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It’s been close to two weeks since Delta Air Lines Inc. (DAL - Free Report) kick-started the fourth-quarter earnings season for the airline space. Overall, the season has been mixed-to-upbeat for the industry. Ancillary revenues helped the operators make up for the higher fuel costs in 2018. The airline companies belong to a top-ranked Zacks industry (top 4%) and top-ranked Zacks sector (top 38%). Lets’ delve a little deeper.
Inside the Headlines
Delta’sfourth-quarter earnings (excluding 19 cents from non-recurring items) of $1.30 per share surpassed the Zacks Consensus Estimate by 3 cents. Moreover, the bottom line increased on a year-over-year basis. Operating revenues of $10,742 million, however, fell short of the Zacks Consensus Estimate of $10,828.7 million. Revenues increased 4.9% from the year-ago figure.
United Continental Holdings (UAL - Free Report) reported better-than-expected earnings and revenues in the fourth quarter of 2018. The company’s earnings (excluding 71 cents from non-recurring items) of $2.41 per share surpassed the Zacks Consensus Estimate of $1.86. Moreover, the bottom line showed a massive year-over-year improvement. Operating revenues came in at $10.49 billion, outpacing the Zacks Consensus Estimate of $10.37 billion. Additionally, the top line rose significantly year over year.
American Airlines Group Inc.’s (AAL - Free Report) fourth-quarter 2018 earnings (excluding 35 cents from non-recurring items) of $1.04 per share surpassed the Zacks Consensus Estimate of $1.02. Moreover, the bottom line increased on a year-over-year basis.
Revenues of $10.938 billion missed the Zacks Consensus Estimate of $11.007 billion. However, the top line improved on a year-over-year basis. Strong demand for air travel led to this year-over-year improvement in the top line.
Low-cost carrier Southwest Airlines Co. (LUV - Free Report) delivered fourth-quarter 2018 earnings per share of $1.17, beating the Zacks Consensus Estimate of $1.06. Results were aided by stronger revenues, higher yields and better cost management.
Operating revenues of $5.704 billion outpaced the Zacks Consensus Estimate of $5.677 billion. The top line also rose year over year. Passenger revenues, accounting for the bulk (93.2%) of the top line, improved 8.6% year over year.
JetBlue Airways Corporation’s (JBLU - Free Report) fourth-quarter 2018 earnings (excluding 5 cents from non-recurring items) of 50 cents per share surpassed the Zacks Consensus Estimate by 8 cents and increased 56.3% year over year. The bottom line was driven by the company’s prudent non-fuel cost management.
Total revenues came in at $1,968 million, which edged past the Zacks Consensus Estimate of $1,965.4 million and increased 12% year over year. Passenger revenues, which accounted for bulk of the top line (96.1%), improved 12.1% in the quarter under review. Other revenues were up 8.8%.
Alaska Air Group Inc. (ALK - Free Report) delivered fourth-quarter 2018 earnings per share (excluding 56 cents from non-recurring items) of 75 cents, surpassing the Zacks Consensus Estimate of 73 cents. Revenues came in at $2,064 million, above the Zacks Consensus Estimate of $2,057.3 million. The top line also rose year over year. Passenger revenues, accounting for a bulk (92.4%) of the top line, were up 6% on a year-over-year basis.
ETF in Focus
Since results were mixed-to-upbeat, investors having a strong stomach for oil-related risks may go for a basket approach or invest in U.S. Global Jets ETF (JETS - Free Report) . This approach makes up for company-specific concentration risks as one company’s weakness compensates for another company’s strength (read: Winning and Losing Sectors ETFs Post OPEC Decision).
JETS in Focus
The $83.6 million-fund holds more than 30 stocks in its portfolio and is concentrated on a few individual securities. Southwest Airlines (12.81%), American Airlines (12.40%), United Continental (11.33%) and Delta Airlines (10.04%) take the first four positions in the fund.
Alaska Air and JetBlue hold the fifth and seventh positions in the fund with a 4.04% and 3.92% weight, respectively. The product charges 60 bps in fees and has gained about 9.4% in the past month (as of Jan 29, 2019) (see all industrials ETFs).
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Airlines ETF Riding High on Q4 Earnings
It’s been close to two weeks since Delta Air Lines Inc. (DAL - Free Report) kick-started the fourth-quarter earnings season for the airline space. Overall, the season has been mixed-to-upbeat for the industry. Ancillary revenues helped the operators make up for the higher fuel costs in 2018. The airline companies belong to a top-ranked Zacks industry (top 4%) and top-ranked Zacks sector (top 38%). Lets’ delve a little deeper.
Inside the Headlines
Delta’sfourth-quarter earnings (excluding 19 cents from non-recurring items) of $1.30 per share surpassed the Zacks Consensus Estimate by 3 cents. Moreover, the bottom line increased on a year-over-year basis. Operating revenues of $10,742 million, however, fell short of the Zacks Consensus Estimate of $10,828.7 million. Revenues increased 4.9% from the year-ago figure.
United Continental Holdings (UAL - Free Report) reported better-than-expected earnings and revenues in the fourth quarter of 2018. The company’s earnings (excluding 71 cents from non-recurring items) of $2.41 per share surpassed the Zacks Consensus Estimate of $1.86. Moreover, the bottom line showed a massive year-over-year improvement. Operating revenues came in at $10.49 billion, outpacing the Zacks Consensus Estimate of $10.37 billion. Additionally, the top line rose significantly year over year.
American Airlines Group Inc.’s (AAL - Free Report) fourth-quarter 2018 earnings (excluding 35 cents from non-recurring items) of $1.04 per share surpassed the Zacks Consensus Estimate of $1.02. Moreover, the bottom line increased on a year-over-year basis.
Revenues of $10.938 billion missed the Zacks Consensus Estimate of $11.007 billion. However, the top line improved on a year-over-year basis. Strong demand for air travel led to this year-over-year improvement in the top line.
Low-cost carrier Southwest Airlines Co. (LUV - Free Report) delivered fourth-quarter 2018 earnings per share of $1.17, beating the Zacks Consensus Estimate of $1.06. Results were aided by stronger revenues, higher yields and better cost management.
Operating revenues of $5.704 billion outpaced the Zacks Consensus Estimate of $5.677 billion. The top line also rose year over year. Passenger revenues, accounting for the bulk (93.2%) of the top line, improved 8.6% year over year.
JetBlue Airways Corporation’s (JBLU - Free Report) fourth-quarter 2018 earnings (excluding 5 cents from non-recurring items) of 50 cents per share surpassed the Zacks Consensus Estimate by 8 cents and increased 56.3% year over year. The bottom line was driven by the company’s prudent non-fuel cost management.
Total revenues came in at $1,968 million, which edged past the Zacks Consensus Estimate of $1,965.4 million and increased 12% year over year. Passenger revenues, which accounted for bulk of the top line (96.1%), improved 12.1% in the quarter under review. Other revenues were up 8.8%.
Alaska Air Group Inc. (ALK - Free Report) delivered fourth-quarter 2018 earnings per share (excluding 56 cents from non-recurring items) of 75 cents, surpassing the Zacks Consensus Estimate of 73 cents. Revenues came in at $2,064 million, above the Zacks Consensus Estimate of $2,057.3 million. The top line also rose year over year. Passenger revenues, accounting for a bulk (92.4%) of the top line, were up 6% on a year-over-year basis.
ETF in Focus
Since results were mixed-to-upbeat, investors having a strong stomach for oil-related risks may go for a basket approach or invest in U.S. Global Jets ETF (JETS - Free Report) . This approach makes up for company-specific concentration risks as one company’s weakness compensates for another company’s strength (read: Winning and Losing Sectors ETFs Post OPEC Decision).
JETS in Focus
The $83.6 million-fund holds more than 30 stocks in its portfolio and is concentrated on a few individual securities. Southwest Airlines (12.81%), American Airlines (12.40%), United Continental (11.33%) and Delta Airlines (10.04%) take the first four positions in the fund.
Alaska Air and JetBlue hold the fifth and seventh positions in the fund with a 4.04% and 3.92% weight, respectively. The product charges 60 bps in fees and has gained about 9.4% in the past month (as of Jan 29, 2019) (see all industrials ETFs).
Want key ETF info delivered straight to your inbox?
Zacks’ free Fund Newsletter will brief you on top news and analysis, as well as top-performing ETFs, each week. Get it free >>