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Airline Stock Roundup: HA, ALK Top Earnings, DAL, UAL & AAL Suspend China Flights

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To allay fears due to the rapidly-spreading coronavirus, major U.S. carriers — Delta Air Lines DAL, United Airlines UAL and American Airlines AAL — have suspended all flights to China. Notably, the coronavirus originated in Wuhan, China.

On the earnings front, Alaska Air Group (ALK - Free Report) and Hawaiian Holdings HA reported better-than-expected earnings per share for fourth-quarter 2019. However, Allegiant Travel Company ALGT lagged earnings estimates. Apart from releasing fourth-quarter results, Alaska Air Group announced a 7.1% hike in quarterly dividend to 37.5 cents per share.

Additionally, European low-cost carrier Ryanair Holdings RYAAY reported impressive results for the third quarter of fiscal 2020 (ended Dec 31, 2019) backed by robust traffic in Christmas/New year.

(Read the Last Airline Stock Roundup here).

Recap of the Past Week’s Most Important Stories

1. Alaska Air Group’s fourth-quarter 2019 earnings per share of $1.46 beat the Zacks Consensus Estimate by 5 cents. Moreover, the bottom line surged 94.7% year over year on low fuel costs. Revenues came in at $2,228 million, surpassing the Zacks Consensus Estimate of $2,220.5 million.

The top line also increased approximately 8% year over year. Passenger revenues — contributing 92.3% to the top line — were up 8% on a year-over-year basis. (Read more: Alaska Air Group Beats on Q4 Earnings, Hikes Dividend).

Alaska Air Group currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

2. Hawaiian Holdings’ fourth-quarter earnings (excluding 8 cents from non-recurring items) of 99 cents per share outpaced the Zacks Consensus Estimate of 87 cents. However, the bottom line edged down 1% year over year. Although quarterly revenues of $708.1 million missed the Zacks Consensus Estimate of $709.3 million, the figure inched up 1.5% year over year.

Meanwhile, operating revenue per available seat mile (RASM: a key measure of unit revenues) in the quarter slid 2.1% year over year. Average fuel cost per gallon decreased 6.8% to $2.05 in the December-end quarter. RASM is expected to decline 4.5-7.5% in the March-end quarter. (Read more: Hawaiian Holdings Q4 Earnings Beat Estimates, Slip Y/Y).

3. Allegiant’s fourth-quarter 2019 earnings of $3.72 per share fell short of the Zacks Consensus Estimate of $3.87. However, the bottom line surged 45.3% year over year, driven by lower fuel costs and higher revenues. Total operating revenues increased 11.9% year over year to $461.1 million on the back of a 10.8% rise in passenger revenues.

Moreover, the top line surpassed the consensus mark of $460.2 million. The company still expects earnings per share between $16.5 and $19 for 2020. (Read more: Allegiant Travel's Q4 Earnings Miss Estimates, Up Y/Y).

4. Ryanair’s profit after tax in third-quarter fiscal 2020 came in at €88 million as against a loss of €66 million witnessed in the prior year. The top line increased 21% to €1.91 billion on the back of a 6% rise in traffic to 36 million. Additionally, the load factor improved to 96% from the prior year’s 95%.

Ryanair reported a 13% increase in revenue per guest rose backed by 9% higher fares in the December-end quarter. The carrier still expects fiscal 2020 profit after tax in the €0.95-€1.05 billion range. Fiscal 2020 revenue per guest is expected to be up 3-4%. Fuel bill for fiscal 2020 is anticipated to rise €440 million from the fiscal 2019 levels. Non-fuel unit costs are projected to rise by roughly 2%.

Meanwhile, Ryanair’s January traffic report was impressive, with the metric (including 0.5 million from its LaudaMotion unit) increasing 5% year over year to 10.8 million. Additionally, the load factor increased to 92% from 91% a year ago. Ryanair operated more than 62,000 scheduled flights in January.

5. In response to the coronavirus outbreak — Delta, United Airlines and American Airlines — suspended all flights to and from China. In fact, the State Department issued an advisory asking Americans not to travel to the country. Delta, United Airlines and American Airlines have reportedly suspended service to mainland China from Feb 6 through Apr 30, Mar 28 and Mar 27, 2020, respectively. Additionally, due to weaker-than-expected demand following the coronavirus outbreak and also political unrest, American Airlines suspended flights to Hong Kong through Feb 20.


The following table shows the price movement of the major airline players over the past week and during the last 6 months.

What’s Next in the Airline Space?

Investors keenly await January traffic reports from multiple carriers. Further, corona virus-related updates and the resultant impact on air travel will be awaited by investors.

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