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In the past week, Allegiant Travel Company (ALGT - Free Report) increased its fuel cost per gallon view for first-quarter 2022 due to the recent upsurge in oil price. By doing so, ALGT joined a host of other airlines that took similar actions, as reported in the previous week’s write up.
Delta Air Lines (DAL - Free Report) was another primary news maker in the past week, courtesy of its environmentally-friendly deal with the sustainable aviation fuel (SAF) maker Gevo. RyanairHoldings (RYAAY - Free Report) was also in news for its eco-friendly stance as it aims to achieve net-zero carbon emissions by 2050. RYAAY intends to achieve one-third of its decarbonization target through the use of sustainable jet fuels. An expansion-related update has also been available from Spirit Airlines (SAVE - Free Report) in the past week.
Recap of the Latest Top Stories
1. Delta signed a “take-or-pay” agreement with Gevo for 75 million gallons of SAF per year for a seven-year term. The agreement replaces Delta’s existing deal with Gevo, signed in 2019, to purchase 10 million gallons of SAF per year. It advances DAL’s goal of achieving net-zero aviation. DAL has a target to replace 10% of its conventional jet fuel consumption with SAF by the end of 2030.
2. In line with its objective to use more SAF, Ryanair is trying to accelerate the supply of SAF by working with the European Union and fuel suppliers. RYAAY anticipates 32% of the decarbonization to happen via technological and operational improvements. RYAAY intends to continue investing in new technology and aircraft.
Ryanair, currently carrying a Zacks Rank #3 (Hold), expects to reduce emissions by offsetting measures. Carbon-capture offset projects plus government policies and reforms, such as the introduction of the Single European Sky ATM Research (SESAR), are expected to help RYAAY meet 24% of its decarbonation target.
3. Allegiant now expects fuel price per gallon to be $3.05 in the first quarter of 2022 (earlier guidance was $2.67). Allegiant lowered its capacity growth forecast for the first quarter due to the oil price rise. Available seat miles (a measure of capacity), both for scheduled service and system wide, are expected to increase in the 17-19% range from the first-quarter 2019 actuals (earlier guidance was for an increase in the 19-23% range).
4. In response to the uptick in air-travel demand, Spirit Airlines is widening its network. To this end, SAVE is expanding its presence in Las Vegas, NV, with nonstop flights to Albuquerque International Sunport (ABQ), Boise Airport (BOI) and Reno-Tahoe International Airport (RNO). Daily nonstop service between Harry Reid International Airport in Las Vegas and ABQ is set to begin Aug 3, 2022, onward. The same between Las Vegas and BOI is expected to commence Aug 5 onward. The service between Las Vegas and RNO will be operational twice daily from Aug 10. Following these new services, Spirit Airlines will operate flights to 41 nonstop destinations and offer up to 75 peak-day departures. This indicates a 30% increase in SAVE’s service to Las Vegas from the year-ago reported figure.
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 most airline stocks have traded in the green over the past week. However, the gains were muted in nature. The NYSE ARCA Airline Index has increased 1.3% to $75.86. Over the past six months, the NYSE ARCA Airline Index has declined 23%.
What's Next in the Airline Space?
Watch this space for the usual news updates on the aviation domain.
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Airline Stock Roundup: ALGT's Increased Q1 Fuel Cost View, DAL's Deal With Gevo
In the past week, Allegiant Travel Company (ALGT - Free Report) increased its fuel cost per gallon view for first-quarter 2022 due to the recent upsurge in oil price. By doing so, ALGT joined a host of other airlines that took similar actions, as reported in the previous week’s write up.
Delta Air Lines (DAL - Free Report) was another primary news maker in the past week, courtesy of its environmentally-friendly deal with the sustainable aviation fuel (SAF) maker Gevo. Ryanair Holdings (RYAAY - Free Report) was also in news for its eco-friendly stance as it aims to achieve net-zero carbon emissions by 2050. RYAAY intends to achieve one-third of its decarbonization target through the use of sustainable jet fuels. An expansion-related update has also been available from Spirit Airlines (SAVE - Free Report) in the past week.
Recap of the Latest Top Stories
1. Delta signed a “take-or-pay” agreement with Gevo for 75 million gallons of SAF per year for a seven-year term. The agreement replaces Delta’s existing deal with Gevo, signed in 2019, to purchase 10 million gallons of SAF per year. It advances DAL’s goal of achieving net-zero aviation. DAL has a target to replace 10% of its conventional jet fuel consumption with SAF by the end of 2030.
2. In line with its objective to use more SAF, Ryanair is trying to accelerate the supply of SAF by working with the European Union and fuel suppliers. RYAAY anticipates 32% of the decarbonization to happen via technological and operational improvements. RYAAY intends to continue investing in new technology and aircraft.
Ryanair, currently carrying a Zacks Rank #3 (Hold), expects to reduce emissions by offsetting measures. Carbon-capture offset projects plus government policies and reforms, such as the introduction of the Single European Sky ATM Research (SESAR), are expected to help RYAAY meet 24% of its decarbonation target.
You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
3. Allegiant now expects fuel price per gallon to be $3.05 in the first quarter of 2022 (earlier guidance was $2.67). Allegiant lowered its capacity growth forecast for the first quarter due to the oil price rise. Available seat miles (a measure of capacity), both for scheduled service and system wide, are expected to increase in the 17-19% range from the first-quarter 2019 actuals (earlier guidance was for an increase in the 19-23% range).
Due to the cut in the capacity growth forecast, ALGT increased the lower limit of its first-quarter 2022 non-fuel unit cost growth projection. The metric is now expected to rise in the 3-5% range from the first-quarter 2019 actuals (earlier guidance was an increase of 1-5%).
4. In response to the uptick in air-travel demand, Spirit Airlines is widening its network. To this end, SAVE is expanding its presence in Las Vegas, NV, with nonstop flights to Albuquerque International Sunport (ABQ), Boise Airport (BOI) and Reno-Tahoe International Airport (RNO). Daily nonstop service between Harry Reid International Airport in Las Vegas and ABQ is set to begin Aug 3, 2022, onward. The same between Las Vegas and BOI is expected to commence Aug 5 onward. The service between Las Vegas and RNO will be operational twice daily from Aug 10. Following these new services, Spirit Airlines will operate flights to 41 nonstop destinations and offer up to 75 peak-day departures. This indicates a 30% increase in SAVE’s service to Las Vegas from the year-ago reported figure.
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 most airline stocks have traded in the green over the past week. However, the gains were muted in nature. The NYSE ARCA Airline Index has increased 1.3% to $75.86. Over the past six months, the NYSE ARCA Airline Index has declined 23%.
What's Next in the Airline Space?
Watch this space for the usual news updates on the aviation domain.