking up in the United States, American Airlines (AAL - Free Report) too announced an expansion plan. The carrier aims to fortify its footprint in Miami, FL with two international destinations and six domestic routes, slated for launch this winter.

European carrier Ryanair Holdings (RYAAY - Free Report) announced plans to hire more than 2,000 pilots over the next three years as it modernizes its fleet and gradually recovers from the COVID-led setback. In an investor update, management at Latin American carrier Gol Linhas (GOL - Free Report) projected second-quarter 2021 load factor (% of seats filled by passengers) to be 85.1%. Detailed results will be out on Jul 29.

Recap of the Past Week’s Most Important Stories

1. On materialization, Spirit Airlines’ robust expansion plan, which was announced at MCO, will make the carrier the largest international airline in Orlando. On an overall basis, the impending extension will make the airline the second-largest carrier operating out of MCO. Its Orlando operations will be 45% above the schedule at the end of 2019 following the activation of new and resumed routes.

Spirit Airlines currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

2. As part of its fleet-modernization plans, Ryanair announced that it took delivery of the first fuel-efficient Boeing 737-8200 Gamechanger aircraft. The carrier intends to take delivery of more than 210 Boeing 737-8200 Gamechanger aircraft over the next three years. With these anticipated additions to its fleet, the carrier looks to boost its work force. It hopes to continue its recovery from the coronavirus-induced damage and fly 200 million passengers by the fiscal year 2024.

We remind investors that Ryanair’s June traffic was impressive as wide-spread vaccination in addition to the easing of restrictions in the EU led to an uptick in air-travel demand as was mentioned in the previous week’s write-up.

3 As part of its expansion plan in Miami, American Airlines intends to begin services to Chetumal, Mexico and San Andres Island, Colombia from Miami International Airport this December. Following this addition, the Fort Worth, TX-based carrier will serve 28 destinations in Mexico and seven in Colombia. Flights to Chetumal and San Andres Island will operate on Wednesdays and Saturdays. While the Chetumal service will begin on Dec 1, the San Andres Island flights will commence from Dec 4.

4. Gol Linhas expects second-quarter EBITDA margin (excluding special items) in the band of 16-18%. Passenger unit revenues for the June quarter are expected to be approximately 17% lower than the year-ago reported number. Non-fuel unit costs in the to-be-reported quarter (excluding non-operating and non-recurring expenses) are expected to decrease roughly 55% from the prior-year reported number. Total capacity (measured in available seat kilometers) is expected to increase roughly 307% from the second-quarter 2020 reported level. Strong seasonal demand is expected to drive the third-quarter capacity to 80% above the June-quarter reading.

5. At Azul (AZUL - Free Report) , June’s consolidated traffic, measured in revenue passenger kilometers, increased 18.2% month over month. With travel demand rising, capacity moved up 16.8% in June from the May tally. Since traffic surge was more than capacity expansion, load factor rose to 76.8% in June from 75.8% in May.

Performance

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

Zacks Investment Research
Image Source: Zacks Investment Research

The table above shows most airline stocks have traded in the red over the past week even though the losses were muted in nature. Consequently, the NYSE ARCA Airline Index has been more or less flat over the past five trading days. Over the course of the past six months, the NYSE ARCA Airline Index has appreciated13%.

What’s Next in the Airline Space?

Investors will keenly await the second-quarter 2021 earnings report of Delta Air Lines (DAL - Free Report) on Jul 14.