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Upbeat Summer Travel Expected: Buy Airlines ETF?

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Despite challenges such as inflation and safety concerns, including the Boeing 737 Max 9 door plug incident, demand for flights persists. United Airlines' (UAL - Free Report) Chief Commercial Officer, Andrew Nocella, anticipates record-breaking numbers of travelers this summer.

The same was the tone of Delta Air Lines (DAL - Free Report) ’ CEO Ed Bastian. Delta’s demand continues to be strong, with a record spring and summer travel season. Delta’s 11 highest sales days in its history happened this calendar year, as quoted on CNBC.

United Airlines is currently undergoing a safety review with the FAA following several incidents, including a tire falling from one of its Boeing 777s. Additionally, airlines are grappling with increased fuel and labor costs, although rebounding corporate travel and demand for international trips are providing a boost. Both Delta and United’s second-quarter forecasts topped Wall Street estimates.

Executives are exploring ways to innovate and monetize various cabin classes, with a focus on premium offerings. Delta has seen continuous growth in premium revenue, leading to investments in upgraded first- and business-class cabins and expanded lounge facilities. Furthermore, Delta plans to introduce a new, more exclusive tier of airport lounge later this year.

Inside United Airlines’ Upbeat Results

United Airlines shares surged as high as 17.5% on Apr 17 due to stellar Q1 results and solid Q2 guidance. United Airlines reported first-quarter 2024 loss per share (excluding 23 cents from non-recurring items) of 15 cents, which was narrower than the Zacks Consensus Estimate loss of 53 cents.

In the year-ago reported quarter, UAL reported a loss of 63 cents per share. Operating revenues of $12,539 million beat the Zacks Consensus Estimate of $12,428.4 million.

For the second quarter, the airline expects to post earnings of between $3.75 and $4.25 in the second quarter, ahead of analysts’ estimates of about $3.76 a share. United maintained its full year profit outlook of $9 to $11 a share. United cut its aircraft-delivery expectations for the year.

Inside Delta’s Upbeat Results

Delta Air Lines reported first-quarter 2024 earnings (excluding 39 cents from non-recurring items) of 45 cents per share, which comfortably beat the Zacks Consensus Estimate of 36 cents. Earnings increased 80% on a year-over-year basis. Revenues of $13.75 billion surpassed the Zacks Consensus Estimate of $12.84 billion.

Delta forecast second-quarter earnings of $2.20 to $2.50 per share, while analysts forecast between $2.23 per share on average, according to LSEG, as quoted on CNBC. It’s revenue in the current period could rise as much as 7%, ahead of analysts' estimates.

Time for Airlines ETF?

As most airlines stocks have surged lately on upbeat industry operations and sentiments, it is wise to bet on the U.S. Global Jets ETF (JETS - Free Report) now. The underlying U.S. Global Jets Index tracks the performance of Airline Companies across the globe with an emphasis on domestic passenger airlines. Delta Airlines (11.20%), United Airlines (10.57%), American Airlines (10.41%) hold the top three spots in the fund. The fund was up 3.9% on Apr 17 and has gained 2.4% past month. The fund should see upbeat momentum from here.

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