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Airline Stock Roundup: ALGT's Traffic Hit by Coronavirus Woes, UAL's Update & More
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In the past week,Allegiant Travel Company (ALGT - Free Report) reported a 39.4% decline in its March traffic due to the coronavirus-led low air-travel demand. In fact, because of this reason, many airline players reported double-digit declines in their respective March traffic numbers in the previous week too.
Meanwhile, United Airlines (UAL - Free Report) posted bleak preliminary first-quarter 2020 results. This Chicago-based carrier was in news for its deal with Bank of China Aviation. The deal is expected to close later this year.
Also, due to the continuous havoc created by the pandemic, the International Air Transport Association (IATA) widened its 2020 passenger revenue decline projection for the airline industry. With airlines gasping for breath, the Trump administration provided them with some cheerful news following an agreement with the Treasury Department in relation to the $25-billion rescue package.
Highlights of the Past Week’s Top Stories
1. At Allegiant, March traffic for scheduled service, measured in revenue passenger miles (RPMs), plunged 39.4% on a year-over-year basis to 839.77 million. Scheduled capacity, calculated in available seat miles (ASMs), also declined 12.2% to 1.41 billion in the month. With traffic tumbling more than the contraction in capacity, load factor deteriorated to 59.4%.
2. With airlines severely affected by the coronavirus pandemic, the respective managerial heads had sought for Federal help to stay afloat. An agreement on the same was reached on Apr 14 under which various airlines are entitled to receive assistance. For instance, JetBlue Airways (JBLU - Free Report) stands to gain $935.8 million under the Coronavirus Aid, Relief and Economic Security Act. Of the total stimulus fund, an amount worth$685.1 million will be through grants, which the company does not have to repay. The balance will be earned via low-interest loans. American Airlines (AAL - Free Report) will receive $4.1 billion in direct support and $1.7 billion in loan. The package under the CARES Act will take care of sustaining jobs only through Sep 30, 2020.
3. Due to the rapidly washed-out air-travel demand, management at United Airlines stated that first-quarter 2020 revenues (on a preliminary basis) declined 17% year over year to $8 billion. Pre-tax loss (adjusted) was $1 billion. Moreover, United Airlines, which expects to get approximately $5 billion via the payroll support program under the CARES Act, applied for up to $4.5 billion in government loans.
Also, with the carrier expecting to trim its May capacity by 90% (similar cuts are expected in June), it agreed to sell 22 planes to Bank of China Aviation. The pact covers a fleet of six Boeing 787-9 and 16 Boeing 737-9 MAX planes. However, the planes can be leased back to the carrier under long-term agreements.
4. With passenger revenues being drained by massively fading air-travel demand as multiple countries are on lockdown and wide-spread travel restrictions are in place, IATA expects the same to shrink by $314 billion in 2020 on a year-over-year basis. Previously, the research firm had predicted an erosion of current-year airline revenues by $252 billion.
5. In a bid to cater to inflated demand for medical supplies in the United States, Delta Air Lines (DAL - Free Report) expanded its cargo-only flights between the United States and Asia. As part of increasing the flight-frequency plan, Delta’s scheduled cargo operation to and from Shanghai with a stop in Incheon will be a daily service following the addition of flights from Los Angeles. Notably, Delta’s Detroit service has been in operation since Mar 30. With passenger revenues declining, other carriers like Southwest Airlines (LUV - Free Report) are also focusing on offering cargo-only flights.
Price Performance
The following table shows the price movement of major airline players over the past week and during the past six months.
The table above shows that all stocks barring Copa Holdings (CPA - Free Report) traded in the red over the past week inducing the NYSE ARCA Airline Index to lose 8.1% of its value over the past week. Over the course of six months, the sector tracker has plummeted 57.7%.
What's Next in the Airline Space?
Investors will look forward to Delta’s first-quarter 2020 earnings report on Apr 22.
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This outperformance has not just been a recent phenomenon. From 2000 – 2019, while the S&P averaged +6.0% per year, our top strategies averaged up to +54.7% per year.
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Airline Stock Roundup: ALGT's Traffic Hit by Coronavirus Woes, UAL's Update & More
In the past week,Allegiant Travel Company (ALGT - Free Report) reported a 39.4% decline in its March traffic due to the coronavirus-led low air-travel demand. In fact, because of this reason, many airline players reported double-digit declines in their respective March traffic numbers in the previous week too.
Meanwhile, United Airlines (UAL - Free Report) posted bleak preliminary first-quarter 2020 results. This Chicago-based carrier was in news for its deal with Bank of China Aviation. The deal is expected to close later this year.
Also, due to the continuous havoc created by the pandemic, the International Air Transport Association (IATA) widened its 2020 passenger revenue decline projection for the airline industry. With airlines gasping for breath, the Trump administration provided them with some cheerful news following an agreement with the Treasury Department in relation to the $25-billion rescue package.
Highlights of the Past Week’s Top Stories
1. At Allegiant, March traffic for scheduled service, measured in revenue passenger miles (RPMs), plunged 39.4% on a year-over-year basis to 839.77 million. Scheduled capacity, calculated in available seat miles (ASMs), also declined 12.2% to 1.41 billion in the month. With traffic tumbling more than the contraction in capacity, load factor deteriorated to 59.4%.
2. With airlines severely affected by the coronavirus pandemic, the respective managerial heads had sought for Federal help to stay afloat. An agreement on the same was reached on Apr 14 under which various airlines are entitled to receive assistance. For instance, JetBlue Airways (JBLU - Free Report) stands to gain $935.8 million under the Coronavirus Aid, Relief and Economic Security Act. Of the total stimulus fund, an amount worth$685.1 million will be through grants, which the company does not have to repay. The balance will be earned via low-interest loans. American Airlines (AAL - Free Report) will receive $4.1 billion in direct support and $1.7 billion in loan. The package under the CARES Act will take care of sustaining jobs only through Sep 30, 2020.
3. Due to the rapidly washed-out air-travel demand, management at United Airlines stated that first-quarter 2020 revenues (on a preliminary basis) declined 17% year over year to $8 billion. Pre-tax loss (adjusted) was $1 billion. Moreover, United Airlines, which expects to get approximately $5 billion via the payroll support program under the CARES Act, applied for up to $4.5 billion in government loans.
Also, with the carrier expecting to trim its May capacity by 90% (similar cuts are expected in June), it agreed to sell 22 planes to Bank of China Aviation. The pact covers a fleet of six Boeing 787-9 and 16 Boeing 737-9 MAX planes. However, the planes can be leased back to the carrier under long-term agreements.
4. With passenger revenues being drained by massively fading air-travel demand as multiple countries are on lockdown and wide-spread travel restrictions are in place, IATA expects the same to shrink by $314 billion in 2020 on a year-over-year basis. Previously, the research firm had predicted an erosion of current-year airline revenues by $252 billion.
5. In a bid to cater to inflated demand for medical supplies in the United States, Delta Air Lines (DAL - Free Report) expanded its cargo-only flights between the United States and Asia. As part of increasing the flight-frequency plan, Delta’s scheduled cargo operation to and from Shanghai with a stop in Incheon will be a daily service following the addition of flights from Los Angeles. Notably, Delta’s Detroit service has been in operation since Mar 30. With passenger revenues declining, other carriers like Southwest Airlines (LUV - Free Report) are also focusing on offering cargo-only flights.
Price Performance
The following table shows the price movement of major airline players over the past week and during the past six months.
The table above shows that all stocks barring Copa Holdings (CPA - Free Report) traded in the red over the past week inducing the NYSE ARCA Airline Index to lose 8.1% of its value over the past week. Over the course of six months, the sector tracker has plummeted 57.7%.
What's Next in the Airline Space?
Investors will look forward to Delta’s first-quarter 2020 earnings report on Apr 22.
Today's Best Stocks from Zacks
Would you like to see the updated picks from our best market-beating strategies? From 2017 through 2019, while the S&P 500 gained and impressive +53.6%, five of our strategies returned +65.8%, +97.1%, +118.0%, +175.7% and even +186.7%.
This outperformance has not just been a recent phenomenon. From 2000 – 2019, while the S&P averaged +6.0% per year, our top strategies averaged up to +54.7% per year.
See their latest picks free >>