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Airlines Earnings Mixed-to-Upbeat: What Lies Ahead of ETF?
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It’s been less than two weeks since Delta Air Lines Inc. (DAL - Free Report) kick started the third-quarter earnings season for the airline space. Overall, the season has been mixed for the industry. The sector still has to traverse a long way before it can reach the pre-pandemic level.
However, the pureplay airlines ETF U.S. Global Jets ETF (JETS - Free Report) has lost 11.5% past month (as of Oct 24, 2022). In fact, the fund underperformed the S&P 500 (down 2.1%) in the past one-month period. This makes third-quarter airlines earnings more important this season as it could determine what lies ahead of the sector.
Let’s delve a little deeper.
Inside the Headlines
Delta Air Lines Inc. (DAL - Free Report) reported third-quarter 2023 earnings (excluding 31 cents from non-recurring items) of $2.03 per share, which comfortably beat the Zacks Consensus Estimate of $1.92 and improved 35% on a year-over-year basis. Revenues of $15,488 million beat the Zacks Consensus Estimate of $15,290.4 million and increased 11% on a year-over-year basis, driven by higher air travel demand.
United Airlines’ (UAL - Free Report) reported third-quarter 2023 earnings per share (excluding 23 cents from non-recurring items) of $3.65, which outpaced the Zacks Consensus Estimate of $3.40 and improved 29.9% year over year. Operating revenues of $14,484 million beat the Zacks Consensus Estimate of $14,441.8 million. The top line increased 12.5% year over year due to upbeat air-travel demand.
American Airlines’ (AAL - Free Report) third-quarter 2023 earnings (excluding $1.21 from non-recurring items) of 38 cents per share easily beat the Zacks Consensus Estimate of 26 cents. Results were aided by higher revenues driven by the buoyant air-travel-demand scenario. In the year-ago quarter, AAL reported earnings of 69 cents. Operating revenues of $13,482 million increased marginally year over year. The top line missed the Zacks Consensus Estimate of $13,518.7 million.
Low-cost carrier Southwest Airlines Co. (LUV - Free Report) reported second-quarter 2023 earnings per share of $1.09, which outpaced the Zacks Consensus Estimate of $1.08 but declined 16.2% on a year-over-year basis. Revenues of $7,037 million beat the Zacks Consensus Estimate of $6,988.7 million and improved 4.6% year over year on solid leisure demand.
Alaska Air Group (ALK - Free Report) reported lower-than-expected earnings per share and revenues in third-quarter 2023. The underperformance was mainly due to high fuel as well as labor costs. Expenses on wages and benefits rose 14% year over year to $782 million in the reported quarter. The labor deal inked by management with pilots last year has led to increased labor costs. High fuel costs due to an escalation in oil price were also a bane and hurt third-quarter results.
ETF in Focus
The $1.32-billion-fund holds about 50 stocks in its portfolio and is concentrated on a few individual securities. All the above-mentioned stocks get a place in the portfolio. The product charges 60 bps in fees.
Bottom Line
While the investing backdrop for JETS is still moderately gloomy, some companies beat on estimates. High oil prices are concerns. However, increased travel demand in the holiday season could bode well for the concerned stocks and the fund.
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Airlines Earnings Mixed-to-Upbeat: What Lies Ahead of ETF?
It’s been less than two weeks since Delta Air Lines Inc. (DAL - Free Report) kick started the third-quarter earnings season for the airline space. Overall, the season has been mixed for the industry. The sector still has to traverse a long way before it can reach the pre-pandemic level.
However, the pureplay airlines ETF U.S. Global Jets ETF (JETS - Free Report) has lost 11.5% past month (as of Oct 24, 2022). In fact, the fund underperformed the S&P 500 (down 2.1%) in the past one-month period. This makes third-quarter airlines earnings more important this season as it could determine what lies ahead of the sector.
Let’s delve a little deeper.
Inside the Headlines
Delta Air Lines Inc. (DAL - Free Report) reported third-quarter 2023 earnings (excluding 31 cents from non-recurring items) of $2.03 per share, which comfortably beat the Zacks Consensus Estimate of $1.92 and improved 35% on a year-over-year basis. Revenues of $15,488 million beat the Zacks Consensus Estimate of $15,290.4 million and increased 11% on a year-over-year basis, driven by higher air travel demand.
United Airlines’ (UAL - Free Report) reported third-quarter 2023 earnings per share (excluding 23 cents from non-recurring items) of $3.65, which outpaced the Zacks Consensus Estimate of $3.40 and improved 29.9% year over year. Operating revenues of $14,484 million beat the Zacks Consensus Estimate of $14,441.8 million. The top line increased 12.5% year over year due to upbeat air-travel demand.
American Airlines’ (AAL - Free Report) third-quarter 2023 earnings (excluding $1.21 from non-recurring items) of 38 cents per share easily beat the Zacks Consensus Estimate of 26 cents. Results were aided by higher revenues driven by the buoyant air-travel-demand scenario. In the year-ago quarter, AAL reported earnings of 69 cents. Operating revenues of $13,482 million increased marginally year over year. The top line missed the Zacks Consensus Estimate of $13,518.7 million.
Low-cost carrier Southwest Airlines Co. (LUV - Free Report) reported second-quarter 2023 earnings per share of $1.09, which outpaced the Zacks Consensus Estimate of $1.08 but declined 16.2% on a year-over-year basis. Revenues of $7,037 million beat the Zacks Consensus Estimate of $6,988.7 million and improved 4.6% year over year on solid leisure demand.
Alaska Air Group (ALK - Free Report) reported lower-than-expected earnings per share and revenues in third-quarter 2023. The underperformance was mainly due to high fuel as well as labor costs. Expenses on wages and benefits rose 14% year over year to $782 million in the reported quarter. The labor deal inked by management with pilots last year has led to increased labor costs. High fuel costs due to an escalation in oil price were also a bane and hurt third-quarter results.
ETF in Focus
The $1.32-billion-fund holds about 50 stocks in its portfolio and is concentrated on a few individual securities. All the above-mentioned stocks get a place in the portfolio. The product charges 60 bps in fees.
Bottom Line
While the investing backdrop for JETS is still moderately gloomy, some companies beat on estimates. High oil prices are concerns. However, increased travel demand in the holiday season could bode well for the concerned stocks and the fund.