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Airline Stock Roundup: AAL & UAL's Q2 Earnings Beat, ALGT's June Traffic & More
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In the past week, sector heavyweights like American Airlines (AAL - Free Report) and United Airlines (UAL - Free Report) reported earnings for second-quarter 2023. Results were aided by upbeat air travel demand and declining fuel costs. Driven by the upbeat air-travel demand scenario, both UAL and AAL lifted their respective earnings per share views for the current year.
Allegiant Travel Company (ALGT - Free Report) reported impressive traffic numbers for June on the back of buoyant passenger volumes. Delta Air Lines (DAL - Free Report) and partner China Eastern Airlines simplified the baggage check-in procedure for China flights in a passenger-friendly move.
Recap of the Past Week’s Most Important Stories
1. American Airlines’ second-quarter 2023 earnings (excluding 4 cents from non-recurring items) of $1.92 per share easily beat the Zacks Consensus Estimate of $1.58. Results were aided by lower costs and higher revenues. Operating revenues of $14,055 million increased 4.7% year over year. The top line beat the Zacks Consensus Estimate of $13,736.3 million. Passenger revenues, accounting for 92.3% of the top line, increased to $12,978 million from $12,223 million a year ago, driven by strong air travel demand, mainly on the domestic front. Demand was particularly strong in June on the back of an increase in close-in bookings.
Management raised its earnings per share outlook for the current year, driven by rosy air-travel-demand scenario. The company now expects 2023 earnings (on an adjusted basis) in the band of $3-$3.75 per share (earlier view was in the $2.5-$3.5 per share range). American Airlines currently carries a Zacks Rank #3 (Hold).
2. United Airlines reported second-quarter 2023 earnings per share of $5.03, which outpaced the Zacks Consensus Estimate of $3.99 and improved more than 100% year over year. Operating revenues of $14,178 million beat the Zacks Consensus Estimate of $13,927.1 million. UAL’s revenues increased 17.1% year over year due to upbeat air travel demand. The year-over-year increase in the top line was driven by a 20.1% rise in passenger revenues. UAL expects 2023 earnings per share in the band of $11-$12 (prior view: $10-$12).
3. At Allegiant, scheduled traffic (measured in revenue passenger miles) increased 2.3% from the June 2022 levels. Capacity (measured in available seat miles) for scheduled service inched up 2.1% from the June 2022 reading.
With the traffic increase outweighing capacity expansion, the load factor (percentage of seats filled by passengers) in May improved 0.2 points to 90.1% from the year-ago period’s levels. For the total system (including scheduled service and fixed fee contract), Allegiant carried 3.7% more passengers in June from the year-ago period’s level.
Total departures (scheduled services) increased 2.3% in June from the year-ago levels. However, its average stage length (miles) fell 0.2%. Fuel price per gallon in June is estimated to have been $2.64 compared with $2.58 in May. Fuel price per gallon for the second quarter is expected to be $2.69.
4. The customers of Delta who are traveling from the United States to interior China via China Eastern's connecting flights at Shanghai-Pudong International Airport can now check in their bags to their final destination in China. This customer-friendly procedure is called TransChina. We remind investors that in 2018, Delta, with the aid of partner China Eastern, became the first foreign carrier in China to have offered this service. Due to COVID-19, this procedure was suspended in 2020. Delta aims to resume this as the first foreign airline on Jul 17.
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 airline stocks exhibited a mixed trend with respect to price in the past week. The NYSE ARCA Airline Index declined marginally over the past week to $76.58. Over the course of the past six months, the sector tracker has surged 21.5%.
What's Next in the Airline Space?
Investors will look forward to the second-quarter 2023 earnings report of Alaska Air Group (ALK - Free Report) , scheduled to be out on Jul 25.
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Airline Stock Roundup: AAL & UAL's Q2 Earnings Beat, ALGT's June Traffic & More
In the past week, sector heavyweights like American Airlines (AAL - Free Report) and United Airlines (UAL - Free Report) reported earnings for second-quarter 2023. Results were aided by upbeat air travel demand and declining fuel costs. Driven by the upbeat air-travel demand scenario, both UAL and AAL lifted their respective earnings per share views for the current year.
Allegiant Travel Company (ALGT - Free Report) reported impressive traffic numbers for June on the back of buoyant passenger volumes. Delta Air Lines (DAL - Free Report) and partner China Eastern Airlines simplified the baggage check-in procedure for China flights in a passenger-friendly move.
Recap of the Past Week’s Most Important Stories
1. American Airlines’ second-quarter 2023 earnings (excluding 4 cents from non-recurring items) of $1.92 per share easily beat the Zacks Consensus Estimate of $1.58. Results were aided by lower costs and higher revenues. Operating revenues of $14,055 million increased 4.7% year over year. The top line beat the Zacks Consensus Estimate of $13,736.3 million. Passenger revenues, accounting for 92.3% of the top line, increased to $12,978 million from $12,223 million a year ago, driven by strong air travel demand, mainly on the domestic front. Demand was particularly strong in June on the back of an increase in close-in bookings.
Management raised its earnings per share outlook for the current year, driven by rosy air-travel-demand scenario. The company now expects 2023 earnings (on an adjusted basis) in the band of $3-$3.75 per share (earlier view was in the $2.5-$3.5 per share range). American Airlines currently carries a Zacks Rank #3 (Hold).
You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here
2. United Airlines reported second-quarter 2023 earnings per share of $5.03, which outpaced the Zacks Consensus Estimate of $3.99 and improved more than 100% year over year. Operating revenues of $14,178 million beat the Zacks Consensus Estimate of $13,927.1 million. UAL’s revenues increased 17.1% year over year due to upbeat air travel demand. The year-over-year increase in the top line was driven by a 20.1% rise in passenger revenues. UAL expects 2023 earnings per share in the band of $11-$12 (prior view: $10-$12).
3. At Allegiant, scheduled traffic (measured in revenue passenger miles) increased 2.3% from the June 2022 levels. Capacity (measured in available seat miles) for scheduled service inched up 2.1% from the June 2022 reading.
With the traffic increase outweighing capacity expansion, the load factor (percentage of seats filled by passengers) in May improved 0.2 points to 90.1% from the year-ago period’s levels. For the total system (including scheduled service and fixed fee contract), Allegiant carried 3.7% more passengers in June from the year-ago period’s level.
Total departures (scheduled services) increased 2.3% in June from the year-ago levels. However, its average stage length (miles) fell 0.2%. Fuel price per gallon in June is estimated to have been $2.64 compared with $2.58 in May. Fuel price per gallon for the second quarter is expected to be $2.69.
More traffic updates are available in the previous week’s write-up.
4. The customers of Delta who are traveling from the United States to interior China via China Eastern's connecting flights at Shanghai-Pudong International Airport can now check in their bags to their final destination in China. This customer-friendly procedure is called TransChina. We remind investors that in 2018, Delta, with the aid of partner China Eastern, became the first foreign carrier in China to have offered this service. Due to COVID-19, this procedure was suspended in 2020. Delta aims to resume this as the first foreign airline on Jul 17.
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 airline stocks exhibited a mixed trend with respect to price in the past week. The NYSE ARCA Airline Index declined marginally over the past week to $76.58. Over the course of the past six months, the sector tracker has surged 21.5%.
What's Next in the Airline Space?
Investors will look forward to the second-quarter 2023 earnings report of Alaska Air Group (ALK - Free Report) , scheduled to be out on Jul 25.