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Airline Stock Roundup: JetBlue August Load Factor Down, GOL Linhas & Spirit Airlines in Focus

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In the last week, key airline players like JetBlue Airways Corporation (JBLU - Free Report) , Spirit Airlines (SAVE - Free Report) , GOL Linhas (GOL - Free Report) and Copa Holdings (CPA - Free Report) revealed their respective traffic data for the month of August.

While the traffic reports of Latin American carriers — GOL and Copa Holdings — were impressive, JetBlue and Spirit Airlines’ performance was disappointing. Evidently, both the U.S.- based carriers reported a decline in their respective load factors (percentage of seats filled by passengers). The downturn was due to traffic growth being outpaced by capacity expansion at JetBlue as well as Spirit Airlines.

Moreover, the Bureau of Transportation Services revealed that average airfares in the United States had declined in the same period.  Notably, the August reading marked the second successive month of price weakness.

Hawaiian Airlines — the wholly owned subsidiary of Hawaiian Holdings (HA - Free Report) — also grabbed headlines by virtue of its announcement to expand operations in New Zealand from March 2018.

Transportation - Airline Industry 5YR % Return

 

Transportation - Airline Industry 5YR % Return

On the price front, the NYSE ARCA Airline Index declined 2% to $106.15 over the last week. 

(Read the last Airline Stock Roundup for Sep 13, 2017).

Recap of the Past Week’s Most Important Stories

1. At JetBlue, traffic — measured in revenue passenger miles (RPMs) — improved 5% year over year while consolidated capacity (or available seat miles/ASMs) expanded 5.4%. But Augustload factor decreased 30 basis points to 87.1% (read more: JetBlue's August Load Factor Declines, Stock Falls).

2. While traffic at Spirit Airlines increased 20.6%, capacity expanded 21.9%. Meanwhile, load factor decreased to 86.2% from 87.1% recorded in August 2016. Additionally, this low-cost carrier registered a completion factor (system wide) of 96.6% for the month with 76.9% flights on schedule (read more: Spirit Airlines' August Traffic Increases, Load Factor Slips).

3. GOL Linhas’ shares were positively impacted following the release of impressive August traffic data. Load factor increased 40 basis points as traffic growth outpaced capacity expansion for the month (read more: GOL Linhas Reports Rise in August Traffic & Load Factor).

GOL Linhas holds a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

4. Fellow Latin American carrier, Copa Holdings, also reported impressive traffic data for August. Load factor increased 140 basis points to 85.1% as traffic growth outpaced capacity expansion for the month (read more: Copa Holdings Traffic, Load Factor Rise in August).

5. Average air fares in August fell 3.2% from the comparable figure a year ago. Also, the price of air tickets decreased 6.1% (unadjusted) in the same month on a month-on-month basis.

According to research firm Hopper, air fares (roundtrip) in the United States are likely hit a low of $216 in October (read more: U.S. Air Fares Continue to Decline: Should Airlines Worry?).

6. Buoyed by strong demand, Hawaiian Airlines intends to start operating up to five non-stop flights (weekly) between Auckland and Honolulu from Mar 21, 2018. In 2013, the company had started operating thrice a week flights connecting the two destinations. Markedly, these flights have carried more 260,000 passengers since inception, thus leading to the company’s expansion plans.

Performance

The following table shows the price movement of the major airline players over the last week and during the past six months. 

Company

Past Week

Last 6 months

HA

-7.2%

-24.6%

UAL

-6.1%

-14.7%

GOL

9.2%

57.4%

DAL

-3.8%

2.2%

JBLU

-6.2%

-3.9%

AAL

-4.6%

6.4%

SAVE

-6.8%

-36.1%

LUV

-1.3%

0.2%

CPA

-2.4%

17.2%

ALK

-6.1%

-23.8%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

The table above shows that all airline stocks, apart from GOL Linhas, which traded in the red over the last week, led to the substantial decline in the NYSE ARCA Airline Index. In fact, the GOL Linhas stock was buoyed by its impressive August traffic report that emerged as the biggest gainer (9.2%) in the period.

Over the course of six months, the sector tracker has depreciated 3%. Spirit Airlines emerged as the biggest laggard (declining 36.1%) due to multiple headwinds like the pilot dispute and the Harvey impact. Shares of Hawaiian Holdings, United Continental Holdings (UAL - Free Report) and Alaska Air Group (ALK - Free Report) too have witnessed double-digit declines in the same period.

What's Next in the Airline Space?

Apart from the usual news updates, investors are expected to look forward to updates on the Hurricane Maria and its impact (if any) on airlines.


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