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Airline Stock Roundup: U.S. Shuts Airspace for Russia, SAVE, RYAAY in Focus
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In the past week, the ban imposed by the U.S. government on Russian carriers by closing down its airspace following the invasion of Ukraine by Russia dominated headlines. However, even before the announcement was made on Mar 1, Delta Air Lines (DAL - Free Report) and American Airlines (AAL - Free Report) had already suspended their partnerships with the respective Russian carriers. United Airlines (UAL - Free Report) too followed suit by temporarily suspending flights over the Russian airspace.
In other news, Ryanair Holdings (RYAAY - Free Report) reported impressive traffic numbers for February on the back of upbeat air-travel demand. Expansion-related updates were available from United Airlines and Spirit Airlines (SAVE - Free Report) in the previous week.
1. United Airlines, currently carrying a Zacks Rank #3 (Hold), is set to resume San Francisco-Melbourne (Australia) flights on May 7. The service remained suspended for long due to coronavirus-related travel restrictions.
3. Despite omicron-led woes, Ryanair’s traffic in February 2022 surged more than 100% year over year to 8.7 million. Traffic in February 2021 was only 0.5 million at RYAAY. Last month’s traffic was also higher than the previous month’s reading of 7 million, reflecting the gradual improvement in air-travel demand. Load factor (percentage of seats filled with passengers) in February 2021 was 86% higher than 78% recorded in February 2021 and 79% in January 2022.
4. Following the eruption of the Russia-Ukraine crisis, Delta suspended its codeshare agreement with the Russian-carrier Aeroflot. To severe ties with Russia, American Airlines suspended its agreements with Aeroflot and another Russian carrier S7 Airlines. United Airlines, which uses the Russian airspace for flights from Delhi (India) is reportedly evaluating options as to how it can continue operating such flights using different routes.
Performance
The following table shows the price movement of the major airline players over the past week and during the last six months.
Image Source: Zacks Investment Research
The table above shows that almost airline stocks traded in the red over the past week mainly due to the upsurge in oil price. We note that even before the Russia-Ukraine crisis emanated, oil price was witnessing a spike. Russia’s launch of military operations in Ukraine skyrocketed the commodity price further (currently trading above $100 a barrel).
The upsurge is reflective of the concerns about oil supplies from Russia, which is one of the world's largest producers of the commodity. Such escalation in oil price does not bode well for airlines’ bottom line as fuel expenses represent one of the largest input costs for these operators. As a result, the NYSE ARCA Airline Index decreased 6.2% to $78.49 over the past week. Over the course of the past six months, the NYSE ARCA Airline Index declined 15%.
What's Next in the Airline Space?
Stay tuned for further updates on the impact on airlines as the Russia-Ukraine tension increases.
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Airline Stock Roundup: U.S. Shuts Airspace for Russia, SAVE, RYAAY in Focus
In the past week, the ban imposed by the U.S. government on Russian carriers by closing down its airspace following the invasion of Ukraine by Russia dominated headlines. However, even before the announcement was made on Mar 1, Delta Air Lines (DAL - Free Report) and American Airlines (AAL - Free Report) had already suspended their partnerships with the respective Russian carriers. United Airlines (UAL - Free Report) too followed suit by temporarily suspending flights over the Russian airspace.
In other news, Ryanair Holdings (RYAAY - Free Report) reported impressive traffic numbers for February on the back of upbeat air-travel demand. Expansion-related updates were available from United Airlines and Spirit Airlines (SAVE - Free Report) in the previous week.
Read the last Airline roundup here.
Recap of the Latest Top Stories
1. United Airlines, currently carrying a Zacks Rank #3 (Hold), is set to resume San Francisco-Melbourne (Australia) flights on May 7. The service remained suspended for long due to coronavirus-related travel restrictions.
Throughout the pandemic, United Airlines had maintained its passenger service to Australia. UAL offers the maximum number of flights to Australia among all U.S. carriers, management had said earlier. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
2. Spirit Airlines launched a service from Orlando International Airport (MCO) to Mercedita International Airport (PSE) in Ponce. The move expands its presence in Puerto Rico. This daily nonstop service complements Spirit Airlines’ existing operations in San Juan (SJU) and Aguadilla (BQN) in Puerto Rico. From Orlando, FL, SAVE operates around 80 flights each day, providing one-stop options between PSE and 28 cities across its route map.
3. Despite omicron-led woes, Ryanair’s traffic in February 2022 surged more than 100% year over year to 8.7 million. Traffic in February 2021 was only 0.5 million at RYAAY. Last month’s traffic was also higher than the previous month’s reading of 7 million, reflecting the gradual improvement in air-travel demand. Load factor (percentage of seats filled with passengers) in February 2021 was 86% higher than 78% recorded in February 2021 and 79% in January 2022.
4. Following the eruption of the Russia-Ukraine crisis, Delta suspended its codeshare agreement with the Russian-carrier Aeroflot. To severe ties with Russia, American Airlines suspended its agreements with Aeroflot and another Russian carrier S7 Airlines. United Airlines, which uses the Russian airspace for flights from Delhi (India) is reportedly evaluating options as to how it can continue operating such flights using different routes.
Performance
The following table shows the price movement of the major airline players over the past week and during the last six months.
Image Source: Zacks Investment Research
The table above shows that almost airline stocks traded in the red over the past week mainly due to the upsurge in oil price. We note that even before the Russia-Ukraine crisis emanated, oil price was witnessing a spike. Russia’s launch of military operations in Ukraine skyrocketed the commodity price further (currently trading above $100 a barrel).
The upsurge is reflective of the concerns about oil supplies from Russia, which is one of the world's largest producers of the commodity. Such escalation in oil price does not bode well for airlines’ bottom line as fuel expenses represent one of the largest input costs for these operators. As a result, the NYSE ARCA Airline Index decreased 6.2% to $78.49 over the past week. Over the course of the past six months, the NYSE ARCA Airline Index declined 15%.
What's Next in the Airline Space?
Stay tuned for further updates on the impact on airlines as the Russia-Ukraine tension increases.