On Jul 13, Delta Air Lines (DAL Quick QuoteDAL - Free Report) initiated the second-quarter 2023 earnings season for the airline space. This Atlanta-based carrier reported better-than-expected earnings per share and revenues driven by the buoyant air-travel demand scenario. Moreover, the company lifted its earnings per share guidance for the current year.

The company now expects 2023 earnings (on an adjusted basis) in the band of $6-$7 per share (the earlier view was $6 per share). Driven by the upbeat air-travel demand scenario, Latin American carriers Gol Linhas , Copa Holdings (CPA Quick QuoteCPA - Free Report) and Azul (AZUL Quick QuoteAZUL - Free Report) reported impressive traffic numbers for the month of June.

Recap of the Past Week’s Most Important Stories

1. Delta’s second-quarter 2023 earnings (excluding 16 cents from non-recurring items) of $2.68 per share comfortably beat the Zacks Consensus Estimate of $2.42. DAL had reported earnings of $1.44 per share a year ago as air travel demand was not so buoyant back then. Revenues of $15,578 million beat the Zacks Consensus Estimate of $14,991.6 million. Total revenues increased 12.69% on a year-over-year basis driven by higher air travel demand.

Backed by strong booking trends for summer, DAL, currently carrying a Zacks Rank #2 (Buy), expects September-quarter revenues (adjusted) to increase in the 11-14% band from third-quarter 2022 actuals. Third-quarter earnings are expected in the range of $2.2-$2.5 per share. 

Delta was also in the news recently courtesy of its deal with El Al Israel Airlines. The news was covered in detail in the previous week’s write-up.

You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here

2. In June, consolidated revenue passenger kilometers (a measure of air traffic) and available seat kilometers (a measure of capacity) increased 14% and 15.4%, respectively, on a year-over-year basis at GOL. The load factor (% of seats filled by passengers) was 75.7%. The number of flight departures at GOL in June registered a 20.8% year-over-year increase. Passengers on board rose 21% year over year on a consolidated basis.

3. In June, Azul’s consolidated revenue passenger kilometers and available seat kilometers increased 15% and 12.6%, respectively, on a year-over-year basis. With consolidated passenger traffic growth outpacing capacity expansion, the load factor (the percentage of seats filled by passengers) improved to 80.9% from 79.3% in June 2022.

On the domestic front, with revenue passenger kilometers (2%) outpacing available seat kilometers (0.6%), the load factor increased to 79.1% from 78% in June 2022. Internationally, revenue passenger kilometers and available seat kilometers increased 92.8% and 94.2%, respectively, on a year-over-year basis. The load factor was 87.3%.

Azul’s chief executive officer, John Rodgerson, stated, “In June, our rational domestic capacity deployment combined with a strong international demand led us to increase our load factor in a healthy revenue environment. I’m very excited for the strongest seasonal period ahead of us.”

4. Copa Holdings’ revenue passenger miles and available seat miles increased 14.9% and 10.7%, respectively, on a year-over-year basis in June. With traffic growth outpacing capacity expansion, the load factor improved to 86.8% from 83.7% in the prior month.

Price Performance

The following table shows the price movement of the major airline players over the past week and during the past six months.

Image Source: Zacks Investment Research

The table above shows that the majority of the airline stocks traded in the green over the past week. Consequently, the NYSE ARCA Airline Index increased 1.5% over the past week to $77.28. Over the course of the past six months, the sector tracker has surged 22.5%.

What's Next in the Airline Space?

Investors are looking forward to the second-quarter 2023 earnings report of United Airlines (UAL Quick QuoteUAL - Free Report) , scheduled to be out on Jul 19.