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Airline Stocks' Q4 Earnings Roster for Jan 25: AAL, ALK, LUV
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Stocks in the Zacks Airline industry are being well served by a buoyant scenario backed by air-travel demand. Air travel demand made a stronger-than-expected recovery as people started booking flights again, thereby boosting passenger revenues, which account for the bulk of most airlines’ top lines. Only a handful of airline companies (two S&P 500 members, to be exact) have reported their fourth-quarter 2023 numbers so far.
However, high fuel costs are likely to have hurt the fourth-quarter performance of airline companies. Fuel expenses represent a key input cost for any airline player. High oil prices are augmenting fuel costs. Even though oil prices declined from their multi-year highs, they remain high.
Given this backdrop, investors interested in the Zacks Airline industry keenly await the results of American Airlines (AAL - Free Report) , Alaska Air Group, Inc. (ALK - Free Report) and Southwest Airlines Co. (LUV - Free Report) , scheduled to be released on Jan 25.
Our quantitative model predicts an earnings beat for a company if it has a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold). This combination increases the chances of an earnings beat. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Let’s delve deeper.
American Airlines’ top-line performance in the fourth quarter is expected to have benefited from upbeat air-travel demand, particularly on the domestic front. Passenger revenues, which account for the bulk of the top line, are likely to have been high, in turn, strengthening total revenues.
Driven by the uptick, AAL expects adjusted operating margin in the December-end quarter to be 2-4%. The carrier projects total revenue per available seat miles (a measure of unit revenue) between 5.5% and 7.5%, lower than fourth-quarter 2022 actuals. System capacity for the to-be-reported quarter is estimated to increase 4.5-6.5% from fourth-quarter 2022.
However, high fuel costs might have affected the bottom-line performance in the quarter under review. Fuel costs per gallon are projected to be in the range of $3.01-$3.11 for the fourth quarter of 2023. Even though fuel prices have come down from the highs witnessed earlier, it still remains elevated.
Alaska Air’s fourth-quarter 2023 revenues are likely to have been aided by continued recovery in air-travel demand and an improvement in passenger revenues. On the back of upbeat air-travel demand and favorable pricing, ALK has updated its fourth-quarter 2023 guidance. Revenues for fourth-quarter 2023 are expected to increase 2.25-3.25% from the fourth quarter of 2022 actuals (earlier view: up 1-4%). For the fourth quarter of 2023, Alaska Air expects a capacity improvement of 13-14% (prior view: 11-14%) from the year-ago reported figure.
The adjusted pre-tax margin is anticipated to be 1% (earlier expectation was between 0% and 2%). Cost per available seat mile, excluding fuel and special items, is expected to decline 5% year over year (prior view: down 3-5%).
However, high fuel costs are likely to have dented ALK’s bottom-line performance in the December quarter. With oil prices moving north, fuel cost per gallon is likely to have been high. For fourth-quarter 2023, ALK forecasts economic fuel cost per gallon of $3.40 (earlier expectation was pegged at $3.30-$3.40).
Our proven model predicts an earnings beat for Alaska Air this earnings season as ALK has an Earnings ESP of +2.70% and a Zacks Rank #3 at present. At the time of fourth-quarter earnings preview article was issued, AAL had an Earnings ESP of +13.05% and a Zacks Rank #3.
Southwest Airlines’ fourth-quarter 2023 revenues are likely to have been aided by favorable air travel demand and yield. The company has witnessed solid leisure demand with record revenues during the Thanksgiving holiday period and better-than-expected close-in bookings, including managed business bookings, during November and December. Backed by this uptick, LUV now expects fourth-quarter unit revenues to improve to the better end of its previous guidance range. LUV continues to expect record fourth-quarter operating revenues and passengers.
Revenue per available seat mile (RASM) for the December quarter is now expected to decline 9-10% (prior view: 9-11%). LUV continues to expect its fourth-quarter available seat miles (ASMs or capacity) to improve 21% from the year-ago period.
On the flip side, escalating fuel prices represent a concern. Notably, LUV has raised its fourth-quarter economic fuel costs per gallon guidance between $3.00 and $3.10 (prior view: $2.90 to $3.00).
Our proven model does not conclusively predict an earnings beat for Southwest Airlines this season as LUV has an Earnings ESP of -24.71% and a Zacks Rank #3 at present.
Image: Bigstock
Airline Stocks' Q4 Earnings Roster for Jan 25: AAL, ALK, LUV
Stocks in the Zacks Airline industry are being well served by a buoyant scenario backed by air-travel demand. Air travel demand made a stronger-than-expected recovery as people started booking flights again, thereby boosting passenger revenues, which account for the bulk of most airlines’ top lines. Only a handful of airline companies (two S&P 500 members, to be exact) have reported their fourth-quarter 2023 numbers so far.
However, high fuel costs are likely to have hurt the fourth-quarter performance of airline companies. Fuel expenses represent a key input cost for any airline player. High oil prices are augmenting fuel costs. Even though oil prices declined from their multi-year highs, they remain high.
Given this backdrop, investors interested in the Zacks Airline industry keenly await the results of American Airlines (AAL - Free Report) , Alaska Air Group, Inc. (ALK - Free Report) and Southwest Airlines Co. (LUV - Free Report) , scheduled to be released on Jan 25.
Our quantitative model predicts an earnings beat for a company if it has a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold). This combination increases the chances of an earnings beat. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Let’s delve deeper.
American Airlines’ top-line performance in the fourth quarter is expected to have benefited from upbeat air-travel demand, particularly on the domestic front. Passenger revenues, which account for the bulk of the top line, are likely to have been high, in turn, strengthening total revenues.
Driven by the uptick, AAL expects adjusted operating margin in the December-end quarter to be 2-4%. The carrier projects total revenue per available seat miles (a measure of unit revenue) between 5.5% and 7.5%, lower than fourth-quarter 2022 actuals. System capacity for the to-be-reported quarter is estimated to increase 4.5-6.5% from fourth-quarter 2022.
However, high fuel costs might have affected the bottom-line performance in the quarter under review. Fuel costs per gallon are projected to be in the range of $3.01-$3.11 for the fourth quarter of 2023. Even though fuel prices have come down from the highs witnessed earlier, it still remains elevated.
Our proven model predicts an earnings beat for American Airlines this earnings season as AAL has an Earnings ESP of +19.74% and a Zacks Rank #2 at present. At the time of fourth-quarter earnings preview article was issued, AAL had an Earnings ESP of +43.10% and a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.
American Airlines Group Inc. Price and EPS Surprise
American Airlines Group Inc. price-eps-surprise | American Airlines Group Inc. Quote
Alaska Air’s fourth-quarter 2023 revenues are likely to have been aided by continued recovery in air-travel demand and an improvement in passenger revenues. On the back of upbeat air-travel demand and favorable pricing, ALK has updated its fourth-quarter 2023 guidance. Revenues for fourth-quarter 2023 are expected to increase 2.25-3.25% from the fourth quarter of 2022 actuals (earlier view: up 1-4%). For the fourth quarter of 2023, Alaska Air expects a capacity improvement of 13-14% (prior view: 11-14%) from the year-ago reported figure.
The adjusted pre-tax margin is anticipated to be 1% (earlier expectation was between 0% and 2%). Cost per available seat mile, excluding fuel and special items, is expected to decline 5% year over year (prior view: down 3-5%).
However, high fuel costs are likely to have dented ALK’s bottom-line performance in the December quarter. With oil prices moving north, fuel cost per gallon is likely to have been high. For fourth-quarter 2023, ALK forecasts economic fuel cost per gallon of $3.40 (earlier expectation was pegged at $3.30-$3.40).
Our proven model predicts an earnings beat for Alaska Air this earnings season as ALK has an Earnings ESP of +2.70% and a Zacks Rank #3 at present. At the time of fourth-quarter earnings preview article was issued, AAL had an Earnings ESP of +13.05% and a Zacks Rank #3.
Alaska Air Group, Inc. Price and EPS Surprise
Alaska Air Group, Inc. price-eps-surprise | Alaska Air Group, Inc. Quote
Southwest Airlines’ fourth-quarter 2023 revenues are likely to have been aided by favorable air travel demand and yield. The company has witnessed solid leisure demand with record revenues during the Thanksgiving holiday period and better-than-expected close-in bookings, including managed business bookings, during November and December. Backed by this uptick, LUV now expects fourth-quarter unit revenues to improve to the better end of its previous guidance range. LUV continues to expect record fourth-quarter operating revenues and passengers.
Revenue per available seat mile (RASM) for the December quarter is now expected to decline 9-10% (prior view: 9-11%). LUV continues to expect its fourth-quarter available seat miles (ASMs or capacity) to improve 21% from the year-ago period.
On the flip side, escalating fuel prices represent a concern. Notably, LUV has raised its fourth-quarter economic fuel costs per gallon guidance between $3.00 and $3.10 (prior view: $2.90 to $3.00).
Our proven model does not conclusively predict an earnings beat for Southwest Airlines this season as LUV has an Earnings ESP of -24.71% and a Zacks Rank #3 at present.
Southwest Airlines Co. Price and EPS Surprise
Southwest Airlines Co. price-eps-surprise | Southwest Airlines Co. Quote
Stay on top of upcoming earnings announcements with the Zacks Earnings Calendar.