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Airline Stock Roundup: New U.S. Airline on the Anvil, AZUL's Traffic & More

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In the past week, Azul AZUL and Hawaiian Holdings’ HA wholly-owned subsidiary, Hawaiian Airlines, reported respective January traffic numbers. While load factor (% of seats filled by passengers) improved at Azul owing to traffic growth outpacing capacity expansion, this key metric declined at Hawaiian Airlines due to capacity overexpansion.

Meanwhile, a new U.S. airline, Breeze Airways (previously codenamed Moxy), is likely to start commercial operations by Dec 31, 2020. To this end, David Neeleman, the founder of JetBlue Airways JBLU, launched Breeze Airways in the past week.

Additionally, American Airlines (AAL - Free Report) extended the period of suspension of its flights to mainland China and Hong Kong from its Dallas-Fort Worth and Los Angeles hubs through April. The decision came due to the slackening of demand on the routes resulting from the coronavirus outbreak.

(Read the Last Airline Stock Roundup here).

Recap of the Past Week’s Most Important Stories

1. At Azul, consolidated traffic (measured in revenue passenger kilometers/RPKs) rose 29.1% year over year to 3.32 billion owing to 28.3% growth on the domestic front and a 31.5% rise internationally. On a year-over-year basis, consolidated capacity (measured in available seat kilometers/ASKs) expanded 26.5% to 3.9 billion, driven by 25.2% and 30.5% increase in domestic and international capacity, respectively. (Read more: Azul's Traffic & Load Factor Increase in January).

Azul sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

2. At Hawaiian Airlines, January traffic (measured in Revenue Passenger Miles) increased 6.6% to 1.53 billion. Capacity (measured in Available Seat Miles) climbed 7.5% to 1.83 billion in the period. Load factor deteriorated 70 basis points to 83.6%. (Read more: Hawaiian Airlines' January Traffic Up but Load Factor Down).

3. At Gol Linhas GOL, consolidated traffic for January inched up 0.4% year over year. On a year-over-year basis, consolidated capacity declined 0.1%. On a year-over-year basis, consolidated capacity declined 0.1%. Consolidated load factor improved to 83.9% from January 2018’s 83.5%, as traffic grew and capacity contracted. (Read more: Gol Linhas' January Traffic & Load Factor Increase).

4 Breeze Airways is the fifth carrier to be launched by Neeleman. Reportedly, an application has already been filed with the US Department of Transportation seeking an airline operating certificate. Once operational, the new airline will serve mid-sized cities in the United States that don’t get many direct flights. Reportedly, Breeze intends to lease 30 Embraer E195 jets from Azul, another carrier which was launched by Needleman. The jets will be delivered from May 2020. Breeze Airways has also reportedly ordered 60 new Airbus jets, scheduled to be delivered from Apr 2021.

5. American Airlines stated that flights connecting its Dallas-Fort Worth and Los Angeles hubs and mainland China will be suspended through Apr 24. The carrier’s flights connecting Dallas-Fort Worth and Hong Kong will be non-operational through Apr 23. Additionally, flights between Los Angeles and Hong Kong will remain suspended through Apr 24. Previously, American Airlines had suspended flights to mainland China and Hong Kong through Mar 27 and Feb 20, respectively.


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

The table above shows that almost all airline stocks traded in the red over the past week, resulting in the NYSE ARCA Airline index declining 1.3% to $110.95. Fears of international travel demand declining due to the coronavirus outbreak contributed to the stocks losing value. Over the course of past six months, the NYSE ARCA Airline index has gained 14.4%.

What’s Next in the Airline Space?

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

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