Back to top

The Zacks Analyst Blog Highlights: Delta Air Lines, Southwest Airlines, JetBlue Airways, American Airlines Group and Ryanair Holdings

Read MoreHide Full Article

For Immediate Release

Chicago, IL – June 7, 2018 – Zacks.com announces the list of stocks featured in the Analyst Blog. Every day the Zacks Equity Research analysts discuss the latest news and events impacting stocks and the financial markets. Stocks recently featured in the blog include Delta Air Lines, Inc. (DAL - Free Report) , Southwest Airlines Co. (LUV - Free Report) , JetBlue Airways Corp. (JBLU - Free Report) , American Airlines Group Inc. (AAL - Free Report) and Ryanair Holdings plc (RYAAY - Free Report) .

Today, Zacks is promoting its ''Buy'' stock recommendations. Get #1Stock of the Day pick for free.

Here are highlights from Wednesday’s Analyst Blog:

Airline Stock Roundup: IAIA, LUV, DAL & More

The past week was dominated by updates from the International Air Transport Association (“IATA”). The monthly data released by the IATA showcased a 6.2% year-over-year increase in demand for air travel across the globe for April 2018.

Another significant update from the trade association emerged recently, when it trimmed its 2018 profitability outlook for the airline industry to $33.8 billion from $38.4 billion anticipated earlier. Notably, high fuel costs were primarily responsible for the view cut. Bulk of the global profits ($15 billion) are expected to come from the North American region.

The IATA updates apart, the Atlanta, GA-based airline behemoth Delta Air Lines, Inc. was in the news by virtue of its May traffic report. In the month, load factor (% of seats filled by passengers) declined as traffic growth was outpaced by capacity expansion.

Meanwhile, Dallas-based Southwest Airlines Co. continues to feel the pinch of the deadly accident on its flight in April, which claimed one life. Due to low ticket sales as a result of the accident apart from the spike in oil prices, this low-cost carrier issued a second-quarter unit revenue view, which was at the lower end of its previous forecast. Operating revenue per available seat mile (RASM) is anticipated to decline around 3% year over year (the earlier guidance had called for a decline in the 1-3% range).

Furthermore, JetBlue Airways Corp. joined fellow-carriers like American Airlines Group Inc. in revamping its policy pertaining to emotional support animals on its flights.

Transportation - Airline Industry 5YR % Return

(Read the last Airline Stock Roundup for May 30, 2018).

Recap of the Past Week’s Most Important Stories

1. At its 74th Annual General Meeting in Sydney, Australia, the IATA stated that due to rising fuel costs and other factors like the ongoing geopolitical tensions, airline companies are expected to be less profitable in 2018 than previously anticipated. Global net profit margin is expected to contract to 4.1% in 2018 from 5% a year ago. However, the top line is projected to increase 10.7% on the back of higher passenger and cargo revenues.

Even though, passenger air travel growth in 2018 (7%) is anticipated to be slower than the phenomenal 8.1% growth witnessed last year, it compares favorably to the 20-year average growth rate (Read more: IATA Trims 2018 Airlines Profit Forecast Due to High Costs).

Earlier in the week, IATA also released its global traffic numbers for April. Although global travel demand (measured in revenue passenger kilometers or RPKs) increased year over year, the metric compared unfavorably to the March reading when traffic expanded 9.7% — the highest growth rate in 12 months. With fuel costs on the rise, air fares are likely to increase in the remainder of the year.

On a year-over-year basis, traffic growth was evident in both international (4.8%) and domestic (8.5%) markets, which resulted in a rise in the overall figure. Total capacity ((available seat kilometers or ASKs) increased 5.9% in the month. Load factor also improved 20 basis points to 82.3% owing to higher traffic growth. In fact, the reading on load factor was a record as far as the month of April was concerned.

2. At Delta, consolidated traffic, measured in revenue passenger miles (RPMs), came in at 19.69 billion, up 2.9% year over year. Consolidated capacity (or available seat miles/ASMs) climbed 3.5% to 22.83 billion on a year-over-year basis (Read more: Delta May Traffic Shows a Rise, Load Factor Drops).

Meanwhile, Delta and Korean Air extended their codeshare agreement on flights in the United States as both the companies aim to boost traffic in the highly lucrative trans-Pacific market. This customer-friendly move followed the launch of a joint venture partnership between the two earlier this year. A codeshare deal allows sharing of flights, which implies that a passenger has the free will to avail any flight operated by either of the companies under the agreement, irrespective of the flight number.

Delta carries a Zacks Rank #3 (Hold). However, you can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

3. Southwest Airlines trimmed its capacity outlooks for second-quarter and full-year 2018 due to increasing fuel prices. The company now anticipates second-quarter available seat mile (ASM) or capacity to rise approximately 3.5%. Earlier, it had called for 3.5-4% growth in the metric. Also, for the latter half of the year, ASM is anticipated to expand approximately 6% year over year, lower than its earlier view of a rise in the low 7% range (read more: Southwest Trims View on Soft Bookings & Spike in Oil Prices).

4. Ireland-based Ryanair Holdings plc reported solid traffic data for May, courtesy of low air ticket prices. The carrier’s traffic improved 6% year over year in the month. Load factor (percentage of seats filled by passengers) rose to 96% from 95% a year ago on the back of decline in air ticket prices. The impressive traffic figures came despite the carrier having to cancel more than 1,100 flights in May due to staff shortages, inclement weather and other factors.

5. From Jul 1, passengers will only be allowed to carry cats, dogs and miniature horses as emotional support animals on JetBlue flights. As part of tightening its policy, this low-cost carrier will ask the relevant passengers to provide extensive documentation pertaining to the animal’s health and behavior.

In addition, the person has to provide proof related to its vaccinations and other factors within 48 hours before the flight. Under the stricter rules, the concerned passenger will also have to sign a document taking full responsibility for any injury caused by the animal he/she is carrying on the flight.

Today, Zacks is promoting its ''Buy'' stock recommendations. Get #1 Stock of the Day pick for free.

About Zacks Equity Research

Zacks Equity Research provides the best of quantitative and qualitative analysis to help investors know what stocks to buy and which to sell for the long-term.

Continuous coverage is provided for a universe of 1,150 publicly traded stocks. Our analysts are organized by industry which gives them keen insights to developments that affect company profits and stock performance. Recommendations and target prices are six-month time horizons.

Strong Stocks that Should Be in the News

Many are little publicized and fly under the Wall Street radar. They're virtually unknown to the general public. Yet today's 220 Zacks Rank #1 "Strong Buys" were generated by the stock-picking system that has nearly tripled the market from 1988 through 2015. Its average gain has been a stellar +26% per year. See these high-potential stocks free >>.

Follow us on Twitter: https://twitter.com/zacksresearch

Join us on Facebook: https://www.facebook.com/home.php#/pages/Zacks-Investment-Research/57553657748?ref=ts

Zacks Investment Research is under common control with affiliated entities (including a broker-dealer and an investment adviser), which may engage in transactions involving the foregoing securities for the clients of such affiliates.

Media Contact

Zacks Investment Research

800-767-3771 ext. 9339

support@zacks.com

https://www.zacks.com/

Past performance is no guarantee of future results. Inherent in any investment is the potential for loss. This material is being provided for informational purposes only and nothing herein constitutes investment, legal, accounting or tax advice, or a recommendation to buy, sell or hold a security. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. It should not be assumed that any investments in securities, companies, sectors or markets identified and described were or will be profitable. All information is current as of the date of herein and is subject to change without notice. Any views or opinions expressed may not reflect those of the firm as a whole. Zacks Investment Research does not engage in investment banking, market making or asset management activities of any securities. These returns are from hypothetical portfolios consisting of stocks with Zacks Rank = 1 that were rebalanced monthly with zero transaction costs. These are not the returns of actual portfolios of stocks. The S&P 500 is an unmanaged index. Visit https://www.zacks.com/performance for information about the performance numbers displayed in this press release.



More from Zacks Press Releases

You May Like