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Airlines Post Impressive May Traffic Numbers: An Analysis
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The Zacks Airline industry has been benefiting from buoyant air travel demand, following the easing of COVID-19 travel restrictions and the reopening of the global economy. The industry is witnessing a solid recovery in demand for domestic as well as international flights. People are again booking flights, thereby leading to higher passenger revenues, which contribute to the bulk of most airlines’ top lines.
Driven by the buoyant scenario with respect to air traffic, Copa Holdings (CPA - Free Report) , Gol Linhas Aereas Inteligentes , Ryanair Holdings (RYAAY - Free Report) and Azul (AZUL - Free Report) reported impressive traffic numbers for the month of May. While CPA currently sports a Zacks Rank #1 (Strong Buy), GOL, RYAAY and AZUL carry a Zacks Rank #3 (Hold) each. You can see the complete list of today’s Zacks #1 Rank stocks here.
Let’s take an in-depth look at these companies’ May traffic reports.
Driven by high passenger volumes, Copa Holdings’ revenue passenger miles (a measure of traffic) rose 15.8% in May on a year-over-year basis. To match the demand swell, CPA is increasing capacity. In May, available seat miles (a measure of capacity) increased 15.3% year over year. With traffic growth outpacing capacity expansion, the load factor (percentage of seats filled by passengers) improved to 86.1% from 85.7% in May 2022.
Gol Linhas also reported a double-digit year-over-year increase in traffic and capacity. In May 2023, consolidated revenue passenger kilometers (a measure of air traffic) and available seat kilometers (a measure of capacity) increased 13.1% and 14.9%, respectively, on a year-over-year basis. The load factor was 76.1%. The number of flight departures at GOL in May registered a 20.7% year-over-year increase. Consolidated passenger on board rose 20.1% year over year.
Domestic departures, accounting for more than 95% of total departures during the month, grew 19.3% on a year-over-year basis. On the domestic front, the number of seats increased 19.5% in May. International departures surged 66.9% in May on a year-over-year basis. The number of seats surged 68.9% internationally.
On the domestic front, passenger on board rose 19.7% year over year. Internationally, the metric surged 28.9% year over year.
Ryanair Holdings, a European carrier,also reported highly impressive traffic numbers for the month of May, driven by upbeat air-travel demand. The number of passengers ferried on RYAAY flights in May was 17 million. This compared favorably with the April 2023 figure of 16 million and 15.4 million in May 2022. Owing to upbeat traffic, the load factor (percentage of seats filled by passengers) was as high as 94% in May compared with 92% a year ago operated more than 94,400 flights in May.
Azul, a Brazilian carrier, also reported a double-digit year-over-year increase in traffic and capacity for the month of May 2023. With consolidated passenger traffic growth (8.3%) outpacing capacity expansion (5%), the load factor increased to 79.8% from 77.3% in May 2022.
On the domestic front, load factor increased to 78.2% from 76.3% in May 2022. Internationally, the metric surged to 85.7% from 85.1% in May 2022.
Year-to-date Price Performance
In fact, air traffic has been buoyant throughout the year leading to significant year-to-date price appreciation in the above stocks.
Image Source: Zacks Investment Research
Bullish Projections Confirm Airlines’ Buoyancy
The impressive traffic reports of the above carriers highlight the positivity surrounding the industry. We believe that the current summer season is likely to see a further surge in passenger revenues, in turn, aiding airlines’ top lines. Per Airlines for America, U.S. airlines are anticipated to carry 257 million passengers from Jun 1 to Aug 31, 2023. The projection marks an all-time high.
Owing to the uptick in passenger volumes coupled with the decline in fuel costs the International Air Transport Association or IATA doubled its current-year forecast for net profits. Despite economic uncertainties. Passenger revenues are the biggest driver of the rosy projection for 2023. Per IATA, passenger revenues in 2023 are now anticipated to be $546 billion compared with the previous estimate of $522 billion. The revised revenue forecast indicates a 27% increase from the 2022 actuals.
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Airlines Post Impressive May Traffic Numbers: An Analysis
The Zacks Airline industry has been benefiting from buoyant air travel demand, following the easing of COVID-19 travel restrictions and the reopening of the global economy. The industry is witnessing a solid recovery in demand for domestic as well as international flights. People are again booking flights, thereby leading to higher passenger revenues, which contribute to the bulk of most airlines’ top lines.
Driven by the buoyant scenario with respect to air traffic, Copa Holdings (CPA - Free Report) , Gol Linhas Aereas Inteligentes , Ryanair Holdings (RYAAY - Free Report) and Azul (AZUL - Free Report) reported impressive traffic numbers for the month of May. While CPA currently sports a Zacks Rank #1 (Strong Buy), GOL, RYAAY and AZUL carry a Zacks Rank #3 (Hold) each. You can see the complete list of today’s Zacks #1 Rank stocks here.
Let’s take an in-depth look at these companies’ May traffic reports.
Driven by high passenger volumes, Copa Holdings’ revenue passenger miles (a measure of traffic) rose 15.8% in May on a year-over-year basis. To match the demand swell, CPA is increasing capacity. In May, available seat miles (a measure of capacity) increased 15.3% year over year. With traffic growth outpacing capacity expansion, the load factor (percentage of seats filled by passengers) improved to 86.1% from 85.7% in May 2022.
Gol Linhas also reported a double-digit year-over-year increase in traffic and capacity. In May 2023, consolidated revenue passenger kilometers (a measure of air traffic) and available seat kilometers (a measure of capacity) increased 13.1% and 14.9%, respectively, on a year-over-year basis. The load factor was 76.1%. The number of flight departures at GOL in May registered a 20.7% year-over-year increase. Consolidated passenger on board rose 20.1% year over year.
Domestic departures, accounting for more than 95% of total departures during the month, grew 19.3% on a year-over-year basis. On the domestic front, the number of seats increased 19.5% in May. International departures surged 66.9% in May on a year-over-year basis. The number of seats surged 68.9% internationally.
On the domestic front, passenger on board rose 19.7% year over year. Internationally, the metric surged 28.9% year over year.
Ryanair Holdings, a European carrier, also reported highly impressive traffic numbers for the month of May, driven by upbeat air-travel demand. The number of passengers ferried on RYAAY flights in May was 17 million. This compared favorably with the April 2023 figure of 16 million and 15.4 million in May 2022. Owing to upbeat traffic, the load factor (percentage of seats filled by passengers) was as high as 94% in May compared with 92% a year ago operated more than 94,400 flights in May.
Azul, a Brazilian carrier, also reported a double-digit year-over-year increase in traffic and capacity for the month of May 2023. With consolidated passenger traffic growth (8.3%) outpacing capacity expansion (5%), the load factor increased to 79.8% from 77.3% in May 2022.
On the domestic front, load factor increased to 78.2% from 76.3% in May 2022. Internationally, the metric surged to 85.7% from 85.1% in May 2022.
Year-to-date Price Performance
In fact, air traffic has been buoyant throughout the year leading to significant year-to-date price appreciation in the above stocks.
Image Source: Zacks Investment Research
Bullish Projections Confirm Airlines’ Buoyancy
The impressive traffic reports of the above carriers highlight the positivity surrounding the industry. We believe that the current summer season is likely to see a further surge in passenger revenues, in turn, aiding airlines’ top lines. Per Airlines for America, U.S. airlines are anticipated to carry 257 million passengers from Jun 1 to Aug 31, 2023. The projection marks an all-time high.
Owing to the uptick in passenger volumes coupled with the decline in fuel costs the International Air Transport Association or IATA doubled its current-year forecast for net profits. Despite economic uncertainties. Passenger revenues are the biggest driver of the rosy projection for 2023. Per IATA, passenger revenues in 2023 are now anticipated to be $546 billion compared with the previous estimate of $522 billion. The revised revenue forecast indicates a 27% increase from the 2022 actuals.