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Airline Stock Roundup: AAL, LUV, ALK & Others Report Q2 Loss

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In the past week, American Airlines (AAL - Free Report) , Alaska Air Group (ALK - Free Report) , Southwest Airlines (LUV - Free Report) , Hawaiian Holdings (HA - Free Report) and JetBlue Airways (JBLU - Free Report) reported losses for second-quarter 2021. The same narrowed year over year as second-quarter 2021 results fared better owing to easy year-over-year comparisons with the performances of second-quarter 2020, which was worst hit by the COVID crisis. That unprecedented setback had hurt the year-ago June quarter’s financial numbers massively.

Delta Air Lines (DAL - Free Report) also incurred a loss in second-quarter 2021, per the previous week’s write up.

Recap of the Past Week’s Most Important Stories

1. American Airlines, currently carrying a Zacks Rank #3 (Hold), incurred a loss (excluding $1.72 from non-recurring items) of $1.69 per share, comparing favorably with the Zacks Consensus Estimate of a loss of $1.71. The bottom line was also narrower than the year-ago loss of $7.82. The airline expects system capacity for the September quarter to decline in the 15-20% range from the figure reported in third-quarter 2019. Total revenues in the third quarter of 2021 are anticipated to decline 20% from the level recorded in third-quarter 2019. Fuel cost per gallon in third-quarter 2021 is expected in the $2.10-$2.15 band. Fuel gallon consumption is expected to be $964 million. CASM excluding fuel and special items in the September quarter is expected to increase in the 8-12% range from the number reported in third-quarter 2019. Pre-tax margin (excluding net special items) for the September quarter is anticipated between -3% and -7%.

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

2. Southwest Airlines incurred a second-quarter 2021 loss (excluding 92 cents from non-recurring items) of 35 cents per share in the second quarter of 2021, wider than the Zacks Consensus Estimate of a loss of 21 cents. The carrier anticipates operating revenues to decline 10-15% in July from the level reported in the same period of 2019. The same for August is expected to be down 12-17%. Load factor (% of seats filled by passengers) is expected to be 85% and 80% in July and August, respectively. The airline estimates economic fuel costs per gallon in the range of $2.05-$2.15 for both the third and the fourth quarter.

3. Alaska Air Group, the parent company of Alaska Airlines, incurred a loss (excluding $3.45 from non-recurring items) of 30 cents per share, narrower than the Zacks Consensus Estimate of a loss of 31 cents. In the year-ago quarter, the company incurred a loss of $3.54 per share. Operating revenues of $1,527 million skyrocketed 262.71% year over year.

4. JetBlue Airways incurred a second-quarter 2021 loss (excluding 84 cents from non-recurring items) of 64 cents per share, comparing favorably with the Zacks Consensus Estimate of a loss of 73 cents.The bottom line was also narrower than the year-ago loss of $2.02. Revenues for the third quarter of 2021 are expected to decline in the 4-9% range from the third-quarter 2019 actuals. Capacity is anticipated to be either flat or decline up to 3% in the September quarter from the figure reported in the third quarter of 2019. Average fuel cost per gallon in the September quarter is estimated to be $2.09.

5. Hawaiian Holdings’ second-quarter 2021 loss (excluding $1.32 from non-recurring items) of $1.44 per share was narrower than the Zacks Consensus Estimate of a loss of $1.79 and the year-ago loss of $3.81. Quarterly revenues of $410.8 million skyrocketed 584.6% year over year and beat the Zacks Consensus Estimate of $393.3 million.

Passenger revenues (contributing 86.7% to the top line) surged to $356.3 million from a mere $29.8 million a year ago as more people took to the skies following the ramp-up in vaccination. Airline traffic, measured in revenue passenger miles, surged in excess of 800% year over year to 1,723 million in the quarter under review. Capacity (measured in available seat miles) expanded even more to 3,546 million as the airline increases the same to meet the uptick in demand. Load factor expanded 54.8 percentage points to 78%. Passenger revenue per ASM (PRASM) ascended 38.2% to 10.05 cents. Average fuel cost per gallon (economic) rose to $1.89 from $1.26 a year-ago.

For the September quarter, capacity is anticipated to drop 20-23% from the third-quarter 2019 levels. Total revenues are anticipated to plunge 28-33% from the third-quarter 2019 actuals.  Operating expenses (excluding non-recurring items) are expected to decline 10-14% from the third-quarter 2019 levels. Interest expense is expected to be at $30 million in the September quarter. Adjusted EBITDA is expected between -$20 and $20 million in the third quarter of 2021. Effective tax rate and fuel cost per gallon are anticipated to be 21% and $2.04, respectively, in the third quarter.

Performance

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

Zacks Investment Research
Image Source: Zacks Investment Research

The table above shows that all airline stocks, barring JetBlue, have traded in the green in the past week, leading the NYSE ARCA Airline Index to inch up 2.3% to touch $96.51. Over the course of the past six months, the NYSE ARCA Airline Index has appreciated 16.3%.

What's Next in the Airline Space?

Investors will keenly await the second-quarter 2021 earnings report of Copa Holdings (CPA - Free Report) , scheduled to be released on Aug 4.