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Airline Stock Roundup: AAL, LUV, JBLU & HA Report Q3 Loss

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In the past week, American Airlines (AAL - Free Report) , Southwest Airlines (LUV - Free Report) , Hawaiian Holdings (HA - Free Report) and JetBlue Airways (JBLU - Free Report) reported losses for third-quarter 2021. The same, however, narrowed year over year as the September-quarter results were better than the same reported for third-quarter 2020, which was severely hit by the COVID crisis. With COVID-19 cases declining in the United States as the Delta variant-induced threat recedes, passenger revenues increased significantly on a year-over-year basis in third-quarter 2021.

Alaska Air Group’s (ALK - Free Report) third-quarter 2021 brought further joy as this Seattle, WA-based carrier reported earnings unlike the above-mentioned airlines. We remind investors that Delta Air Lines (DAL - Free Report) too posted earnings report for the September quarter, which was included in the previous week’s write up.

Recap of the Latest Top Stories

1. Alaska Air’s third-quarter 2021 earnings (excluding 6 cents from non-recurring items) of $1.47 per share surpassed the Zacks Consensus Estimate of $1.29. In the year-ago period, the company incurred a loss of $3.23. Operating revenues of $1,953 million outperformed the Zacks Consensus Estimate of $1,932 million. The top line surged more than 100% year over year with passenger revenues, accounting for 90.8% of the top line, soaring above 200%, courtesy of improvement in air-travel demand from the pandemic-led lows. For the fourth quarter, Alaska Air expects capacity to decline approximately 13-16% from the comparable period’s level in 2019. The company estimates economic fuel cost per gallon in the band of $2.20-$2.30.

Alaska Air currently carries a Zacks Rank #4 (Sell).

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

2. Southwest Airlines incurred a loss (excluding 96 cents from non-recurring items) of 23 cents per share in the third quarter of 2021, narrower than the Zacks Consensus Estimate of a loss of 27 cents. This marks the company’s seventh consecutive quarterly loss. Operating revenues of $4,679 million outperformed the Zacks Consensus Estimate of $4,581.5 million and also jumped more than 100% year over year. Passenger revenues, which accounted for 90.3% of the top line, totaled $4,227 million, reflecting an improvement of more than 100% year over year. Management estimates lingering effects from the deceleration in bookings witnessed in the third quarter to impact the fourth-quarter operating revenues by approximately $100 million.

3. American Airlines’ third-quarter 2021 loss (excluding $1.24 from non-recurring items) of 99 cents per share compared favorably with the Zacks Consensus Estimate of a loss of $1.04. Quarterly loss per share was also narrower than the year-ago loss of $5.54. Operating revenues of $8,969 million skyrocketed 182.67% year over year and also surpassed the Zacks Consensus Estimate of $8,926.6 million. This massive year-over-year jump reflects improving air-travel demand. Revenues increased 20%, sequentially. American Airlines expects system capacity for the December quarter to decline in the 11-13% range from the figure reported in fourth-quarter 2019. Total revenues in the fourth quarter of 2021 are anticipated to decline 20% from the level recorded in fourth-quarter 2019. Fuel cost per gallon in fourth-quarter 2021 is expected in the $2.43-$2.48 band.

4. JetBlue Airways incurred a third-quarter 2021 loss (excluding 52 cents from non-recurring items) of 12 cents per share, comparing favorably with the Zacks Consensus Estimate of a loss of 19 cents. This was the seventh successive quarterly loss posted by the low-cost carrier. Quarterly loss per share was also narrower than the year-ago loss of $1.75. Revenues for the fourth quarter of 2021 are expected to decline in the 8-13% range from the fourth-quarter 2019 actuals. Capacity is anticipated to decline in the 4-7% range for the December quarter from the figure reported in the fourth quarter of 2019. Average fuel cost per gallon in the December quarter is estimated to be $2.49.

5. Hawaiian Holdings’ third-quarter 2021 loss (excluding $1.23 from non-recurring items) of 95 cents per share was narrower than the Zacks Consensus Estimate of a loss of $1.29 and the year-ago loss of $3.76. Quarterly revenues of $508.8 million skyrocketed 569.7% year over year and beat the Zacks Consensus Estimate of $490.6 million.

Passenger revenues (contributing 89.2% to the top line) surged to $454 million from $39.8 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 1625% year over year in the quarter under review. Capacity (measured in available seat miles) expanded 488.7% as the airline increases the same to meet the uptick in demand. Load factor (percentage of seats filled by passengers) expanded 50.3 percentage points to 75.9% for scheduled operations. Passenger revenue per ASM (PRASM) ascended 93.9% to 10.84 cents. Average fuel cost per gallon (economic) rose to $2.07 from $1.24 a year ago. Unit cost (excluding fuel and non-recurring items) declined 74.9% to 10.28 cents in the September quarter.

For the December quarter, capacity is anticipated to drop 18-21% from the fourth-quarter 2019 reading. Total revenues are anticipated to plunge 32-37% from the fourth-quarter 2019 actuals. Operating expenses (excluding non-recurring items) are expected to decline 7-11% from the levels recorded in fourth-quarter 2019. Adjusted EBITDA is expected between -$50 and -$110 million in the fourth quarter of 2021. Effective tax rate and fuel cost per gallon are anticipated to be 21% and $2.41, respectively, in the fourth quarter. Jet fuel consumption (in gallons) is expected to decline in the 21.5-24.5% band in fourth-quarter 2021 from the fourth-quarter 2019 actuals.

Performance

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

Zacks Investment ResearchImage Source: Zacks Investment Research

 

The table above shows that most airline stocks have traded in the red over the past week, causing the NYSE ARCA Airline Index to decline 2.4% to $87.86. Over the course of the past six months, the NYSE ARCA Airline Index has depreciated 17%.

What’s Next in the Airline Space?

Investors will await the third-quarter 2021 earnings report of SkyWest (SKYW - Free Report) , scheduled to be released on Oct 28.