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Airline Stocks Report August Traffic Numbers: An Analysis
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The Zacks Airline industry has been benefiting from buoyant air travel demand, both on domestic and international fronts. Upbeat passenger volumes have always been acting as a tailwind. Higher bookings contribute to the airlines’ top-line performance. While air travel demand is robust on the leisure front, business travel has also made an encouraging comeback.
Further, the decline in fuel expenses represents another tailwind for the industry. Notably, oil prices declined almost 15.6% from the beginning of July 2024 to date. As fuel expenses represent a key input cost for any transportation player, a decline in oil prices bodes well for the bottom-line growth of airline stocks.
Partly due to these tailwinds, we believe the Zacks Airline industry has risen 12.9% so far this year, outperforming 4.2% growth of the broader Zacks Transportation sector and the 4.1% rise of the Zacks S&P 500 Composite.
YTD Price Performance
Image Source: Zacks Investment Research
On the flip side, the prospects of the industry players are dented by high labor costs. With U.S. airlines grappling with a labor shortage in the post-COVID high-demand scenario, the bargaining power of various labor groups has naturally increased. As a result, we have seen pay-hike deals being inked in the space. This is resulting in a spike in labor costs.
For example, at United Airlines (UAL - Free Report) , consolidated cost per available seat mile, excluding fuel, third-party business expenses, profit-sharing and special charges, increased 2.1% year over year in the second quarter of 2024. Southwest Airlines Co. (LUV - Free Report) ) consolidated unit cost or cost per available seat mile (CASM) excluding fuel, oil and profit-sharing expenses, and special items increased 6% year over year in second-quarter 2024.
Moreover, production delays at Boeing (BA - Free Report) are hurting the fleet-related plans of airlines in the United States. Weak pricing power also remains an overhang.
Given this backdrop, let’s take a look at the August 2024 traffic reports issued by Ryanair Holdings (RYAAY - Free Report) , Copa Holdings (CPA - Free Report) and Allegiant Travel Company (ALGT - Free Report) .
The number of passengers transported on Ryanair flights was 20.5 million in August 2024, reflecting an 8% year-over-year increase. RYAAY’s traffic in August was much more than the July reading of 20.2 million, June reading of 19.3 million, May reading of 18.9 million, April reading of 17.3 million and March reading of 13.6 million.
The August load factor (percentage of seats filled by passengers) of 96% remained flat sequentially, as well as on a year-over-year basis. The figure was higher than the load factor of 95% reported in June and May, 92% reported in April 2024 and 93% reported in March 2024.
RYAAY operated more than 111,800 flights in August 2024. This marks an improvement from 110,500 flights in July 2024, 106,000 flights operated in June 2024, 105,000 flights in May 2024, 98,400 flights in April 2024 and 77,000 flights in March 2024.
Notably, RYAAY’s impressive August 2024 traffic numbers reflect improvement at a six-month stretch from March 2024.
To meet the upbeat demand, Ryanair expects its traffic view to grow 8% on a year-over-year basis for fiscal 2025, subject to Boeingdeliveries returning to contracted levels before the year-end.
Driven by high passenger volumes,Copa Holdings, revenue passenger miles (a measure of traffic) improved on a year-over-year basis in August. To match the demand swell, CPA is increasing its capacity. In August, available seat miles (a measure of capacity) increased 8.2% year over year. Revenue passenger miles increased 5.8% year over year. Although traffic improved on a year-over-year basis, it failed to outpace capacity expansion. As a result, the load factor (percentage of seats filled by passengers) fell to 85.1% from 87% in August 2023.
Upbeat air travel demand has been aiding Copa Holdings' revenues. Management expects the current-year load factor (percentage of seats filled by passengers) to be 86.5%, assuming that the rosy traffic scenario continues. For 2024, the company expects consolidated capacity or available seat miles to register 9% growth year over year. Operating margin is projected in the 21-23% band. CPA presently carries a Zacks Rank #3 (Hold).
Allegiant, a Zacks Rank #4 (Sell) stock, reported disappointing traffic numbers for August 2024.
Scheduled traffic (measured in revenue passenger miles) grew 0.8% from the August 2023 levels. Capacity (measured in available seat miles) for scheduled service rose 2.7% year over year. Although traffic improved on a year-over-year basis, it failed to outpace capacity expansion. As a result, the load factor (percentage of seats filled by passengers) in August 2024 declined to 84.5% from 86% a year ago.
Total departures (scheduled services) improved 3.4% in August 2024 from a year ago. However, its average stage length (miles) fell 0.5% year over year.
For the total system (including scheduled service and fixed fee contract), Allegiant carried 1.8% more passengers in August 2024 from the year-ago level. System-wide capacity expanded 3% in August 2024 on a year-over-year basis.
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Airline Stocks Report August Traffic Numbers: An Analysis
The Zacks Airline industry has been benefiting from buoyant air travel demand, both on domestic and international fronts. Upbeat passenger volumes have always been acting as a tailwind. Higher bookings contribute to the airlines’ top-line performance. While air travel demand is robust on the leisure front, business travel has also made an encouraging comeback.
Further, the decline in fuel expenses represents another tailwind for the industry. Notably, oil prices declined almost 15.6% from the beginning of July 2024 to date. As fuel expenses represent a key input cost for any transportation player, a decline in oil prices bodes well for the bottom-line growth of airline stocks.
Partly due to these tailwinds, we believe the Zacks Airline industry has risen 12.9% so far this year, outperforming 4.2% growth of the broader Zacks Transportation sector and the 4.1% rise of the Zacks S&P 500 Composite.
YTD Price Performance
Image Source: Zacks Investment Research
On the flip side, the prospects of the industry players are dented by high labor costs. With U.S. airlines grappling with a labor shortage in the post-COVID high-demand scenario, the bargaining power of various labor groups has naturally increased. As a result, we have seen pay-hike deals being inked in the space. This is resulting in a spike in labor costs.
For example, at United Airlines (UAL - Free Report) , consolidated cost per available seat mile, excluding fuel, third-party business expenses, profit-sharing and special charges, increased 2.1% year over year in the second quarter of 2024. Southwest Airlines Co. (LUV - Free Report) ) consolidated unit cost or cost per available seat mile (CASM) excluding fuel, oil and profit-sharing expenses, and special items increased 6% year over year in second-quarter 2024.
Moreover, production delays at Boeing (BA - Free Report) are hurting the fleet-related plans of airlines in the United States. Weak pricing power also remains an overhang.
Given this backdrop, let’s take a look at the August 2024 traffic reports issued by Ryanair Holdings (RYAAY - Free Report) , Copa Holdings (CPA - Free Report) and Allegiant Travel Company (ALGT - Free Report) .
August 2024 Traffic Reports: RYAAY, CPA & ALGT
European carrier Ryanair Holdings (RYAAY - Free Report) , a Zacks Rank #2 (Buy) stock has reported impressive traffic numbers for August 2024. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
The number of passengers transported on Ryanair flights was 20.5 million in August 2024, reflecting an 8% year-over-year increase. RYAAY’s traffic in August was much more than the July reading of 20.2 million, June reading of 19.3 million, May reading of 18.9 million, April reading of 17.3 million and March reading of 13.6 million.
The August load factor (percentage of seats filled by passengers) of 96% remained flat sequentially, as well as on a year-over-year basis. The figure was higher than the load factor of 95% reported in June and May, 92% reported in April 2024 and 93% reported in March 2024.
RYAAY operated more than 111,800 flights in August 2024. This marks an improvement from 110,500 flights in July 2024, 106,000 flights operated in June 2024, 105,000 flights in May 2024, 98,400 flights in April 2024 and 77,000 flights in March 2024.
Notably, RYAAY’s impressive August 2024 traffic numbers reflect improvement at a six-month stretch from March 2024.
To meet the upbeat demand, Ryanair expects its traffic view to grow 8% on a year-over-year basis for fiscal 2025, subject to Boeingdeliveries returning to contracted levels before the year-end.
Driven by high passenger volumes,Copa Holdings, revenue passenger miles (a measure of traffic) improved on a year-over-year basis in August. To match the demand swell, CPA is increasing its capacity. In August, available seat miles (a measure of capacity) increased 8.2% year over year. Revenue passenger miles increased 5.8% year over year. Although traffic improved on a year-over-year basis, it failed to outpace capacity expansion. As a result, the load factor (percentage of seats filled by passengers) fell to 85.1% from 87% in August 2023.
Upbeat air travel demand has been aiding Copa Holdings' revenues. Management expects the current-year load factor (percentage of seats filled by passengers) to be 86.5%, assuming that the rosy traffic scenario continues. For 2024, the company expects consolidated capacity or available seat miles to register 9% growth year over year. Operating margin is projected in the 21-23% band. CPA presently carries a Zacks Rank #3 (Hold).
Allegiant, a Zacks Rank #4 (Sell) stock, reported disappointing traffic numbers for August 2024.
Scheduled traffic (measured in revenue passenger miles) grew 0.8% from the August 2023 levels. Capacity (measured in available seat miles) for scheduled service rose 2.7% year over year. Although traffic improved on a year-over-year basis, it failed to outpace capacity expansion. As a result, the load factor (percentage of seats filled by passengers) in August 2024 declined to 84.5% from 86% a year ago.
Total departures (scheduled services) improved 3.4% in August 2024 from a year ago. However, its average stage length (miles) fell 0.5% year over year.
For the total system (including scheduled service and fixed fee contract), Allegiant carried 1.8% more passengers in August 2024 from the year-ago level. System-wide capacity expanded 3% in August 2024 on a year-over-year basis.