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Airline Stock Roundup: Q4 Earnings Report of SAVE and GOL, HA in Focus
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In the past week, Spirit Airlines (SAVE - Free Report) reported better-than-expected earnings per share and revenues for fourth-quarter 2022. The results were aided by strong air-travel demand for leisure.
Fourth-quarter earnings-related updates were discussed in the previous write-up as well. Latin-American carriers, Gol Linhas and Azul (AZUL - Free Report) reported a year-over-year improvement in their respective traffic numbers for January. Pilots of Hawaiian Airlines, the wholly-owned subsidiary of Hawaiian Holdings (HA - Free Report) , meanwhile, approved a new four-year pay-related contract.
Recap of the Latest Top Stories
1 Spirit Airlines’ fourth-quarter 2022 earnings of 12 cents per share surpassed the Zacks Consensus Estimate of 4 cents. Revenues of $1,391.3 million outpaced the Zacks Consensus Estimate of $1,389 million and improved 40.9% year over year on the back of increased flight volume and higher operating yields. In fourth-quarter 2022, passenger revenues, which accounted for the bulk of the top line (98.4%), increased 41% year over year to $1,369.67 million. Management expects adjusted operating expenses of $1.39-$1.40 billion for the first quarter of 2023. Currently, Spirit Airlines carries a Zacks Rank #3 (Hold).
2. For January 2023, consolidated traffic (measured in revenue passenger kilometers) at Gol Linhas increased 8.9% year over year. To match the upbeat demand situation, the company is simultaneously expanding its capacity (measured in available seat kilometers). During the same month, capacity grew 6.2% year over year. GOL carried 11.1% more passengers in January compared with the year-ago figure. Consolidated load factor (% of seats filled by passengers) improved to 84.7% in January from 82.6% a year ago.
Domestic departures, which accounted for more than 94% of total departures during the month, grew 3.5% on a year-over-year basis. On the domestic front, the number of seats increased 3%.
3. Hawaiian Airlines received encouraging news on the labor front when its pilots, represented by the Air Line Pilots Association, cleared a four-year deal. Following the approval, pilots of the carrier are eligible for pay-hikes that will average more than 32% over the four-year period. In the voting procedure, 93% pilots cast their votes with 65% favoring the deal. The agreement, which will take effect on Mar 2, 2023, includes industry-leading rates for HA’s future Airbus A330F cargo fleet.
Pilots at HA are now eligible for an immediate 16.6% pay raise on average. Other benefits include the presence of a $10 million ratification bonus and the creation of a new $2,500 health reimbursement account. The deal will also result in improvement in quality of life of pilots by providing more schedule flexibility apart from raising company retirement contributions.
4. For the month of January, Azul’s consolidated traffic increased 21.3% year over year. To match the increased demand situation, AZUL is expanding its capacity. In the same period, capacity grew 23.5% year over year. Since traffic growth was less than capacity expansion, the load factor (percentage of seats filled by passengers) fell 1.5 percentage points to 82.3% last month.
The surge in international traffic (up 137.3% year over year) led to a rosy scenario with respect to consolidated traffic. On the domestic front, traffic and capacity increased 6.5% and 10.2%, respectively.
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 all airline stocks have traded in the red over the five trading days. The NYSE ARCA Airline Index has decreased 6.1% to $60.78. Over the course of the past six months, the NYSE ARCA Airline Index has decreased 8.9%.
What's Next in the Airline Space?
Investors will keenly await the fourth-quarter 2022 earnings report of the Latin American carrier Copa Holdings (CPA - Free Report) , scheduled to be out on Feb 15.
We expect CPA’s performance to have been aided by improving air-travel demand in Latin America. However, high fuel costs are likely to have impeded the bottom-line performance in the to-be-reported quarter.
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Airline Stock Roundup: Q4 Earnings Report of SAVE and GOL, HA in Focus
In the past week, Spirit Airlines (SAVE - Free Report) reported better-than-expected earnings per share and revenues for fourth-quarter 2022. The results were aided by strong air-travel demand for leisure.
Fourth-quarter earnings-related updates were discussed in the previous write-up as well. Latin-American carriers, Gol Linhas and Azul (AZUL - Free Report) reported a year-over-year improvement in their respective traffic numbers for January. Pilots of Hawaiian Airlines, the wholly-owned subsidiary of Hawaiian Holdings (HA - Free Report) , meanwhile, approved a new four-year pay-related contract.
Recap of the Latest Top Stories
1 Spirit Airlines’ fourth-quarter 2022 earnings of 12 cents per share surpassed the Zacks Consensus Estimate of 4 cents. Revenues of $1,391.3 million outpaced the Zacks Consensus Estimate of $1,389 million and improved 40.9% year over year on the back of increased flight volume and higher operating yields. In fourth-quarter 2022, passenger revenues, which accounted for the bulk of the top line (98.4%), increased 41% year over year to $1,369.67 million. Management expects adjusted operating expenses of $1.39-$1.40 billion for the first quarter of 2023. Currently, Spirit Airlines carries a Zacks Rank #3 (Hold).
You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here
2. For January 2023, consolidated traffic (measured in revenue passenger kilometers) at Gol Linhas increased 8.9% year over year. To match the upbeat demand situation, the company is simultaneously expanding its capacity (measured in available seat kilometers). During the same month, capacity grew 6.2% year over year. GOL carried 11.1% more passengers in January compared with the year-ago figure. Consolidated load factor (% of seats filled by passengers) improved to 84.7% in January from 82.6% a year ago.
Domestic departures, which accounted for more than 94% of total departures during the month, grew 3.5% on a year-over-year basis. On the domestic front, the number of seats increased 3%.
3. Hawaiian Airlines received encouraging news on the labor front when its pilots, represented by the Air Line Pilots Association, cleared a four-year deal. Following the approval, pilots of the carrier are eligible for pay-hikes that will average more than 32% over the four-year period. In the voting procedure, 93% pilots cast their votes with 65% favoring the deal. The agreement, which will take effect on Mar 2, 2023, includes industry-leading rates for HA’s future Airbus A330F cargo fleet.
Pilots at HA are now eligible for an immediate 16.6% pay raise on average. Other benefits include the presence of a $10 million ratification bonus and the creation of a new $2,500 health reimbursement account. The deal will also result in improvement in quality of life of pilots by providing more schedule flexibility apart from raising company retirement contributions.
4. For the month of January, Azul’s consolidated traffic increased 21.3% year over year. To match the increased demand situation, AZUL is expanding its capacity. In the same period, capacity grew 23.5% year over year. Since traffic growth was less than capacity expansion, the load factor (percentage of seats filled by passengers) fell 1.5 percentage points to 82.3% last month.
The surge in international traffic (up 137.3% year over year) led to a rosy scenario with respect to consolidated traffic. On the domestic front, traffic and capacity increased 6.5% and 10.2%, respectively.
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 all airline stocks have traded in the red over the five trading days. The NYSE ARCA Airline Index has decreased 6.1% to $60.78. Over the course of the past six months, the NYSE ARCA Airline Index has decreased 8.9%.
What's Next in the Airline Space?
Investors will keenly await the fourth-quarter 2022 earnings report of the Latin American carrier Copa Holdings (CPA - Free Report) , scheduled to be out on Feb 15.
We expect CPA’s performance to have been aided by improving air-travel demand in Latin America. However, high fuel costs are likely to have impeded the bottom-line performance in the to-be-reported quarter.