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In the past week, Delta Air Lines (DAL - Free Report) kick-started the first-quarter 2022 earnings season in the airline space. The Atlanta-based carrier reported a loss as Omicron dented travel plans in the early part of the first quarter of 2022. However, the carrier had delivered earnings in the last two quarters of 2021.
Nevertheless, with the threat of the Omicron variant subsiding, air-travel demand was exceptionally strong in March this year. Upbeat demand led to DAL earning a profit in the month with the adjusted operating margin reaching almost 10%. Also, driven by buoyant demand, Delta gave a bullish outlook for the second quarter of 2022.
Also, owing to the uptick in air-travel demand, American Airlines (AAL - Free Report) gave an improved view for its first-quarter 2022 total revenues. Detailed results will be out on Apr 21. However, JetBlue Airways (JBLU - Free Report) and Alaska Air Group’s (ALK - Free Report) subsidiary Alaska Airlines lowered their respective capacity to ensure a smooth summer travel in the wake of staffing shortages. Latin American carrier Azul (AZUL - Free Report) was another primary newsmaker, courtesy of its bullish March traffic report.
Recap of the Latest Top Stories
1.Delta’s first-quarter 2022 loss (excluding 25 cents from non-recurring items) of $1.23 per share was narrower than the Zacks Consensus Estimate of a loss of $1.28. Revenues came in at $9,348 million, which not only beat the Zacks Consensus Estimate of $9,063.5 million but also soared in excess of 100% from the year-ago figure. The uptick in air-travel demand in the United States can be gauged from the fact that 80.5% of first-quarter 2022 passenger revenues came from the domestic markets. Per Delta's president Glen Hauenstein, "In the June quarter, we are successfully recapturing higher fuel prices and expect our revenue recovery to accelerate to 93 to 97 percent with unit revenue up double digits compared to 2019." Operating margin (adjusted) for the June quarter of 2022 is anticipated in the 12-14% range.
Delta, currently carrying a Zacks Rank #3 (Hold), was also in the news recently owing to its fleet-modernization exercise. The story was covered in the previous week’s write-up.
3. JetBlue’s management slashed its May capacity 8-10%, expecting similar capacity cuts for the remainder of summer. Per management, JBLU has hired 2,500 people so far this year but is still facing shortages. Alaska Airlines also plans to trim its schedule by 2% through the end of June due to pilot crisis. The airline already canceled several flights earlier this month due to staffing constraints.
4. In March, Azul’s consolidated traffic surged 68.6% year over year. To match the increased demand situation, AZUL is expanding its capacity. In the same month, capacity grew 52.6% year over year. Since traffic growth was more than capacity expansion, load factor (percentage of seats filled by passengers) improved 7.5 percentage points (p.p) to 78.7% last month.
Upbeat traffic in its domestic markets is leading to the rosy scenario on a consolidated basis. In March, domestic traffic and capacity improved 52.6% and 39.4%, respectively. Per Azul’s CEO John Rodgerson, "In March, we saw a strong improvement in booking trends, driven by one of the fastest corporate recoveries in the world. While we did experience some challenges from Omicron in 1Q22, we are happy to report those are now behind us and we are focused on executing our business plan for 2022, with the full recovery of corporate demand still to come and the upside from the appreciation of the real against the dollar.”
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 all the airline stocks have traded in the green over the past week. Strong air-travel demand leading to impressive revenue projections for the second quarter of 2022 from Delta and for the first quarter from American Airlines was behind the upside. The NYSE ARCA Airline Index has increased 4.9% to $80.45. Over the past six months, the NYSE ARCA Airline Index has declined 14.2%.
What's Next in the Airline Space?
With multiple airlines slated to report their first-quarter 2022 financials shortly, investors interested in the industry will keep a close eye on how they perform.
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Airline Stock Roundup: DAL's Upbeat Q2 Revenue View, AAL, JBLU in Focus
In the past week, Delta Air Lines (DAL - Free Report) kick-started the first-quarter 2022 earnings season in the airline space. The Atlanta-based carrier reported a loss as Omicron dented travel plans in the early part of the first quarter of 2022. However, the carrier had delivered earnings in the last two quarters of 2021.
Nevertheless, with the threat of the Omicron variant subsiding, air-travel demand was exceptionally strong in March this year. Upbeat demand led to DAL earning a profit in the month with the adjusted operating margin reaching almost 10%. Also, driven by buoyant demand, Delta gave a bullish outlook for the second quarter of 2022.
Also, owing to the uptick in air-travel demand, American Airlines (AAL - Free Report) gave an improved view for its first-quarter 2022 total revenues. Detailed results will be out on Apr 21. However, JetBlue Airways (JBLU - Free Report) and Alaska Air Group’s (ALK - Free Report) subsidiary Alaska Airlines lowered their respective capacity to ensure a smooth summer travel in the wake of staffing shortages. Latin American carrier Azul (AZUL - Free Report) was another primary newsmaker, courtesy of its bullish March traffic report.
Recap of the Latest Top Stories
1.Delta’s first-quarter 2022 loss (excluding 25 cents from non-recurring items) of $1.23 per share was narrower than the Zacks Consensus Estimate of a loss of $1.28. Revenues came in at $9,348 million, which not only beat the Zacks Consensus Estimate of $9,063.5 million but also soared in excess of 100% from the year-ago figure. The uptick in air-travel demand in the United States can be gauged from the fact that 80.5% of first-quarter 2022 passenger revenues came from the domestic markets. Per Delta's president Glen Hauenstein, "In the June quarter, we are successfully recapturing higher fuel prices and expect our revenue recovery to accelerate to 93 to 97 percent with unit revenue up double digits compared to 2019." Operating margin (adjusted) for the June quarter of 2022 is anticipated in the 12-14% range.
Delta, currently carrying a Zacks Rank #3 (Hold), was also in the news recently owing to its fleet-modernization exercise. The story was covered in the previous week’s write-up.
You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
2. Per a SEC filing dated Apr 12, American Airlines expects total revenues to decline approximately 16% in first-quarter 2022 from the comparable period’s number in 2019. This is better than AAL’s previous view of an approximate decrease of 17%. Amid the Russia-Ukraine war, fuel prices are soaring. AAL now estimates fuel cost per gallon to be $2.80-$2.85 in the first quarter compared with $2.73-$2.78 anticipated previously.
3. JetBlue’s management slashed its May capacity 8-10%, expecting similar capacity cuts for the remainder of summer. Per management, JBLU has hired 2,500 people so far this year but is still facing shortages. Alaska Airlines also plans to trim its schedule by 2% through the end of June due to pilot crisis. The airline already canceled several flights earlier this month due to staffing constraints.
4. In March, Azul’s consolidated traffic surged 68.6% year over year. To match the increased demand situation, AZUL is expanding its capacity. In the same month, capacity grew 52.6% year over year. Since traffic growth was more than capacity expansion, load factor (percentage of seats filled by passengers) improved 7.5 percentage points (p.p) to 78.7% last month.
Upbeat traffic in its domestic markets is leading to the rosy scenario on a consolidated basis. In March, domestic traffic and capacity improved 52.6% and 39.4%, respectively. Per Azul’s CEO John Rodgerson, "In March, we saw a strong improvement in booking trends, driven by one of the fastest corporate recoveries in the world. While we did experience some challenges from Omicron in 1Q22, we are happy to report those are now behind us and we are focused on executing our business plan for 2022, with the full recovery of corporate demand still to come and the upside from the appreciation of the real against the dollar.”
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 all the airline stocks have traded in the green over the past week. Strong air-travel demand leading to impressive revenue projections for the second quarter of 2022 from Delta and for the first quarter from American Airlines was behind the upside. The NYSE ARCA Airline Index has increased 4.9% to $80.45. Over the past six months, the NYSE ARCA Airline Index has declined 14.2%.
What's Next in the Airline Space?
With multiple airlines slated to report their first-quarter 2022 financials shortly, investors interested in the industry will keep a close eye on how they perform.