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Airline Stocks' Jan 26 Q4 Earnings Roster: AAL, ALK & More
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Stocks in the Zacks Airline industry are being well served by a buoyant scenario backed by air-travel demand. Air travel demand made a stronger-than-expected recovery as people started booking flights again, thereby boosting passenger revenues, which account for the bulk of most airlines’ top lines. Only a handful of airline companies (two S&P 500 members, to be exact) have reported their fourth-quarter 2022 numbers so far.
However, high fuel costs are likely to have hurt the fourth-quarter performance of airline companies. Fuel expenses represent a key input cost for any airline player. High oil price is augmenting fuel costs. Even though oil price declined from their multi-year highs, they remain high. Oil price was up 6.7% in the October-December period.
Given this backdrop, investors interested in the Zacks Airline industry keenly await the results of American Airlines (AAL - Free Report) , Alaska Air Group, Inc. (ALK - Free Report) , Southwest Airlines Co. (LUV - Free Report) and JetBlue Airways Corporation (JBLU - Free Report) , scheduled to be released on Jan 26.
Our quantitative model predicts an earnings beat for a company if it has a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold). This combination increases the chances of an earnings beat. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
American Airlines’ top-line performance in the fourth quarter is expected to have benefited from upbeat air-travel demand, particularly on the domestic front. Driven by the uptick, AAL expects fourth-quarter 2022 adjusted operating margin to increase 10.25-10.5% (prior view: 5.5-7.5%). Total revenues are expected to register 16-17% growth (prior view: 11-13% growth rate).
Passenger revenues, which account for the bulk of the top line, are likely to have been high, in turn, boosting the top line. The Zacks Consensus Estimate for load factor is pegged at 84% for fourth-quarter 2022, higher than 80% reported in fourth-quarter 2019.
However, high operating costs are anticipated to have affected the bottom-line performance in the to-be-reported quarter. AAL expects adjusted earnings per share in the range of $1.12-$1.17.
Our proven model predicts an earnings beat for American Airlines this earnings season as AAL has an Earnings ESP of +9.79% and a Zacks Rank #2 at present. At the time, the fourth-quarter earnings preview article was issued, AAL had an Earnings ESP of +16.71% and a Zacks Rank #2.
American Airlines Group Inc. Price and EPS Surprise
Alaska Air’s fourth-quarter 2022 revenues are likely to have been aided by continued recovery in air-travel demand and an improvement in passenger revenues. On the back of upbeat air-travel demand and favorable pricing, ALK has updated its fourth-quarter 2022 guidance. The company now expects fourth-quarter 2022 total revenues to increase 13-14% from the fourth quarter of 2019 actuals (the previous guidance had hinted at a 12-15% increase). Load factor (% of seats filled by passengers) is now expected in the 84-86% band (earlier guidance was in the 83-86% range).
Meanwhile, with oil prices coming down in the latter half of the December quarter, fuel price per gallon is now expected in the range of $3.50-$3.60 (earlier guidance was in the $3.50-$3.70 band) for fourth-quarter 2022. Although the higher end of the fuel cost guidance has been lowered, escalating operating expenses, primarily due to fuel prices, are likely to have dampened Alaska Air’s bottom line. The Zacks Consensus Estimate for ALK’s fourth-quarter 2022 earnings has been revised downward by 12% in the past 90 days. The Zacks Consensus Estimate for economic fuel cost per gallon is pegged at $3.62 for the fourth quarter, indicating 60.1% growth year over year.
Our proven model does not conclusively predict an earnings beat for Alaska Air this season as ALK has an Earnings ESP of -7.82% and a Zacks Rank #3 at present.
Southwest Airlines’s fourth-quarter 2022 performance is likely to have been affected by massive flight cancellations due to unfavorable weather conditions during the Christmas holiday weekend. Following the massive cancellations, LUV expects available seat miles (a measure of capacity) to decline approximately 6% in fourth-quarter 2022 from the fourth-quarter 2019 actuals. The previous guidance hinted at a 2% decline in available seat miles for fourth-quarter 2022. Revenues are likely to have been adversely impacted by $400-$425 million. Management expects a pre-tax hit of $725-$825 million to fourth-quarter earnings.
However, LUV’s focus on boosting cargo revenues is likely to have aided its performance in the to-be-reported quarter. The Zacks Consensus Estimate for fourth-quarter 2022 cargo revenues hints at an 11.6% sequential increase.
Our proven model does not conclusively predict an earnings beat for Southwest Airlines this time around as LUV has an Earnings ESP of 0.00% and a Zacks Rank #3 at present. At the time, the fourth-quarter earnings preview article was issued, LUV had an Earnings ESP of -101.96% and a Zacks Rank #3.
JetBlue Airways’s fourth-quarter 2022 performance is likely to have been unfavorably impacted by Hurricane Nicole-induced disruptions in air-travel demand. The Zacks Consensus Estimate for fourth-quarter 2022 earnings has been revised downward over the past 60 days. Apart from the hurricane, the holiday calendar timing in 2022 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 15-19% increase from fourth-quarter 2019 actuals. High fuel costs are also likely to have hurt JBLU'S bottom-line performance in Q4. On the brighter side, JetBlue’s efforts to reduce its debt load is encouraging. We are also impressed by the company's efforts to modernize its fleet.
Our proven model predicts an earnings beat for JetBlue this earnings season as JBLU has an Earnings ESP of +6.77% and a Zacks Rank #3 at present.
JetBlue Airways Corporation Price and EPS Surprise
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Airline Stocks' Jan 26 Q4 Earnings Roster: AAL, ALK & More
Stocks in the Zacks Airline industry are being well served by a buoyant scenario backed by air-travel demand. Air travel demand made a stronger-than-expected recovery as people started booking flights again, thereby boosting passenger revenues, which account for the bulk of most airlines’ top lines. Only a handful of airline companies (two S&P 500 members, to be exact) have reported their fourth-quarter 2022 numbers so far.
However, high fuel costs are likely to have hurt the fourth-quarter performance of airline companies. Fuel expenses represent a key input cost for any airline player. High oil price is augmenting fuel costs. Even though oil price declined from their multi-year highs, they remain high. Oil price was up 6.7% in the October-December period.
Given this backdrop, investors interested in the Zacks Airline industry keenly await the results of American Airlines (AAL - Free Report) , Alaska Air Group, Inc. (ALK - Free Report) , Southwest Airlines Co. (LUV - Free Report) and JetBlue Airways Corporation (JBLU - Free Report) , scheduled to be released on Jan 26.
Our quantitative model predicts an earnings beat for a company if it has a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold). This combination increases the chances of an earnings beat. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
You can see the complete list of today’s Zacks #1 Rank stocks here.
Let’s delve deeper.
American Airlines’ top-line performance in the fourth quarter is expected to have benefited from upbeat air-travel demand, particularly on the domestic front. Driven by the uptick, AAL expects fourth-quarter 2022 adjusted operating margin to increase 10.25-10.5% (prior view: 5.5-7.5%). Total revenues are expected to register 16-17% growth (prior view: 11-13% growth rate).
Passenger revenues, which account for the bulk of the top line, are likely to have been high, in turn, boosting the top line. The Zacks Consensus Estimate for load factor is pegged at 84% for fourth-quarter 2022, higher than 80% reported in fourth-quarter 2019.
However, high operating costs are anticipated to have affected the bottom-line performance in the to-be-reported quarter. AAL expects adjusted earnings per share in the range of $1.12-$1.17.
Our proven model predicts an earnings beat for American Airlines this earnings season as AAL has an Earnings ESP of +9.79% and a Zacks Rank #2 at present. At the time, the fourth-quarter earnings preview article was issued, AAL had an Earnings ESP of +16.71% and a Zacks Rank #2.
American Airlines Group Inc. Price and EPS Surprise
American Airlines Group Inc. price-eps-surprise | American Airlines Group Inc. Quote
Alaska Air’s fourth-quarter 2022 revenues are likely to have been aided by continued recovery in air-travel demand and an improvement in passenger revenues. On the back of upbeat air-travel demand and favorable pricing, ALK has updated its fourth-quarter 2022 guidance. The company now expects fourth-quarter 2022 total revenues to increase 13-14% from the fourth quarter of 2019 actuals (the previous guidance had hinted at a 12-15% increase). Load factor (% of seats filled by passengers) is now expected in the 84-86% band (earlier guidance was in the 83-86% range).
Meanwhile, with oil prices coming down in the latter half of the December quarter, fuel price per gallon is now expected in the range of $3.50-$3.60 (earlier guidance was in the $3.50-$3.70 band) for fourth-quarter 2022. Although the higher end of the fuel cost guidance has been lowered, escalating operating expenses, primarily due to fuel prices, are likely to have dampened Alaska Air’s bottom line. The Zacks Consensus Estimate for ALK’s fourth-quarter 2022 earnings has been revised downward by 12% in the past 90 days. The Zacks Consensus Estimate for economic fuel cost per gallon is pegged at $3.62 for the fourth quarter, indicating 60.1% growth year over year.
Our proven model does not conclusively predict an earnings beat for Alaska Air this season as ALK has an Earnings ESP of -7.82% and a Zacks Rank #3 at present.
Alaska Air Group, Inc. Price and EPS Surprise
Alaska Air Group, Inc. price-eps-surprise | Alaska Air Group, Inc. Quote
Southwest Airlines’s fourth-quarter 2022 performance is likely to have been affected by massive flight cancellations due to unfavorable weather conditions during the Christmas holiday weekend. Following the massive cancellations, LUV expects available seat miles (a measure of capacity) to decline approximately 6% in fourth-quarter 2022 from the fourth-quarter 2019 actuals. The previous guidance hinted at a 2% decline in available seat miles for fourth-quarter 2022. Revenues are likely to have been adversely impacted by $400-$425 million. Management expects a pre-tax hit of $725-$825 million to fourth-quarter earnings.
However, LUV’s focus on boosting cargo revenues is likely to have aided its performance in the to-be-reported quarter. The Zacks Consensus Estimate for fourth-quarter 2022 cargo revenues hints at an 11.6% sequential increase.
Our proven model does not conclusively predict an earnings beat for Southwest Airlines this time around as LUV has an Earnings ESP of 0.00% and a Zacks Rank #3 at present. At the time, the fourth-quarter earnings preview article was issued, LUV had an Earnings ESP of -101.96% and a Zacks Rank #3.
Southwest Airlines Co. Price and EPS Surprise
Southwest Airlines Co. price-eps-surprise | Southwest Airlines Co. Quote
JetBlue Airways’s fourth-quarter 2022 performance is likely to have been unfavorably impacted by Hurricane Nicole-induced disruptions in air-travel demand. The Zacks Consensus Estimate for fourth-quarter 2022 earnings has been revised downward over the past 60 days. Apart from the hurricane, the holiday calendar timing in 2022 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 15-19% increase from fourth-quarter 2019 actuals. High fuel costs are also likely to have hurt JBLU'S bottom-line performance in Q4. On the brighter side, JetBlue’s efforts to reduce its debt load is encouraging. We are also impressed by the company's efforts to modernize its fleet.
Our proven model predicts an earnings beat for JetBlue this earnings season as JBLU has an Earnings ESP of +6.77% and a Zacks Rank #3 at present.
JetBlue Airways Corporation Price and EPS Surprise
JetBlue Airways Corporation price-eps-surprise | JetBlue Airways Corporation Quote
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