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In the past week, we saw airline heavyweights like Delta Air Lines (DAL - Free Report) and Alaska Air Group (ALK - Free Report) give upbeat projections for the final quarter of the year, driven by robust air-travel demand. On the other hand, JetBlue Airways’ (JBLU - Free Report) management expects unit revenues for the December quarter to be at the low end of the previously guided range.
United Airlines (UAL - Free Report) was also in the news due to its fleet-modernization efforts, with management announcing that UAL will buy at least 100 787 Dreamliners from Boeing. With air-travel demand improving, Copa Holdings (CPA - Free Report) reported upbeat traffic numbers for the month of November.
Recap of the Latest Top Stories
1 Driven by upbeat air-travel demand, Delta expects fourth-quarter 2022 operating margin to be 11%, i.e. at the top of the previously guided 9-11% range. DAL now expects adjusted earnings per share in the $1.35-$1.40 range (the earlier outlook was in the range of $1-$1.25). Total revenues are now likely to increase in the 7-8% range from fourth-quarter 2019 actuals (the earlier outlook was for an increase in the 5-9% range). For full-year 2022, adjusted earnings are expected in the $3.07-$3.12 range. Meanwhile, full-year 2022 total revenues are expected in the $45.5-$45.6 billion range. Current-year operating margin is expected to be 7.7%. For full-year 2023, DAL expects 15-20% year-over-year revenue growth. Earnings per share and operating margin for full-year 2023 are expected in the $5-$6 band and 10-12% range, respectively. Free cash flow is anticipated to exceed $2 billion next year. Earnings per share and free cash flow are anticipated to exceed $7 and $4 billion, respectively, in full-year 2024. Delta currently carries a Zacks Rank #3 (Hold).
2. Alaska Air now expects fourth-quarter 2022 capacity to decline in the 7-9% range from fourth-quarter 2019 actuals (earlier guidance called for a 7-10% decline). On the back of upbeat air-travel demand and favorable pricing, ALK now expects fourth-quarter 2022 total revenues to increase 13-14% from fourth-quarter 2019 actuals (the previous guidance had hinted at a 12-15% increase). Moreover, ALK’s management aims to resume share buybacks early next year, following the lifting of restrictions under the CARES Act.
3. In a bid to modernize its fleet, United Airlines placed the largest 787 Dreamliner order to Boeing. UAL will purchase 100 Boeing 787 Dreamliners, with options to buy 100 more. UAL anticipates getting delivery of the new widebody planes between 2024 and 2032. The new jets are expected to result in 25% improvement pertaining to fuel usage compared with the older Boeing 767 widebodies and some 777s that will be placed. As a result of this massive deal, significant job opportunities for pilots, flight attendants and maintenance technicians, among others are also likely to be created.
4. With hurricane Nicole impacting operations, close-in demand for the final month of the year has been weaker than expected, per JetBlue’s management. Apart from the hurricane, the holiday calendar timing this year had a greater-than-expected negative impact. As a result, JBLU now anticipates revenue per available seat mile for the fourth quarter of 2022 to be at the low end of its earlier guided range of a 15-19% increase from fourth-quarter 2019 actuals.
JBLU was also in the news recently due to its environmentally-friendly approach. That story was reported in detail in the previous week’s write-up.
5. In November 2022, Copa Holdings’ traffic, measured in revenue passenger miles (RPMs), increased 6.4% to 1.81 billion from the comparable period’s level in 2019. Increased passenger volume led to this upside. To match upbeat demand, CPA is increasing capacity — measured in available seat miles (ASMs) — which increased 4.6% from the November 2019 level to 2.08 billion. With traffic growth outpacing capacity expansion, the load factor (% of seats filled by passengers) improved 150 basis points to 87% in November 2022.
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 traded in the red over the past week. The NYSE ARCA Airline Index inched down 0.8% to $57.05 over the past week. Over the course of the past six months, the NYSE ARCA Airline Index has remained flat.
What's Next in the Airline Space?
Stay tuned for the usual updates in the space.
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Airline Stock Roundup: DAL, ALK's Bullish Q4 Projections & CPA in Focus
In the past week, we saw airline heavyweights like Delta Air Lines (DAL - Free Report) and Alaska Air Group (ALK - Free Report) give upbeat projections for the final quarter of the year, driven by robust air-travel demand. On the other hand, JetBlue Airways’ (JBLU - Free Report) management expects unit revenues for the December quarter to be at the low end of the previously guided range.
United Airlines (UAL - Free Report) was also in the news due to its fleet-modernization efforts, with management announcing that UAL will buy at least 100 787 Dreamliners from Boeing. With air-travel demand improving, Copa Holdings (CPA - Free Report) reported upbeat traffic numbers for the month of November.
Recap of the Latest Top Stories
1 Driven by upbeat air-travel demand, Delta expects fourth-quarter 2022 operating margin to be 11%, i.e. at the top of the previously guided 9-11% range. DAL now expects adjusted earnings per share in the $1.35-$1.40 range (the earlier outlook was in the range of $1-$1.25). Total revenues are now likely to increase in the 7-8% range from fourth-quarter 2019 actuals (the earlier outlook was for an increase in the 5-9% range). For full-year 2022, adjusted earnings are expected in the $3.07-$3.12 range. Meanwhile, full-year 2022 total revenues are expected in the $45.5-$45.6 billion range. Current-year operating margin is expected to be 7.7%. For full-year 2023, DAL expects 15-20% year-over-year revenue growth. Earnings per share and operating margin for full-year 2023 are expected in the $5-$6 band and 10-12% range, respectively. Free cash flow is anticipated to exceed $2 billion next year. Earnings per share and free cash flow are anticipated to exceed $7 and $4 billion, respectively, in full-year 2024. Delta currently carries a Zacks Rank #3 (Hold).
You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here
2. Alaska Air now expects fourth-quarter 2022 capacity to decline in the 7-9% range from fourth-quarter 2019 actuals (earlier guidance called for a 7-10% decline). On the back of upbeat air-travel demand and favorable pricing, ALK now expects fourth-quarter 2022 total revenues to increase 13-14% from fourth-quarter 2019 actuals (the previous guidance had hinted at a 12-15% increase). Moreover, ALK’s management aims to resume share buybacks early next year , following the lifting of restrictions under the CARES Act.
3. In a bid to modernize its fleet, United Airlines placed the largest 787 Dreamliner order to Boeing. UAL will purchase 100 Boeing 787 Dreamliners, with options to buy 100 more. UAL anticipates getting delivery of the new widebody planes between 2024 and 2032. The new jets are expected to result in 25% improvement pertaining to fuel usage compared with the older Boeing 767 widebodies and some 777s that will be placed. As a result of this massive deal, significant job opportunities for pilots, flight attendants and maintenance technicians, among others are also likely to be created.
4. With hurricane Nicole impacting operations, close-in demand for the final month of the year has been weaker than expected, per JetBlue’s management. Apart from the hurricane, the holiday calendar timing this year had a greater-than-expected negative impact. As a result, JBLU now anticipates revenue per available seat mile for the fourth quarter of 2022 to be at the low end of its earlier guided range of a 15-19% increase from fourth-quarter 2019 actuals.
JBLU was also in the news recently due to its environmentally-friendly approach. That story was reported in detail in the previous week’s write-up.
5. In November 2022, Copa Holdings’ traffic, measured in revenue passenger miles (RPMs), increased 6.4% to 1.81 billion from the comparable period’s level in 2019. Increased passenger volume led to this upside. To match upbeat demand, CPA is increasing capacity — measured in available seat miles (ASMs) — which increased 4.6% from the November 2019 level to 2.08 billion. With traffic growth outpacing capacity expansion, the load factor (% of seats filled by passengers) improved 150 basis points to 87% in November 2022.
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 traded in the red over the past week. The NYSE ARCA Airline Index inched down 0.8% to $57.05 over the past week. Over the course of the past six months, the NYSE ARCA Airline Index has remained flat.
What's Next in the Airline Space?
Stay tuned for the usual updates in the space.