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Airline Stock Roundup: LTM's Q3 Earnings Beat,SAVE's Bullish Q4 View & More

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In the past week, LATAM Airlines Group S.A.’s (LTM - Free Report) bottom line surpassed estimates in the third quarter of 2018. However, the metric declined year over year due to high fuel costs, and devaluation of the Brazilian real and Argentinean peso.

On the non-earnings front, Spirit Airlines (SAVE - Free Report) issued an improved unit revenue view for the fourth quarter of 2018. Higher expectations regarding load factor (% of seats filled by passengers) and favorable pricing of non-ticket items like seats and bags led to the upbeat view. Alaska Air Group (ALK), like Spirit Airlines, too unveiled a bullish unit revenue forecast on its investor day.

An expansion-related update from United Continental Holdings’ (UAL - Free Report) subsidiary— United Airlines — also grabbed headlines over the past week, which was a day short of trading due to the Nov 22, Thanksgiving holiday. Delta Air Lines (DAL - Free Report) invited attention as well, courtesy of its impressive performance during the Thanksgiving period.

(Read the last Airline Stock Roundup for Nov 21, 2018)

Recap of the Past Week’s Most Important Stories

1. LATAM Airlines reported better-than-expected earnings per share and lower-than-expected revenues in the third quarter of 2018. The top line was hurt by a 5.3% reduction in passenger revenues. Meanwhile, high fuel costs negatively impacted the bottom line. In spite of a 32.9% spike in fuel costs (average price per gallon excluding hedge increased 27.7% year over year), this Latin American carrier’s operating expenses dipped 3.5% year over year to $2,317 million. (Read more: LATAM Airlines Q3 Earnings Top, Fall Y/Y on Fuel Costs).

2. Spirit Airlines stated that it now expects total revenue per available seat miles (TRASM: a key measure of unit revenues) to increase by approximately 11% year over year (the earlier view had called for an increase of approximately 6%).Unit revenues apart, this Zacks Rank #1 (Strong Buy) company’s projections with respect to cost items are also impressive. The carrier expects non-fuel unit costs (adjusted) to increase in the 5-5.5% band (earlier the company had predicted the metric to rise 5-6% year over year). Economic fuel cost is now projected to be $2.27 per gallon compared with $2.46 estimated earlier. (Read more: Spirit Airlines Hikes Q4 TRASM Projection, Stock Up).

You can see the complete list of today’s Zacks #1 Rank stocks here.

3. Alaska Air Group now expects fourth-quarter revenue per available seat mile between12.60 cents and 12.80 cents(the earlier view had predicted this metric in the 12.40-12.60 cents range). Non-fuel unit costs for the fourth quarter of 2018 are still predicted to be between8.97 cents and 9.01 cents. Economic fuel cost is now projected to be $2.33 per gallon compared with $2.36 estimated earlier. For 2018, non-fuel unit costs are expected to be in the 8.50-8.52 cents band.

4. United Airlines announced plans to initiate non-stop services connecting Paine Field/Snohomish County Airport from the airline’s hubs in Denver and San Francisco. On approval, the carrier will begin operations on Mar 31, 2019, with two daily flights from Denver and four daily services from San Francisco.(Read more: United Continental Arm to Connect Paine Field From Key Hubs).

5. Elaborating on its impressive performance during the Thanksgiving period, Delta stated that more than 2.3 million customers were transported to various destinations globally from Nov 21 to Nov 25. Notably, the carrier operated 23,114 flights during the said period. It further added that Nov 25 was the busiest travel day, with approximately 646,000 people availing Delta flights. This, according to Delta, was a record for November.

In the Nov 21- Nov 25 timeframe, the company achieved a completion factor of 99.77%. Also, 70.3% flights arrived on time during this period.

Price Performance

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

 

 

The table above shows that the majority of the airline stocks traded in the green over the past week mainly owing to low oil prices. Consequently, the NYSE ARCA Airline Index gained 4.5% during the period. Shares of Spirit Airlines gained the most (18.1%), courtesy of its upbeat guidance for the fourth quarter. Over the course of six months, the sector tracker declined 2.6% despite impressive gains at the likes of GOL Linhas Aéreas Inteligentes (GOL - Free Report) .

What's Next in the Airline Space?

Investors are looking forward to November traffic reports from the likes of Delta and Ryanair Holdings (RYAAY - Free Report) in the coming days.

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